Global stock markets collectively rebounded, driven by buying in the artificial intelligence sector. The European STOXX 600 Index and U.S. stock futures rose in tandem, while a slight easing in Middle East geopolitical tensions led Brent crude oil futures to fall 1.8% to around $92 per barrel.
The bond market's repricing of the Federal Reserve's tightening monetary policy continues, with the U.S. 10-year Treasury yield remaining above 4.5%. The swap market shows that the expectation of a 25 basis point rate hike by the Federal Reserve in December is almost fully priced in.
This week, global markets face a series of high-risk events, with the U.S. Consumer Price Index (CPI) data to be released on Wednesday and the European Central Bank's interest rate decision on Thursday. The debut of the new Federal Reserve Chairman Kevin Warsh is also approaching.
AI Trading Frenzy Revives, Tech Stocks Lead Gains
On Tuesday, global market buying funds flowed back into the technology sector. The European STOXX 600 Index rose 0.5%, with semiconductor heavyweights ASML (ASML:US) and Infineon (IFX:DE) leading the gains. U.S. stock futures also rose, with S&P 500 futures up 0.4% and Nasdaq 100 futures up 0.7%. Nvidia (NVDA:US) and Goldman Sachs (GS:US) rose in pre-market trading. The secret filing for an IPO by OpenAI and the oversubscription of SpaceX shares provided long-term support for tech stocks. However, analysts pointed out that SpaceX currently has a forward P/E ratio of 56 times, and future earnings must be strong enough to maintain this valuation.
Bond Market Repricing Tightening Policy, Yields Remain High
Although U.S. Treasuries saw a slight rebound during the day, yields remained high overall. The U.S. 10-year Treasury yield stayed above 4.5%. According to LSEG data, the number of days this year with the U.S. 30-year Treasury yield above 5% has reached a new high since 2007. Bank of America (BAC:US) noted that inflation is above target in 46 out of 68 global central banks, explaining the bond market's repricing of tightening policies. In the foreign exchange market, the dollar fell slightly for two consecutive days but has risen about 2% over the past four weeks. Last week's strong non-farm payroll data reinforced tightening expectations, with the swap market showing about a 60% chance of a Federal Reserve rate hike as early as October.
Diverging Central Bank Policies and Increased Forex Intervention Risks
Global major central banks' policy paths are diverging. The European Central Bank (ECB) is set to hold an interest rate decision on Thursday, with the market fully pricing in a 25 basis point hike to 2.25%. Meanwhile, Indonesia's central bank (BI) urgently announced a benchmark rate hike to stabilize its currency. In the Asian forex market, the USD/JPY exchange rate remains near 160.2, staying above the intervention warning line. Japan's Finance Minister, Satsuki Katayama, stated on Tuesday that officials are always prepared to take decisive action. If U.S. core inflation data rebounds more than expected, the U.S.-Japan interest rate differential may widen further, potentially forcing Japanese officials to buy yen again for substantial intervention.
Commodities and Crypto Assets Under Pressure at High Levels
The fading geopolitical premium has led to a pullback in commodity prices. Israel and Iran reached a temporary agreement to halt mutual attacks, causing Brent crude oil futures to fall 1.8% to around $92 per barrel. In precious metals, New York gold futures fell 0.3% to $4,351.80 per ounce, down about 18% from pre-conflict highs, continuing to be pressured by the high-interest-rate environment. In the digital asset sector, cryptocurrencies struggled to rebound after a significant decline last week, with Bitcoin slightly down 0.2% to around $63,366, having previously hit a 20-month low of $59,125. In the short term, without sustained capital inflows, the crypto market may continue to experience volatility.
Key Inflation Data and Fed Debut Approaching
In the coming weeks, global financial markets will face a series of high-risk events. The U.S. May Consumer Price Index (CPI) to be released on Wednesday is a key catalyst, with the market expecting rising energy costs to continue pushing up overall inflation. Of greater concern to global investors is the Federal Reserve's (Fed) interest rate decision on June 17, which will also mark the debut of the new Fed Chairman Kevin Warsh. Institutional strategists warn that if inflation risks remain high, the Fed may adopt a more hawkish policy stance, potentially challenging the current valuation levels of risk assets.
