Market News. 

📊 Yesterday, ECB President Lagarde and Chief Economist Lane said they need more evidence that inflation threats have passed before cutting rates further. Lagarde emphasized the ECB will be data-dependent and make decisions meeting-by-meeting, not committing to a specific policy path. June inflation data may show a small moderation but won’t be enough on its own to fully assess price pressures. Lagarde stressed the ECB won’t be swayed by any single data point and will consider a range of factors in their assessments. In summary, the ECB appears poised to keep rates on hold in July pending further economic readings.

💶 Related Market: The immediate effect of Lagarde’s words caused the euro to regain ground against the dollar, rising rapidly towards 1.0775. However, the news did not sit well with European equities which fell more than 1% this session, with the taxi trading close to 18,100 points and the CAC 40 falling to 7,500 points, an area we highlighted in previous reports. For these reasons, the EURUSD is weakening again and is currently close to 1.0715.

🇬🇧 UK: Paradoxically, while European stock markets are falling, the London Stock Exchange remains solid and close to all-time highs in its FTSE 100 index, which is currently trading at 8,140 points. The euro continues to lose strength against the pound, EURGBP is in a historical equatorial zone around 0.84 on which it could pivot in the coming weeks.

❌ Those who warned of the end of the British economy by voting Brexit, once again, seem to have been wrong, considering the political and economic instability in Europe at the moment.

🇫🇷 Frexit: Le Pen, who looks set to be France’s next president, suggested in 2017 that she would consider leaving the euro if she became French president. Although she has recently qualified these words and ruled out such a scenario, the risks of currency defragmentation are probably closer than ever.

📈 Bond yields in Europe rise again, reflecting political risks and Lagarde’s words ruling out rate cuts in July. The German 2-year bond is back close to 3% yield, trading at 2.90%. The French bond is close to 3.20%.

🇨🇳 China’s central bank, PBoC, plans to increase bond holdings to curb speculative movements, potentially triggering sell-offs and encouraging savers to switch to equities, and may initiate purchases to alleviate financing costs.

📉 Related Market: The Shanghai SSE index has recovered ground after the loss of 3000 points, trying to hold at least that reference area, but most likely the falls will continue in the coming sessions given the technical pattern of the charts. On the other hand, the Hang Seng the Hong Kong Index who presents bearish patterns, and struggles to stay above 17,500 points, if lost the index could fall to 16,200 points.

⚖️ Geopolitics: 

📜 The Supreme Court ruled that former presidents have immunity from prosecution for actions taken within their constitutional powers as president. The 6-3 ruling recognized presidential immunity for the first time and gives Trump broad protection from prosecution. The outcome was a major victory for Trump in his multiple ongoing criminal cases. If reelected, Trump could try to end the prosecution or pardon himself. In summary, the Supreme Court significantly bolstered Trump’s legal defenses in an impactful pre-election ruling.

🔒 Steve Bannon, a former senior advisor to Donald Trump, reported to prison in Connecticut to begin a four-month sentence for contempt of Congress. He was convicted for defying a subpoena to testify before the committee investigating the January 6th, 2021 attack on the US Capitol. Bannon spoke defiantly and said he was proud to go to prison if it stood up to President Biden. He will continue contributing to his podcast from prison to support Trump. Bannon joins other former Trump associates who have served time for ties to the former president.

✈️ Russia struck an air base in Starokostiantyniv, Ukraine that is believed may house incoming US-made F-16 fighter jets. Officials are remaining tight-lipped about details of attacks and F-16 deployment locations for security. Analysts say Russia aims to disrupt infrastructure and target the F-16s themselves to limit Ukraine’s air power. The US recently approved additional weapons aid including HAWK air defence systems. However, Ukraine has long requested fighter jets to better defend its skies from Russian aircraft.