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May 20th - For a long time, sharp fluctuations in the bond market have been a warning sign of economic hardship. For example, the recent surge in global yields, fueled by concerns that Middle East conflict would lead to an inflationary spiral, is a prime example. However, as part of its aggressive monetary easing program, the Bank of Japan (BOJ) purchased a large amount of government bonds, causing the Japanese bond market to lose this function. But since the central bank began tapering its bond purchases in 2024, market function has been gradually recovering. A recent BOJ survey captured this shift, measuring market participants views on the functioning of the Japanese bond market. The survey results, released Wednesday, showed a diffusion index improving from -26 in February to -16. Shota Ryu, a strategist at Mitsubishi UFJ, said the recent surge in Japanese bond yields indicates a loss of confidence in both government and BOJ policies, a shift that could lead to further yen depreciation. If this occurs, there is a risk of a vicious cycle where a weaker yen triggers inflation concerns, further pushing up bond yields. He stated, "A weaker yen is highly likely to further fuel inflation expectations, thereby prompting yields to rise further."Market news: The Iraqi Prime Minister has instructed that efforts be made to increase oil exports and diversify export channels.May 20th - In the first four months of the year, the postal industry handled a total of 70.16 billion parcels, a year-on-year increase of 4.1%. Among these, express delivery volume reached 64.57 billion parcels, a year-on-year increase of 5.1%. By business type, in the first four months, intra-city express delivery volume reached 4.51 billion parcels, a year-on-year decrease of 9.1%; inter-city express delivery volume reached 58.68 billion parcels, a year-on-year increase of 6.4%; and international/Hong Kong, Macao and Taiwan express delivery volume reached 1.38 billion parcels, a year-on-year increase of 2.6%.On May 20th, the National Bureau of Statistics released unemployment data by age group for April 2026. In April, the national urban surveyed unemployment rate was 5.2%, the unemployment rate for the urban labor force aged 16-24 was 16.3%, the unemployment rate for the urban labor force aged 25-29 was 7.4%, and the unemployment rate for the urban labor force aged 30-59 was 4.2%.Hungarian Prime Minister Majol: For a strong Europe, we need a strong Central European competitiveness.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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