Financial Markets Daily Report12 setembre 2025
Markets were mixed in yesterday's session. Global stock markets advanced and U.S. sovereign yields nudged down as the U.S. CPI report did not depress investor expectations about Fed cuts. In Europe, the euro strengthened on the back of a hawkish reading of the ECB's meeting, German sovereign yields nudged up but peripheral spreads ticked down.
The ECB left rates unchanged, as widely expected, and gave no forward guidance as it reiterated that it will not precommit to any particular rate path and will instead stick to a "meeting-by-meeting, data-dependent" approach. Investors made a hawkish reading of the meeting and market odds of a 25bp rate cut in 2026 declined by ca. 10pp (see our own take here).
U.S. headline CPI inflation accelerated to 0.4% mom and 2.9% yoy in August (0.2% mom and 2.7% in July) while core inflation remained unchanged at 0.3% mom and 3.1% yoy. Tariff-exposed products saw upward price pressures. Market odds for Fed cuts remained strongly anchored (100% probability of a September cut and a total of 150bp in cuts by early 2027).