U.S. june CPI print well above expectations

Stock markets in the U.S. we would say had a session of mixed moves as much focus was on the June CPI print which came well above expectations once again (Core +0.9% MoM vs bbg surv. +0.4%). We witnessed yields decline as investors mulled a surprise U.S. inflation jump that stirred the debate on how long Federal Reserve policy can stay ultra-loose. Investors are also weighing the prospects for an increased U.S. government spending in the future as the Senate Democrats on the Budget Committee have agreed to set a top line of $3.5 trillion for a bill to carry most of President Joe Biden’s economic agenda into law without Republican support.

The markets in Asia were mostly lower following a decline on Wall Street as U.S. inflation concerns kicked in. The likes of Japan Nikkei edged down 0.3% in early trading; Hong Kong’s Hang Seng dropped 0.6% while the Shanghai Composite dipped 0.8%. Some parts in Asia are seeing an uptick in COVID-19 infections, the likes of Sydney extended its lockdown for a further two weeks; Tokyo has already began reporting hundreds of new cases daily. Some experts say that could jump to thousands in coming weeks, as the “bubble” conditions for the Olympians have been compromised, with staff and athletes testing positive for the virus. The Games open on July 23.

Brent and WTI time-spreads followed different paths on Tuesday, with Brent mostly gaining while WTI dipped, even as outright prices for both benchmarks surged. Oil was steady in early trading on Wednesday, with Brent around $76.40 a barrel. The benchmark rose almost 2% on Tuesday after the American Petroleum Institute said U.S. crude inventories slid by more than 4 million barrels last week, signaling a rapidly tightening market as major economies ease pandemic restrictions.

The Republic of Benin began investor calls yesterday in preparation for a new Eurobond issuance and has mandated the likes of Citi, NATIXIS and Societe Generale as Joint Sustainability Structuring Advisers and Joint Bookrunners to organize these calls. A 12.5yr or 15yr weighted average life is rumored to be offered while the net proceeds of the offering are intended to be used to finance and/or refinance eligible SDG expenditures.