Market Commentary | The week that was

News from the United States caused headlines as consumer prices accelerated in May to 8.6% year-on-year, well above the expected 8.3%. US bond yields have spiked on the short end of the curve on the back of the announcement, along with a surge in the dollar. Equity markets have come under pressure and gold is firmer. The hot consumer inflation report sparked expectations that policymakers may implement future hikes in interest rates faster and in bigger increments.

Locally, the announcement of Comair’s (Kulula and British Airways aircraft) liquidation may result in domestic travel cost increasing by as much as 40%. SA Flyer editor, Guy Leitch, told Moneyweb in an interview that Comair’s exit, coupled with the type of market structure the industry operates in, as well as spiralling operational costs, could have an enormous impact on ticket prices. Expectations are that prices may only begin to normalise in 2023.

Looking at the week ahead: All eyes will be on The Federal Reserve’s (FED) two-day meeting, starting on Wednesday. Expectations are that interest rates may be increased by 0.5%.