ECB Rate Hike and US Inflation Data Send Markets into High Alert
Markets are bracing for the European Central Bank's second rate hike of the year and key US inflation data on Thursday. The ECB is expected to raise interest rates, with traders pricing in almost two 25-basis-point hikes by December.
The region's stocks and the euro and sterling are holding their ground as traders wait for the ECB's decision. However, bond markets remain volatile due to escalating Middle East attacks causing oil prices to surge above $100 a barrel.
Columbia Threadneedle's Global Head of Absolute Return Fixed Income, Keith Patton, noted that the key will be President Christine Lagarde's response to questions about further increases ahead. He also questioned whether the ECB has modeled the potential detriment to growth from additional rate hikes.