Fresh Information – Currency Thoughts
Fresh Information
June 11, 2026
World financial markets were hit by several new developments this Thursday. On balance, equities are up, and 10-year sovereign debt yields are down. But these moves were trimmed after the announced rise in U.S. PPI inflation exceeded expectations. The dollar has not been affected much at all.
- The latest U.S. military operation against Iran has been ended, and apparently energy facilities were not involved.
- President Trump continues to complain that Iran’s government negotiators are dragging their feet.
- Shipping traffic in the Strait of Hormuz reportedly has picked up a bit.
- Central banks in Serbia and Turkey as expected left their interest rates unchanged after scheduled reviews.
- The Governing Council of the European Central Bank — also as expected — made its first interest rate hike since September 2023. In doing so, officials revised projected inflation higher for 2026 and 2027 and cut projected economic growth lower for each of those years.
Just prior to the opening bell on Wall Street, major U.S. stock indices in futures trading showed gains between 0.4% and 0.8%. The 10-year Treasury yield’s net decline on the day had been trimmed in half to two basis points from four bps 90 minutes earlier. The dollar was unchanged against the yen but 0.1% firmer relative to the euro. After ranging as low as $88.63 overnight, WTI oil’s price was 0.5% higher on balance at $90.43. Gold and silver prices were up by 0.9% and 1.7% on the day. Although up 2.1%, Bitcoin hadn’t moved any further over the last hour and a half.
Most Asian stock markets closed slightly lower today, although Japan’s Nikkei-225 ticked 0.1% higher. European share prices, in contrast, were flashing green but not to the same extent as earlier in the day. The Paris CAC and British FTSE, for instance, are up by 0.8% and 0.6%, but the German DAX has flipped to a 0.1% net dip.
U.S. producer price inflation climbed 0.8 percentage points to a 42-month high of 6.5% in July, which exceeded analyst forecasts and resulted from the second consecutive monthly advance of 1.1%. This overall PPI advance was associated with a 43-month high of 5.1% when excluding food, energy and trade items. Meanwhile, new jobless insurance claims last week surpassed expectations by 10k and, at 229k, was their most elevated in 14 weeks. Continuing claims as of the final week in May were at a 7-week high.
The European Central Bank’s trio of key rates were lifted by an as-expected 25 basis points to a 2.25% deposit rate, a 2.40% refinancing rate, and 2.65% on the marginal lending facility rate. A statement announcing these changes explains
The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area. Interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission.
The quarterly revision of macroeconomic projections at the ECB revised CPI inflation in 2026 and 2027 upward to 3.6% and 2.3%, both above the 2.0% target, and penciled in a 2.2% core CPI forecast as late as 2028. GDP is now expected to expand more softly, just 0.8% this year and then 1.2% in 2023. President Lagarde’s post-decision press conference predicts continuing softening of the labor market and warns of the risk of energy price pass-through into the service sector.
At the Central Bank of Turkey and National Bank of Serbia, policy interest rates were held steady at 37.0% and 5.75%. In the linked statements explaining these decisions, monetary policies are characterized as restrictive already. Turkey’s rate had been as elevated as 50% from March 2023 until December 2024 but has not be reduced since this past January and exceeds the latest on-year inflation figure of 32.6%. Turkish monetary authorities believe their “tight monetary policy stance will strengthen the disinflation process through demand, exchange rate, and expectation channels,” and promise to tighten the policy stance in the future “in case of a significant and persistent deterioration in the inflation outlook.”
Serbia’s 5.75% central bank interest rate is well above CPI inflation of 3.3% and the newly raise rate level at the European Central Bank. NBS officials concede that “The final effects of the energy shock on global inflation, as well as inflation and economic activity at home, are difficult to estimate as they depend on the duration and intensity of the conflict…. If assessed that the increase in global oil prices is having more pronounced second-round effects on other prices through inflation expectations, the NBS will respond using all available instruments.”
Today’s non-U.S. data-release highlights include the Japanese Ministry of Finance’s quarterly business outlook survey, which showed a deterioration this quarter, affecting both large and small firms in manufacturing and non-manufacturing but imply a quick resolution of the Middle East war with positive sentiment getting restored in the second half of this year.
Measures of consumer price inflation picked up last month to 0.8% in Sweden from -0.1% in April and stayed in a 3.6-3.7% for a third straight month in Ireland versus 2.7% in the first two months of this year.
South Africa’s current account surplus of 190.7 billion rand in 1Q 2026 was its widest in 22 quarters. Business confidence there recovered half an index point to 124.1 last month from April’s 7-month low, and manufacturing activity sank 2.7% on month during April.
Officials at the Central Reserve Bank of Peru also will announce their latest interest rate decision later today. The rate has been at 4.25% since a reduction last September.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Turkey, European Central Bank, National Bank of Serbia, U.S. producer prices
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