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Asian shares fall as oil lingers above $120; yen sinks

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By YURI KAGEYAMA

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The Governing Council of the European Central Bank is holding a monetary policy meeting later in the day. Comments from Christine Lagarde, head of the European Central Bank, have markets anticipating an interest rate hike in July, with possibly more to follow . . . “To that end, ECB will not want to throw the baby out with the bath water; calibrating monetary tightening in a more sustained, even if slow, pace,” [Venkateswaran Lavanya ] said in a commentary.

So, what happened? Well, the ECB decided to end net asset purchases under its APP as of July 1st. They also decided to raise the key ECB interest rates by 25 basis points in July, and also expects to raise borrowing rates again in September. Significance? It will be the first increase in borrowing costs in more than a decade.

The central bank also looked into the crystal ball and revised projected inflation in the Zone to 6.8% in 2022, 3.5% in 2023 and 2.1% in 2014. Growth outlook was also revised, to 2.8% this year and 2.1% next year.

U.S. crude oil prices rose 2.3% on Wednesday and are up 63% for the year, while wheat prices are up 39% in 2022.

Well, as of a few minutes ago, WTI crude futures are holding at 122.00. Up 0.08% for the day, and 74.38% YoY. Wheat? It is currently selling at 1053.00 Usd/Bu. Down for the day 2%, but up 54.59% YoY.

A couple of other commodity headlines? Corn futures were trading around the $7.6 per bushel level, highest reached since hitting an almost a ten year high of $8.1 last April. Soybean futures s are inching away from heights reached days ago when in hit $17.5 per bushel in June, the highest in 3 months and not far from all time record from 2012 of $18.

Tomorrow’s headline? Initial jobless claims in the U.S. increased this week to 229 thousand the week ending June 4th, up from 202 thousand the previous week, and up 25 thousand above expectations. Looking for trends, here, since traditionally these do not go up during summer months.

Have a great day.

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One more note for the day.

The annual inflation in Ireland jumped to 7.8% in May, the highest since September 1984, up from 7% in April. The main contributors came from housing, utilities and transportation. Consumer prices were up by 0.9% MoM, up from the previous month.

Contrast Ireland to Greece, where the annual inflation rate in Greece rose to 11.3% in May, fom 10.2% las month, and the highest since September of 1994. And Brazil, where the annual inflation rate declined to 11.73% in May, from 12.13% in March, but still the 9th straight month of double-digit inflation. And Mexico, where the annual inflation rate slowed to 7.65% in May, from 7.68 percent, previously, but in the neighborhood to a 21 year high.

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