BoE’s Carney set up (at least) one rate cut - ANZ

The ANZ Research Team notes that Thursday's BoE’s Carney speech set up at least one rate cut, with the market now pricing in 16bp for a cut in July and a full cut by August.

Marke Wrap

Unnamed sources also reported that the ECB is set to weigh looser rules for QE. The EUR fell from 1.1100 to 1.1025, but retraced some of the move after the ECB would not comment.

AUD and NZD remained stable during the volatility, with AUD at 0.7450 and NZD still above 0.71. S&P downgraded the EU to AA/Stable from AA+/Negative, with little initial market reaction. Equities continue to surge and volatility declined. The FTSE 100 closed up 2.3%, with the prospect of BoE QE coming into sight.

Euro Stoxx was up 1.1%; DAX up 0.7%; and CAC 40 up 1.0%. The S&P 500 was up 1.4%, with VIX down 6.1%. The VIX is now lower than pre-Brexit levels. US Treasuries bull steepened, with the front end down 4-5bps and the long end down 24bps.

In the UK, 2 year yields fell 11bps, with the 10 year down 8bps. Commodities were mixed, with oil prices off by around 2%, while gold was up marginally to $1322/oz