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Economic data released in the US yesterday further fueled the hawkish Federal Reserve (Fed) bets. The US 2-year yield jumped more than 3% to 4.90% for the first time since the mini banking crisis. The probability of a 25bp hike from the Fed in the July meeting jumped to 87%, while the pricing in the market suggests that the Fed’s two rate hikes are now likelier than not.

And perhaps because the aggressive Fed tightening doesn’t impact economic strength as badly ass expected, stock investors saw no urgence in selling their stocks on rising hawkish Fed expectations.

Yet, a further rise in US yields could weigh on stock appetite before the weekly closing bell.

In the Eurozone, investor mood was a bit tricky because inflation data released this week in the Eurozone revealed that inflation in core and periphery diverged in favour of the latter. More importantly, the end of ECB’s cheap loans should increase the yield spread between the Eurozone’s core and periphery and weigh on the EURUSD.

In China, the latest economic data didn’t enchant investors. Chinese manufacturing PMI remained below 50, in the contraction zone, for the third consecutive month, despite recurrent policy easing from the People’s Bank of China (PBoC). The Chinese government has no choice but to regain people’s and investors’ confidence if it doesn’t want to become too old before becoming rich enough.

US and European stocks were up on Wednesday. The US chipmakers dampened appetite across the Atlantic Ocean on news that the Biden Administration will bring more restrictions to the US chipmakers’ exports toward China, but Nasdaq still eked out gains.

Elsewhere, the major central bankers’ speeches were the same background music. The Federal Reserve’s (Fed) Powell, the Bank of England’s (BoE) Bailey, and the European Central Bank’s (ECB) Lagarde agreed that their fight against inflation wasn’t done yet, and that more rate hikes are on the pipeline, especially now that the US banks passed the Fed’s stress test. In Japan, however, there is no sign of life from the Bank of Japan (BoJ) just yet.

The dollar yen is now at the highest levels since November last year, a touch below the 145 mark, and on its way toward higher waters. Sentiment in euro is weak on mixed economic data.

In energy, US crude jumped off below the $67pb level on the back of an almost 10mio barrel decline in US crude inventories last week. There is now a triple bottom formation at around the $67pb level, and that could throw a floor under any short-term selloff in crude oil. But the $70pb resistance remains strong, and more offers are waiting into the 50-DMA.

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