Updated: Aug 21, 2022
European Central Bank decisions
Due to high inflationary pressures, the ECB on July 21st announced a 50 basis point raise to interest rates.
It also launched the Transmission Protection Instrument (TPI), an anti-fragmentation tool aimed at supporting nations with large debt burdens and high borrowing costs and limiting discrepancies among euro zone member states. The TPI is designed to cap borrowing costs across the region. Source: ECB
Annual inflation rate in the Euro Area was confirmed at a record high of 8.6% in June of 2022, compared to 8.1% in May and 1.9% a year earlier. The biggest contribution came once again from prices of energy (42%), but strong price increases were also seen for food, alcohol & tobacco (8.9%) and services (3.4%), suggesting a widespread inflationary pressure. Excluding energy, the inflation increased to 4.9% from 4.6%. Compared to the previous month, consumer prices increased 0.8%. Source: Eurostat
The Consumer Prices Index (CPI) rose by 9.4% in the 12 months to June 2022, up from 9.1% in May. On a monthly basis, CPI rose by 0.8% in June 2022, compared with a rise of 0.5% in June 2021.
The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.2% in the 12 months to June 2022, up from 7.9% in May. Rising prices for motor fuels and food made the largest upward contributions to the change in both the CPIH and CPI 12-month inflation rates between May and June 2022. Source: Office for National Statistics
The S&P 500 fell nearly 1% on Friday to 3,961.63, but finished the week 2.6% higher. The DJIA lost nearly 0.5% on Friday to 31,899.29, but was up 2% for the week, Nasdaq was the biggest weekly winner among the three U.S indexes advancing 3.3%.
The Stoxx 600 closed 0.4% higher on Friday, with travel and leisure stocks advancing 2.4% as most sectors finished in positive territory. The pan-European benchmark also had a positive week, climbing almost 3%.
The spread between Italian and German bond yields which is seen as a measure of stress in European markets or a fear gauge, has widened in recent months to its highest level since May 2020.