A look at the day ahead in European and global markets from Tom Westbrook
British inflation figures this morning could take traders' minds off England's cricket defeat, should they show the slowdown that economists are hoping for.
Reuters' poll shows expectations that headline month-on-month CPI eases to 0.5% in May from 1.2% a month earlier, and that the pace of core price rises slows down as well.
That could give succour to market bets that the Bank of England is more likely to hike by 25 basis points than by 50 bps at Thursday's meeting. Pre-CPI pricing implies a 75% chance of the former and a 25% chance of the latter.
But a bit the questions Australia's comeback at Edgbaston has asked about England's aggressive new cricketing style, an upside inflation surprise can upset the policy outlook.
Gilt yields paused a recent selloff on Tuesday as traders wait on the data and policymakers' response, while sterling seems to be thinking better of a breakout beyond one-year highs, as the economic outlook is not pretty. [GBP/]
In Asia, China's slowdown and the lack of big-bang stimulus had markets on the slide. Hong Kong's Hang Seng gapped some 2% lower and is again eyeing 2023 lows, while the yuan is cheaper than when China's borders were still shut in December.
U.S. President Joe Biden referred to his Chinese counterpart as a dictator in remarks at a California fundraiser late on Tuesday, perhaps a signal that top diplomat Antony Blinken's visit to China is not really much of a breakthrough after all.
Later on Wednesday, Federal Reserve Chair Jerome Powell appears before the U.S. Congress where he will be quizzed about policymakers' projections for two more interest rate hikes this year.
Key developments that could influence markets on Wednesday:
British inflation data
Fed Chair Jerome Powell speaks