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, weak PMI data for August, which signalled a slowdown in economic growth across the Atlantic, but most acutely in Europe, caused sovereign bond yields to fall across the board (around 13bps. for the long-term references). In the eurozone, PMI data for the services sector fell below the 50 threshold for the first time in 2023.
As investors await the Jackson Hole conference for some guidance on monetary policy, European sovereign bond yields fell across the board in Tuesday's session. Meanwhile US short-term references posted gains, boosted by Fed's Barkin hawkish remarks on how the current strong economy would allow for higher rates should inflation pick up.
With little novelties on the data front, investors started the week resuming their positioning to higher rates for longer selling off sovereign bonds, bringing yields up again. The surge was greater on long-term references and widespread across developed economies, with the US 10-year benchmark rising 9 bps. to hit multi-year highs.
Greetings back to work in a week beginning with the downbeat echoes of Friday, when investors traded in a risk-averse mood. Sovereign bond yields ended the week sliding across the board, especially in Europe, and so did stocks, with the biggest falls in China. The USD was broadly flat, while commodities rose slightly.
The last stages of this cycle of monetary policy tightening centered the stage in yesterday’s session as the ECB hiked interest rates by 25bp (depo at 3.75% and refi at 4.25%). Nevertheless, Christine Lagarde said that this might not be the last hike and insisted that interest rates will remain high for a long period of time to break the back of inflation.
The US Federal Reserve meeting centered the stage in yesterday's session with a 25bp interest rate hike, as expected by the consensus. The description of the economic outlook was very similar to June's, while the president Jerome Powell recognized that the last CPI inflation release surprised them slightly on the positive side.
In yesterday’s session, investors weighed mixed signals from economic sentiment indicators in the US and in Germany. While the Conference Board consumer sentiment indices rose in July, signaling that private consumption might still have room to grow in Q3, the German IFO moderated.
The global economic outlook centered the stage in yesterday’s session as investors focused on July’s flash PMIs. In the euro area, the soft growth momentum was visible in the fall of the services (51.1) and manufacturing (42.7) indices. In the US, the manufacturing PMI rose and got closer to the 50-point threshold, but the services PMI lost steam.
In the last session of the week, investors traded cautiously in absence of key macroeconomic data releases and as they waited for monetary policy meetings this week in the main central banks.
Investors continued to trade with a cautious tone on Thursday, taking on board a new bath of data pointing to moderating inflationary pressures in Europe and a tight labour market in the US.
A lower-than-expected inflation data in the UK reinforced hopes among investors that disinflationary pressures are gaining traction, triggering a sharp depreciation of the British pound and a drop in the country’s sovereign debt yields.
A session with mixed results on Tuesday, as investors balanced out somewhat dovish comments from some key ECB officials with softer-than-expected activity data in the US (retail sales rose by 0.2% m/m in June while industrial production fell by 0.5% m/m) and a new batch of positive earnings reports from some US banks.