The European Central Bank, as expected by the market, cut interest rates for the first time in nearly five years, indicating that the inflation outlook has &#34;significantly improved.&#34; However, it raised its inflation expectations for this year and next, stating that it will keep policy rates restrictive &#34;as long as necessary.&#34; ECB President Lagarde expressed uncertainty about the future path and timing, suggesting a bumpy road ahead in the coming months. Media reports revealed that ECB officials have almost completely ruled out the possibility of further rate cuts in July, with some officials questioning the wisdom of a rate cut in September.
Commentators noted that the ECB's move this time was dovish, emphasizing the need for cautious decision-making in the future and not signaling any further actions. Following the ECB meeting, investors reduced their bets on a rate cut in July, with market pricing now expecting the next rate cut to be delayed from October to December. The euro surged, approaching the high set on Tuesday for the first time in over two months, while eurozone bond prices fell further, German bond yields widened, global bond prices overall retreated, and the bond market's five-day winning streak since last December came to an abrupt end.
The May US non-farm payrolls report will be released this Friday. Commentators anticipate that bond investors will take profits before the release of this key employment report, so the decline in US bonds on Thursday was not unexpected. However, the number of initial jobless claims in the US last week exceeded expectations, reaching a high for the fourth consecutive week, indicating a slight cooling in the labor market and favoring a rate cut by the Federal Reserve later this year. Following the data release, the yield on the two-year US Treasury, sensitive to interest rates, turned lower, approaching a three-week low.
The gains in the US stock market were limited on Thursday, with both the S&amp;P and Nasdaq hitting new highs during the session but turning lower more than once. Media reports indicated that US government agencies will investigate Microsoft, OpenAI, and NVIDIA for their impact on the AI industry, focusing on the behavior of these companies rather than on mergers and acquisitions. NVIDIA experienced a &#34;flash crash&#34; in early trading, falling nearly 6% from its intraday record high

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Expectations for the ECB interest rate cut "cool down", the euro jumped; the yield spread of German bonds widened, and US bond yields pressured three-week lows; US stocks were under pressure, with NVIDIA briefly plummeting nearly 6%. The US non-farm payroll report for May will be released this Friday

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Before the heavyweight employment report, the US stock market was under pressure, with NVIDIA plummeting nearly 6% at one point, the ECB's interest rate cut expectations "cooling down," and the euro jumping