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Morning Report – Friday 11th June

FTSE to open at 7,086 (-2 pts)

Yesterday’s reaction to US inflation data marked a clear shift in sentiment towards the belief that inflation will be transitory…

The US Consumer Price Index hit 5% – it’s highest level since the financial crisis, but stocks rallied and bond yields broke to their lowest levels since March. This bullish reaction indicates that the market no longer as fearful of inflation as it once was.

While in Europe, the ECB kept rates unchanged and avoided any talk of tapering its bond buying program, instead ECB President Christine Lagarde said inflation would remain below target.

The bullish sentiment has fed through into Asian trading and the Hang Seng is up 0.49%, and our Risk Barometer looks ‘risk on’ despite European futures being relatively flat.

?Risk Barometer Explained

The FTSE failed to break resistance yesterday, despite the S&P flirting with all-time highs and the ECB remaining accommodative.

FTSE futures prices are on course to post their tightest weekly range in over 11 weeks – indicative the current levels of compression in the market.

FTSE 100 Daily Rolling Futures – Key Levels