Further rise in US inflation

The euro is trading around parity with the dollar this morning while sterling continues to hover just above $1.18 against the US currency, which in turns leaves the euro-pound exchange rate still trading in and around 84.5p

Government bond yields ended slightly lower yesterday in the case of US 10-year yields (at around 2.95%) and slightly higher in the case of equivalent German yields (at just over 1.15%), while equity markets in the US lost ground after a higher than expected inflation reading for June

The annual rate of CPI inflation in the US accelerated to 9.1% last month from 8.6% in May – the consensus had expected a reading of 8.8% – though the core (or underlying) rate dipped to 5.9% from 6.0% and is now down from what looks to have been a peak of 6.5% in March this year

Canada’s central bank (Bank of Canada) raised interest rates by a full percentage point (100bps) to 2.5% at its latest monetary policy meeting, noting that inflation is ‘higher and more persistent’ than it had expected, and said that rates ‘will need to rise further’

Data due today includes jobless claims and producer prices in the US and CPI inflation in Ireland, while the European Commission publishes updated economic forecasts