Financial Markets Daily Report

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A mixed session for financial markets packed with economic data releases ahead of a holiday in the US today (Thanksgiving Day).

Investors continued trading with a risk-off mood, with sentiment gloomed by the deterioration of the COVID situation across Europe and mixed signals from economic sentiment data. Investors were also taking position ahead of the bank holiday in the US later this week.

Financial markets started the week with mixed results. Investors balanced out the risk from the COVID outbreak in Europe with the re-appointment of Jerome Powell as the next Fed president and the nomination of Lael Brainard as the next VP, signaling policy continuity at the helm of the central bank.

Markets ended the week with a risk-off sentiment, driven by hawkish commentary by some Fed officials about the potential need to readjust policy to deal with the rebound in inflation. In contrast, ECB president Christine Lagarde reiterated prices will stabilize in the euro area in line with the central bank's target.

Inflation remained the key focus of investors on Thursday, following comments by Fed and IMF officials that the rebound in prices might be more broad based and "sticky".

In yesterday's session investors traded cautiously as, again, inflation concerns and monetary policymakers' comments centered the stage.

In yesterday's session, financial markets ended with mixed results, following the better-than-expected economic data releases in the U.S. (October retail sales and industrial production rose by 1.7% and 1.6 m-o-m, respectively) and comments from various Fed officials.

Comments by central bankers centered the stage at the start of the week in a session with no relevant economic data releases. In the euro area Christine Lagarde reiterated that a rate hike in 2022 is "very unlikely" even if the current inflation spike might be higher and longer than initially expected.

Investors closed the week with a cautious mood amid mixed economic data releases in the U.S. and dovish comments from ECB officials. In particular, the Finnish and Lithuanian central banks' chiefs insisted that the current inflation is transitory, although it may last longer than initially expected.

Equity markets recorded a modest pickup on Thursday, recovering from the selloff in the previous session, after the stronger-than-expected U.S. CPI October data reinforced fears about intensifying inflationary pressures.

Financial markets ended the day with mixed results, as stronger-than-expected inflation data in both the U.S. and China reinforced investors’ fears about the persistency of the pickup in prices.

In yesterday’s session, central bankers’ comments centered the stage again, as investors positioned for today’s release of the key CPI October data in the U.S.