July 21, 2022 09:18 GMT
- Focus turns to the upcoming ECB rate decision, with markets still split as to whether the bank raise rates by 25 or 50bps at today's meeting. Outside of headline rates, markets will also be looking for clarity surrounding the so-called Transmission Protection Mechanism - a mechanic the bank plan to use to combat unwarranted widening spreads in Eurozone government bond markets.
- The conditions surrounding the TPM will be a particular focus today as the Italian 10yr yield surges higher on the resignation of the Italian PM Draghi, who failed to corral sufficient support for his broad coalition. The Italian/German 10y yield spread has blown wider by over 10bps today, with the Italian 10y yield now higher than it's Greek counterpart.
- The Italian news has done little to hinder the EUR's progress, however, with the single currency off the session's best levels but avoiding any test of the late Wednesday lows.
- Equity futures are generally lower early Thursday, indicating a softer open on Wall Street later today. Nonetheless, the risk backdrop remains favourable, with the e-mini S&P printing a new monthly high this week and piercing key resistance at the 55-day EMA.
- Outside of the ECB decision, weekly US jobless claims data is due as well as the July Philadelphia Fed. Outside of G10, both the South African and Turkish central banks also decide on policy.