​Markets are ready for end of rate hiking cycle

2023-07-26
Summary:

Global equity markets and U.S. Treasury yields rose on Tuesday ahead of the Fed's expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.

Global equity markets and U.S. Treasury yields rose on Tuesday ahead of the Fed's expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.


The U.S. dollar weakened, losing earlier session gains. Most market participants expect the Fed to deliver a 25 basis-point rate hike on Wednesday.


Oil prices rose to three-month highs as signs of tighter supplies and pledges by Chinese authorities lifted sentiment. Gold prices strengthened as the dollar fell, increasing 0.5% to $1,964.34.


Commodities

China’s top leaders pledged to step up policy support for the economy, focusing on boosting domestic demand.


The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the OPEC+.


Earlier-loading Brent contracts are selling above later loadings, a price structure known as backwardation indicating traders see tight supply, with the six-month spread near a 2.5-month high.


Forex

Signs of an extremely resilient U.S. economy helped the dollar recover from a recent 15-month low, as well as persistent weakness in Europe.


Still the survey from the Conference Board offered mixed signals. Consumers remain fearful of a recession over the next year following hefty interest-rate hikes from the Fed.


The euro fell for a fifth successive session as evidence of a slowdown in Europe builds after a recent survey showed demand for loans in the euro zone hitting a record low in the second quarter.

EURUSD

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