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LGT Navigator: ECB to lay the foundation for interest rate turnaround

June 9, 2022

This afternoon, the European Central Bank (ECB) will most likely pave the way for a first interest rate move in July and announce the end of the negative interest rate era. A strong signal from the ECB seems justified in view of the persistently high inflationary pressure. The statements by central bank president Lagarde at the press conference at 2:30pm (CET) are therefore expected with great excitement.

ECB to lay the foundation for interest rate turnaround

The ECB is expected to set the course for the interest rate turnaround today and prepare the capital markets for the first rate hike in around eleven years. Numerous votes from the central bank's top committee have already indicated several times that it is appropriate to raise interest rates in view of the record inflation in the euro area, because high inflation is increasingly weighing on the economy and especially on consumption. But even the ECB is not “omnipotent” and cannot do much, for example, about the sharp rise in energy prices.

Stock market sentiment remains fragile

Meanwhile, sentiment on the stock markets remains fragile, while yields are rising on the bond markets. The benchmark ten-year US government bond yield climbed back above the three percent mark to 3.05%. On Wall Street, the Dow Jones Industrial went out with a daily loss of -0.81% at 32'910.90 points. The S&P 500 lost a good one percent in midweek and fell back to 4'115.77 points. On the Nasdaq 100, the indices fell by about -0.75%. In addition to the interest rate decision of the ECB, tomorrow will already be the latest data on the inflation trend in the US and next week the upcoming interest rate decision of the Fed.

In Asia, the trend on the stock markets remains mixed and characterized by inflation and economic concerns. In Tokyo, the 225-stock Nikkei index trades around +0.4% higher, while in Hong Kong and in Shanghai, the indices record losses of around -0.3% to -0.5%. 

Euro economy started the new year better than anticipated

According to revised data, the eurozone's gross domestic product grew more strongly in the first quarter than previously expected. Compared to the previous quarter, the GDP of the 19-euro countries expanded by +0.6%. A previous estimate by Eurostat had still assumed +0.3%. Ireland's economy grew most strongly at +10.8%. By contrast, the “big two” Germany and France recorded only moderate growth of +0.2% in Q1 or, in the case of France, even a decline in economic output of -0.2%. 

Economic Indicators June 9

MEZ Country Indicator Last period
13:45 EZ ECB Monetary Policy Announcement
14:30 EZ ECB President Lagarde Press Conference
14:30 US Initial Jobless Claims (weekly) 200,000


Earnings Calender June 9

Country Company Period
GE Beiersdorf Capital Markets Day
US AMD Investor Day


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