Headlines:
- ECB welcomes back an old friend
- Italian stocks crushed as risk jitters reverberate in Europe
- Oil resilience continues to shine through
- ECB's Holzmann: September rate hike will be at least 25 bps
- ECB's Kazaks: Gradual rate hikes does not mean slow
- ECB's Villeroy: The "neutral rate" is somewhere between 1% and 2%
- Japan financial authorities express concern about rapid yen weakening
- Japan top currency diplomat says authorities will take appropriate action if needed
Markets:
- AUD leads, GBP lags on the day
- European equities lower; S&P 500 futures flat
- US 10-year yields up 0.5 bps to 3.047%
- Gold down 0.7% to $1,834.23
- WTI crude up 0.6% to $122.23
- Bitcoin down 0.6% to $29,995
The mood in Europe is looking rather gloomy as regional markets focused on the lack of urgency by the ECB in addressing fragmentation risks. Italian bonds sold off heavily with 2-year BTP yields surging by 20 bps to 1.58%:
The selloff in periphery bonds kept European equities pinned down with Italy's FTSE MIB leading losses, down by over 3% on the day.
That all eventually spilled over to the euro, with EUR/USD falling from 1.0610 to 1.0570 and is keeping at the lows for the day now. GBP/USD also trickled lower to fall to its lowest levels on the week, just below 1.2430 from around 1.2480 earlier in the day.
The dollar is keeping more mixed, awaiting the US inflation data release. USD/JPY was jawboned lower by Japanese officials in a fall from 133.85 to 133.36 before recovering to 133.90 levels now.
Meanwhile, the aussie and kiwi are keeping firmer with both currencies up 0.3% against the dollar to 0.7120 nd 0.6415 respectively.
Elsewhere, oil continues to show much resilience after a fall in Asia trading to near $120 before picking up to hit highs for the day in European trading at $122.60.
