Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
In yesterday's session, the FOMC decided to leave interest rates unchanged at the 5.25%-5.50% target range. Despite describing the economic outlook with similar words than in September and not ruling out an additional rate hike, markets lowered the probabilities of a further tightening in the monetary policy stance.
In yesterday's session, euro area economic releases took center stage. Lower-than-expected October y/y inflation in Germany (3.0% vs 3.3% expected) and in Spain (3.5% vs 3.8% expected) pushed euro area sovereign yields down and the area's main stock indices up. 3Q German GDP growth came in at -0.1% vs -0.2% expected.
Volatility rose during the last session of the week amid heightened tensions in the Middle East, mixed corporate earnings, and expectations of the FOMC meeting later this week. Stocks fell across the globe, with US and European stock indices entering “correction” territory after falling 10% their most recent peak in July.
In yesterday’s session, investors focused their attention to the ECB monetary policy meeting, where interest rates were left unchanged (depo and refi at 4.0% and 4.5%, respectively), and to Q3 GDP figures for the US, which grew at a solid 4.9% SAAR rate with dynamic rates of growth of private and public consumption and residential investment.
In yesterday’s session, investors traded cautiously focusing their attention on the corporate earnings season and being attentive to the monetary policy path ahead and to the geopolitical risks. In this context, yields on sovereign bonds surged in advanced economies, with the 10-treasury getting closer to 5%.
In yesterday's session, a mixed release of the flash October PMIs pushed 10-year sovereign yields modestly down on both sides of the Atlantic while stock indices edged up backed on mixed Q3 earnings releases. Some companies beat analysts' profits expectations, some announced a higher profit guidance or other disappointed in both dimensions.
The week started off with a volatile session as markets await key economic data this week (PMIs for advanced economies and US 3Q GDP), 3Q euro area Bank Lending Survey, the ECB's rate decision, further 3Q earnings, and news from the Middle East.
In the last session of the week, investors traded with a risk-off mood amid fears of a escalating conflict in the Middle East. The VIX index, despite remaining at historically moderate levels, reached its highest level since March and stock indices declined across the globe.
In yesterday’s session, investors once more weighed the growing tensions in the Middle East and the future path of interest rates. Fed Chair Jerome Powell said the central bank would proceed carefully with rates, highlighting that the rise in yields in bond markets is helping to tighten financial conditions.
In yesterday’s session, investors traded with mixed sentiment as they navigate through heightened tensions in the Middle East and a continued rhetoric of “higher for longer interest rates” supported by strong US economic data. President Biden arrived in Israel but has not been able to achieve major diplomatic breakthroughs to calm markets.
Solid US economic data released yesterday showed a still resilient economy reinforcing the the case for the Federal Reserve to keep interest rates higher for longer. September US industrial production rose to the highest level in nearly five years to 103.6 and retail sales increased 0.7%, up from 0.6% beating expectations.