You're now leaving O-IM

O-IM’s website and/or mobile terms, privacy and security policies don’t apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. O-IM isn’t responsible for (and doesn’t provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the O-IM name.

Cancel Proceed

Coming soon ...


Weekly Market Wrap 26/05/2023

UK CPI data once again surprises to the upside, leaving the Bank of England with a difficult decision to make. The US debt ceiling debacle may be reaching its conclusion, whilst central bank officials give further direction as to how US and European interest rates could move.

UK Market 

The UK market ended the week lower. UK CPI was released this week, with both headline and core inflation surprising to the upside. UK CPI did finally fall below double digits, dropping from 10.1% in March to a 8.7% reading for April. However, the 8.7% figure was significantly higher than the 8.2% economist forecast, whilst core CPI rose to 6.8% when a flat figure at 6.2% had been forecast. The headline fall was driven by lower fuel and energy prices, whilst persistent increases in core goods and services as well as food prices kept core inflation at elevated levels. The latest reading has reaffirmed investor view that the Bank of England will continue to raise rates, with a 0.25% increase forecast at the June meeting, which would take the base rate to 4.75%. The IMF this week released an updated outlook for the UK economy, stating that the UK is now expected to avoid a recession in 2023 and is estimating to grow 0.4% over the year. The IMF did however warn that inflation remains too high and recommended that interest rates remain at elevated levels in order to bring inflation lower.

US Markets

The S&P 500 is set to end the week down 0.97% at 4,151 and the NASDAQ is 0.98% higher at 13,938. President Joe Biden and Republican Kevin McCarthy are said to be close to agreeing a deal that would raise the US government’s debt ceiling for two years, which could end market concern over a potential default by the US. A Republican representative has said that a deal could be agreed as soon as Friday afternoon. In the latest minutes released from the US Federal Reserve, stance from policymakers appeared to shift slightly, with officials feeling that the need for further rate increases “had become less certain”. The minutes also suggested that further hikes may not be required if the previous actions of the Fed have the intended impact on the economy. Markets are pricing in an outside chance of a further 0.25% hike in June, with broad expectations leaning towards a pause of tightening.

European Markets

The Euro Stoxx 50 is currently down 2.52% at 4,284, the DAX is 2.83% lower at 15,813, whilst the CAC 40 has fallen 3.29% to 7,245. Klaas Knot, President of the Dutch Central Bank said that the European Central Bank needs to raise interest rates at least another two times. Knot also claimed that market expectations of rate cuts in early 2024 were “overly optimistic”.

Fixed Income

Yields on 10-Year US government bonds jumped this week to 3.82%, as investor concerns around the debt ceiling persisted. UK government bonds jumped by a more significant 0.35% following the upside surprise to inflation.


Brent Crude is set to end the week up 1.26%, with a gain on Friday due to optimism about a resolution to the debt ceiling.


The Week Ahead 

Monday – UK Bank Holiday

Tuesday – European Consumer Confidence

Wednesday – Germany CPI

Thursday – EU CPI, US Initial Jobless Claims

Friday – US Nonfarm Payrolls & Unemployment

*Price changes as of last week’s close unless stated otherwise.