In yesterday's session investors adjusted their interest rate expectations amid monetary policy and fiscal news in the euro area, while corporate profits centered the stage in the US.
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During a volatile session, financial markets closed the day with no clear direction, with investors taking position ahead of the crucial ECB meeting on Thursday and the release of the US CPI inflation on Friday.
Financial markets extended losses on Thursday, following the confirmation by the ECB to accelerate the withdrawal of policy accommodation, including ending net purchases on July 1st and starting a rate liftoff cycle on the 21st.
Yesterday, investors traded with cautious optimism after two days of consecutive declines in stock markets. The announcement that the German constitutional court will not initially block the NGEU package (€750bn) contributed to investors' optimism. Opposition argued that the EU was exceeding its powers by issuing such large amount of debt.
In yesterday's session financial markets experienced risk aversion flows. Despite the positive results presented by some companies, the increase in COVID cases around the globe led investors to move from equities tied to the economic cycle to safer assets such as sovereign bonds, gold and safe haven currencies.
Investors ended the week in a mixed session, as they assessed the release of U.S. economic indicators and evolving tensions between the U.S. and Iran.
Investors started the week with a cautious mood as they wait for the release of this week's Q1 corporate results and the ECB monetary policy meeting.
The ECB monetary policy meeting yielded, as expected, no change in the official interest rates and a communication consistent with a first rate cut in June, at the next meeting. Christine Lagarde reiterated, though, that the ECB will be data-dependent and added that it will not be Fed-dependent.
Investors ended the week with mixed results, with sentiment supported by data showing employment growth in the US slowed down in August, in line with expectations, while the jobless rate rose by 0.2 p. p. to 3.7%. In the eurozone, producer prices (PPI) rose by 37.9% y/y in July, fueling concerns that inflationary pressures are building up.
The sell-off in the US bond market continued on Monday as worries about inflation erode expected bond returns. The yield on 10-year Treasury notes rose 3 basis points to 1.37%. These worries also hit Asian markets, where Japan's 10-year yields rose to 0.13% and Australia's rose to its highest level since June 2019 (1.61%).
Investors continued to trade in a mixed mood in yesterday's session. Commodity prices declined across the board while the USD strengthened. Stocks were mixed, advancing in Asia and Europe but declining moderately in the U.S.
Market sentiment remained subdued on Tuesday as investors awaited Thursday’s US inflation report for December, which could shed some light on the Fed’s future interest rate decisions. In this context, government bond yields rose in the eurozone, despite the negative surprise from German industrial production for November, and fell slightly in the US.
In the last session of the week, financial markets exhibited a positive tone on the back of better-than-expected housing data in the U.S. and continued optimism on easing trade tensions.
In yesterday's session, investors traded cautiously as they continued to assess whether central banks will be able to tame inflationary pressures without causing a hard landing. Geopolitical news centered the stage too, after the G7 meeting in Germany and ahead of today's NATO summit in Madrid.
In yesterday's session, economic data releases continued to center the stage. In the US, Q2 GDP figures were revised downwards from 2.4% q/q SAAR to 2.1%, while, in the euro area, country members' inflation figures failed to prove a decisive trend towards the 2%. Euro area aggregate data will be released today.
Volatility and risk aversion continued to set the tone across markets on Wednesday, with investors taking position ahead of a crucial inflation report in the US later today and the kickoff of the Q3 corporate earnings season on Friday.
Investors traded cautiously ahead of today's signature of the U.S.-China phase-one trade deal and the release of further details on the agreement.
Risk aversion continued to set the tone across markets on Thursday, following the imposition of lockdown measures in some big urban areas in China. In the US, new weekly jobless claims and the manufacturing ISM survey surprised positively, which, in turn, exacerbated fears among investors of more aggressive interest rate hikes.
Investors traded with a cautious mood in yesterday’s session amid mixed economic data in the US and a delicate geopolitical situation. Nevertheless, US and NATO comments are for now ruling out the possibility that the missiles hitting Poland had a Russian origin.
In yesterday's session, new data supported investors' expectations that interest rate cuts could begin this summer, which sent euro area and US sovereign bond yields down. Specifically, weekly unemployment benefit claims rose in the US, and the minutes from the ECB's March meeting confirmed officials are confident inflation is moving in the right direction.