RELIEF FOR CENTRAL BANKS
In Europe, EUROSTOXX 50 futures and DAX futures both rose 0.2 per cent, while FTSE futures added 0.3 per cent.
S&P 500 futures climbed 0.9 per cent, while Nasdaq futures jumped 1.5 per cent amid a general surge in risk assets.
Central banks are due to meet in the US, UK, Japan, Australia, Switzerland, Sweden, Norway and Russia this week, with Japan considered the one likely to lift rates this time.
The Federal Reserve is widely expected to leave rates at 3.50 per cent to 3.75 per cent on Wednesday at Chair Kevin Warsh’s debut meeting.
The statement, economic projections and news conference will be scrutinised for any signals of the Fed dropping its easing bias as officials grow more hawkish on inflation risks.
Investors were quick to trim the chance of a hike this year, with December futures edging up four ticks, while a move as early as October is now priced around 45 per cent.
Treasuries rallied on hopes that oil prices would now fall sustainably and lessen the upside risks for inflation. Yields on 2-year notes dropped 6 basis points to 4.02 per cent.
The drop in yields and general improvement in risk pulled the US dollar broadly lower, with the euro rising 0.4 per cent to US$1.1608. The dollar dipped 0.2 per cent on the yen to 159.90, while sterling rose 0.3 per cent to US$1.3446.
The Bank of England is expected to hold rates at 3.75 per cent on Thursday and through 2026, with policymakers seen in no rush to tighten. The BoE’s vote split and monetary policy report will be of interest.
Top-tier UK data includes May inflation and retail sales, and April employment. Thursday’s Makerfield election will also be watched, as a win for Labour Mayor Andy Burnham could set up a leadership contest against Prime Minister Keir Starmer.
In commodity markets, the drop in yields helped non-interest-paying gold climb 1.9 per cent to US$4,300 an ounce.
