The big story in the Asia day was the Reserve Bank of New Zealand again taking investors by surprise, this time by signalling an end to the tightening cycle after hiking by a quarter point. Markets had been betting on another 25 basis points before the peak, and the kiwi dollar nose-dived.
ECB President Christine Lagarde makes the opening remarks at a celebration to mark the central bank’s 25th anniversary. She recently told her colleagues to “buckle up” in the battle on inflation, and that sentiment was backed on Tuesday by both the Bundesbank president and the head of Deutsche Bank.
In the United States, investors will be parsing the minutes of this month’s meeting to see how many officials supported the decision to soften guidance on future hikes, as they try and get a read on the odds of a hike in June.
Of course, hanging over everything continues to be the debt ceiling impasse. As long as there is no deal, the risk of a disastrous default cannot be discounted, with only about a week to go before June 1, the date that the U.S. government has warned it may be unable to pay its bills.
European stocks are likely poised for further declines, after Asia got knocked back again, with more than 1% drops for benchmarks in Tokyo and Hong Kong.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/AAS6XXOZBFJ37EOQD5HWGIJYZU.jpg "UK awaits CPI; US debt standoff casts long shadow 40")
