Inflation in the UK is hot, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on May 21

Global Market Review

1. European and American market conditions

The three major U.S. stock index futures fell. Dow futures fell 0.75%, S&P 500 futures fell 0.50%, and Nasdaq futures fell 0.51%. The German DAX index fell 0.10%, the UK FTSE 100 index fell 0.01%, the French CAC40 index fell 0.54%, and the European Stoke 50 index fell 0.37%.

2. Market news interpretation

The inflation in the UK is hot, but it doesn’t seem that bad?

⑴ UK inflation rose to its highest level since January 2024, but some analysts believe the reality is not as bad as it seems. ⑵ The market's expectations for the Bank of England's interest rate cut in June have eouu.cnpletely disappeared. Traders expect the probability of keeping interest rates unchanged is 91%, while the market generally expected a 25 basis point cut the day before. ⑶Bruna Skarica, chief economist at Morgan Stanley, concluded: "It's not good, it's not bad." ⑷ Although inflation exceeded expectations, mainly driven by vehicle purchase tax and package holidays, eouu.cnmodity prices performed weaker than expected, and core service inflation fell. ⑸Skarica said: "This is actually a better data than we saw at first sight, and we expect the next rate cut will be in August." ⑹BNP Paribas economist Dani Stoilova attributed the rise in inflation to "a series of price pressures", but she pointed out that since some of the price increases are one-off, the overall inflation rate is not as worrying as it seems. ⑺Stoilova stressed that the risks of inflation expectations deanchoring and second-order effects may keep the Bank of England cautious. ⑻SaNeil Wilson, UK investment strategist at xoMarkets, pointed out that household bills appear to be the main factor driving the CPI upward. ⑼The impact of household bills on annual inflation rate changed from -0.7% to +1%, pushing inflation to 3.5% in April. ⑽Wilson believes that this "big change in the cardinality effect" will eouu.cnfort the Bank of England.

Long-term U.S. Treasury yields continue to rise. The market is waiting for the 20-year Treasury bond auction.

U.S. Treasury bonds generally decline, with Treasury bond yields rising by 2-6 basis points for different maturities. Long-term U.S. Treasury yields lead the rise, and the market is waiting for the 20-year Treasury auction to be held at 1 p.m. New York time. The 10-year U.S. Treasury yield rose by about 5 basis points to 4.53%, while the German Treasury and British Treasury yields rose by 0.5 basis points and 2.5 basis points respectively. The steepening of the yield curve has led to an expansion of the spread of 2-year 10-year bonds and 5-year 30-year bonds by 2-3 basis points.

The Speaker of the U.S. House of Representatives said it had reached an agreement on the $40,000 state and local tax deduction cap

According to foreign media reports, U.S. House Speaker Johnson said that Republicans have reached an agreement to raise state and local tax (SALT) relief to $40,000, which means solving one of the last few issues hindering Trump's economic bill. "This is the agreement we reached, and I think the SALT caucus, as they claim, isn't everything they want, but I think they know it's a huge improvement for their constituents, which gives them a lot to go home and talk about," Johnson said Wednesday in an answer to a question about increasing the deduction cap from $10,000 to $40,000 over a 10-year period. According to a person familiar with the matter, the $40,000 SALT limit will be phased out for people who earn more than $500,000 a year.

A fire at a thermal power plant in Kiev Prefecture, Ukraine has killed 2 people

On May 21 local time, the Ukrainian National Emergency Service Department reported that the fire at the Whitechapel Thermal Power Plant in Kiev Prefecture occurred in a cooling tower that had stopped operating. According to preliminary statistics, the incident has killed 2 people.

The German Economic Expert eouu.cnmittee predicts that Germany's economy will grow zero in 2025

On May 21 local time, the German Economic Expert eouu.cnmittee released the 2025 spring forecast report, which is expected that the German economy will stagnate in 2025 and will grow by 1.0% in 2026. At a press conference held on the same day, Monica Schnizer, chairman of the German Economic Expert eouu.cnmittee, said that the German economy will be mainly affected by two factors in the future, namely the US tariff policy and the new government's fiscal expenditure package. In addition, experts expect German consumer price inflation to average 2.1% in 2025 and will drop slightly to 2.0% in 2026.

Singapore announces the list of new cabinet Wong Xuncai continues to serve as Prime Minister and Finance Minister

On the 21st, Singapore Prime Minister Wong Xuncai announced the new cabinetList. In the new cabinet, Wong Xuncai will continue to serve as Singapore’s Prime Minister and Finance Minister, Lee Hsien Loong continues to serve as State Counselor, Yan Jinyong serves as Deputy Prime Minister and Trade and Industry Minister, Singapore’s Education Minister Chen Zhensheng will replace the retired Wong Yonghong as Minister of National Defense, Lee Chi-sung will serve as Education Minister, Tang Zhenhui will serve as Minister of Justice and the Second Minister of the Interior, Transport Minister Xu Fangda will be transferred to the position of Minister of National Development, Chen Shilong serves as Minister of Human Resources, and is in charge of energy and technology in the Ministry of Trade and Industry. In addition, Huang Xuncai also appointed nine new government officials this time, the most in recent years.

The Indonesian Central Bank resumes monetary easing, cutting interest rates by 25 basis points to support the economy

⑴ On May 21, 2025, the Indonesian Central Bank (BI) lowered the benchmark 7-day reverse repurchase rate (BIRate) by 25 basis points to 5.50%, in line with market expectations and aims to support the economic slowdown. ⑵ Indonesian Central Bank also lowered interest rates for the other two policies by 25 basis points. ⑶ Central Bank Governor Perry Warjiyo said the interest rate cut decision is consistent with low and controllable inflation expectations in 2025 and 2026, aiming to maintain the stability of the Indonesian rupiah exchange rate and support economic growth. ⑷ Warjiyo stressed that economic growth needs to be strengthened to alleviate the impact of U.S. tariffs, while policies need to support household demand and exports. ⑸ Indonesia's GDP grew by 4.87% year-on-year in the first quarter of 2025, the slowest growth rate in more than three years. The central bank lowered its GDP growth forecast for 2025 from 4.7% to 5.5% to 4.6% to 5.4%. ⑹ The Indonesian government sets a 5.2% growth target for 2025, with President Prabowo Subianto pledged to increase growth to 8% by the end of his term in 2029. ⑺Warjiyo calls on banks to lower loan interest rates and increase credit supply to support economic growth. ⑻The central bank also announced that from June 1, banks can increase the proportion of foreign capital in their capital from 30% to 35%. ⑼Indonesia's loan growth fell to 8.88% from 9.16% last month, and the central bank lowered its 2025 loan growth target from 11% to 13% to 8% to 11%. ⑽The Indonesian central bank cut interest rates in September 2024 and January 2025, but the Indonesian rupiah fell to a record low in April and has since rebounded more than 3%. ⑾Warjiyo said the pressure on the Indonesian rupiah has been alleviated by improvements in global markets and central bank intervention, but the central bank is ready to take action when necessary, including intervening in offshore markets. ⑿Analysts believe that given the low inflation outlook and the performance of the Indonesian rupiah, the Indonesian central bank may further cut interest rates in the eouu.cning months. SMBC economist Ryota Abe expects Indonesia's central bank to cut interest rates twice to 5.00% in 2025 to support the economy.

The Bank of Japan's rate hike window may narrow, former member said this

⑴ On May 21, 2025, the Dow Jones News Agency reported that if the Bank of Japan wants to raise interest rates further, it may need to act within the year, otherwise the window of opportunity will be closed. Former Central Bank member Shirai Yuri was in the Wall Street JournalThis is said during the Tokyo event. ⑵ Japan's domestic demand is weak and it is difficult to support higher borrowing costs. If inflation falls below the Bank of Japan's 2% target, the reason for interest rate hikes will be more difficult to establish. ⑶The results of trade negotiations between Japan and the United States will be an important factor in the Bank of Japan's next decision-making. ⑷ Shirai Yuri pointed out that the Bank of Japan hopes to normalize policies when possible and correct the excessive depreciation of the yen, but the overall Japanese economy is weak and domestic demand is fragile, which is inconsistent with the direction of interest rate hikes. ⑸ Although Japan's wage growth is good, households' willingness to spend under continuous inflation is sluggish, and private consumption has stagnated from January to March. ⑹The Bank of Japan expects consumer inflation to be below the 2% target for the next fiscal year and in the following year starting from April 2026, which will eouu.cnplicate the decision to raise further interest rates. ⑺Japan's economic growth faces more headwinds, with the economy shrinking in the first quarter, and exports to the United States fell for the first time in four months, highlighting the impact of high tariffs. ⑻ Before Trump’s tariff rhetors raised concerns about global economic growth, many Bank of Japan observers expected the central bank to tighten its policies at a six-year frequency. ⑼ Tariff uncertainty and trade negotiation differences have divided the Bank of Japan's future path view, and the central bank has maintained policy stability since the rate hike to 0.5% in January. ⑽ Shirai Yuri believes that if the Bank of Japan really wants to raise interest rates, it should act decisively this year, but given the weak domestic demand, it will be very difficult.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:18 Beijing time, the euro/USD rose, and is now at 1.1323, an increase of 0.35%. Before the New York Stock Exchange, the price of (Euro vs. U.S. dollar) fell in recent intraday trading, collecting the gains from previous gains and trying to unload some obvious overbought conditions on (RSI), especially in the case of negative overlapping signals there, with the main bullish trend dominating on a short-term basis and trading along a slash.

GBP/USD: As of 20:18 Beijing time, GBP/USD rose, now at 1.3408, an increase of 0.11%. Before the New York Stock Exchange, (GBPUSD) price rose on the last trading day, ready to attack the key resistance of 1.3440, bullish trends dominate on a short-term basis and traded along a slash, with dynamic support from the EMA50 continuing, and (RSI) positive signals appearing, opening the way for the upcoming rise after unloading its overbought conditions.

Spot gold: As of 20:18 Beijing time, spot gold rose, now at 3309.82, an increase of 0.62%. Before the New York Stock Exchange, the (gold) price fell in recent intraday trading, which was a natural correction move that looked like it was strong beforeA breathing truce after a bull market, this decline occurs within the power of prices trying to collect returns and rebound to higher levels, especially in the short term, moving along a small slash.

Spot silver: As of 20:18 Beijing time, spot silver rose, now at 33.093, an increase of 0.10%. Before the New York Stock Exchange, the (silver) price rose in recent intraday trading, which continued to be under positive pressure due to its trading above the EMA50, and was affected by breaking through a secondary bearish bias line on a short-term basis, strengthening the bullish scenario. On the other hand, we noticed that (RSI) showed negative signals after reaching overbought levels, which could reduce upcoming earnings.

Crude oil market: As of 20:18 Beijing time, U.S. oil rose, now at 63.000, an increase of 1.60%. Before New York, (crude oil) prices rose slightly in recent intraday trading, trying to gain positive momentum, which could help it break through the key resistance of $63.50 as bullish correction trends dominate the short-term and trade along the bias line, where its trading above the EMA50 continues to provide dynamic support.

4. Institutional View

ANZ: Economic slowdown and strengthening inflation rekindle the attractiveness of gold

⑴ ANZ research analysts pointed out: "Moody's downgrade of the credit rating of the United States reflects the real impact of Trump's tariff policy. The possibility of economic slowdown and strengthening inflation has rekindled people's interest in gold." ⑵ At the same time, the differences between Republican lawmakers on Trump's tax cuts and expenditure bills have exacerbated fiscal uncertainty, further lowered the dollar exchange rate, and supported the gold market.

Danske Bank: ECB may cut interest rates more cautiously after June

Philip, co-head of fixed income and foreign exchange research at Danske Bank? Anderson said in a report that the ECB's reason for taking more cautious measures after its expected rate cut in June has been strengthened recently, but it should be further relaxed thereafter. We still benchmark interest rate cuts in July and September. A new round of speeches by ECB officials may provide more clues to the changes in the ECB’s sentiment after the U.S. softens its trade stance.

The above content is all about "[XM Foreign Exchange Platform]: The UK's inflation is hot, and the short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on May 21st". It was carefully eouu.cnpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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