The war in Ukraine has tended to increase uncertainty regarding inflation and growth prospects. When and with what consequences this war will end is pure speculation, but capital markets are expected to build a certain immunity to the headline risks in the coming weeks. The medium- to long-term consequences, on the other hand, could be significant. It is possible that we are at the beginning of a new bloc formation or a new Cold War. This would put a significant damper on globalization and further fuel higher structural inflation. 

The major US equity indices closed mixed on Tuesday, with the Dow erasing 0.5%, the S&P 500 ending 0.4% lower and the Nasdaq making a shy rebound of 0.2%, as investors continued to assess the outlook for inflation and economic growth while refraining from opening new positions ahead of the Fed decision later today. In Europe, major bourses ended sharply lower, extending losses for a sixth straight session, pressured by concerns that the central banks’ aggressive rate hikes would tip the economy into recession. 


  • Shares in China led gains in mixed Asian trading on Wednesday following the release of better-than-expected Chinese economic data. 
  • European futures gained this morning in line with US contracts. 
  • Oil prices were muted compared to the day before, after falling by over 1% on Tuesday, amid demand concerns as investors brace for an aggressive move from the Federal Reserve to combat surging inflation. Meanwhile, OPEC stuck to its forecast that world oil demand will exceed pre-pandemic levels in 2022, but see demand growth slowing next year. 
  • Industrial production in China unexpectedly expanded in May while retail sales fell less than expected and fixed asset investment grew faster than estimated during the first five months of the year. 
  • Producer prices in the US increased 0.8% mom in May, following a 0.4% in April and matching forecasts. Compared to the previous year, prices paid to US producers rose 10.8%, slowing further from a 21-year high of 11.5% hit in March.  
  • The 10-year US Treasury note yield skyrocketed to above 3.45% for the first time since April 2011 as investors have dramatically increased their bets that the Federal Reserve will raise interest rates by 75 basis points on Wednesday. Meanwhile, the policy-sensitive two-year US Treasury yield climbed to its highest level since 2007. 
  • FedEx increased its quarterly dividend by 53% to $1.15 per share and reached a deal with shareholder D.E. Shaw to add two independent directors to its board. Its shares rallied by 14% in yesterday’s session.