The Week Ahead (8 – 12 Jun): Euro rates, UK GDP & HPI, Paypoint, Wizz Air, Adobe

This week has been characterised by a slight risk-off bias in equities, driven primarily by renewed Middle East tensions and the associated oil price volatility feeding into inflation concerns. Overall, none of the moves in the indices or major commodities is anything to write home about.

As Graham has regularly noted in the DSMR, much of the commentary has focused on the upcoming wave of Mega-IPOs, such as SpaceX, and whether this is a sign of further US market advantage or late-stage bubble behaviour.

Here's what we can look forward to next week:

Economic Calendar

ECB Interest Rate Decision

The next ECB decision is on Thursday, and markets are overwhelmingly expecting a 25bp rate increase, taking the deposit rate from 2.00% to 2.25%. The ECB held rates unchanged at its April meeting but explicitly highlighted rising inflation risks from higher energy prices and geopolitical disruptions. Eurozone inflation rising to 3.2% in May increased those concerns, with core inflation also moving higher, suggesting price pressures are spreading beyond energy.

[All charts in this section: Trading Economics]

With the rise considered in the bag, the key question for markets is not this decision but what Christine Lagarde says about July and September. Hawkish commentary would likely lead to higher bond yields and a stronger euro. Markets would begin pricing a terminal deposit rate nearer 2.50%-2.75%. Banks and insurers could gain on expectations of higher NIM and investment yields.

UK…

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