Danske Bank has released a comprehensive publication aimed at providing insights into current market movements and economic trends. On the forefront, the 10-year US Treasury yield has experienced a slight uptick, nearing the significant 4.80% mark. This adjustment in yields comes amid anticipation of crucial US Producer Price Index (PPI) data, which could dictate the next phase for the XAU/USD pair, currently swayed by hawkish Federal Reserve expectations favoring USD bulls.
Danske Bank projects the European Central Bank's (ECB) deposit rate will reach 1.5% by September, while the Federal Reserve's target for the Fed Funds rate is set between 3% and 3.25% by March 2026. Despite a recent slowdown in bond yields due to a sparse macroeconomic data calendar, the outlook for the 10-year US Treasury yield remains at 4.20%. Meanwhile, the target for the 10-year German Bund has been revised upward from 2.00% to 2.25%.
Brent crude oil prices have seen a notable rise, closing above $80 per barrel for the first time since October. This surge is partly attributed to the United States' announcement of aggressive sanctions on Russian oil, further intensifying the upward trajectory of energy prices.
Asian markets reflected a positive trend this morning, with most indexes climbing, except Japan. In contrast, US stock markets showed mixed results yesterday: the Dow Jones Industrial Average rose by 0.9%, the S&P 500 increased by 0.2%, and the Russell 2000 went up by 0.2%, while the Nasdaq experienced a decline of 0.4%.
Long-end European Government Bond (EGB) yields have also seen an increase, with peripheral regions such as Italy underperforming. The recent influx of US macroeconomic data has been favorable from an equity standpoint, contributing to these fluctuations.
In currency markets, GBP/USD holds steady above 1.2200 early Tuesday, following a dip to a 15-month low of 1.2100 on Monday. Investors are keenly watching for statements from Kansas City Fed's Esther George and New York Fed's John Williams later this evening, which may provide further guidance on monetary policy directions.