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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 traded cautiously in yesterday’s session as they await key economic releases this week, including euro area 1Q GDP (today), which is expected to show the economy grew 0.2% yoy, euro area April inflation (today) expected to stay at 2.4% yoy, and the Fed’s FOMC meeting tomorrow, where markets anticipate no changes to the Fed’s target rate.

At its meeting yesterday, the Federal Reserve kept interest rates on hold at 5.25-5.50%, as expected, and the Fed's policy statement kept its economic assessment and policy guidance without changes. Powell signaled the next move is unlikely to be an interest rate hike as the Fed is still leaning towards an eventual cut, despite needing greater confidence to do so.

In yesterday's session investors continued to assess the Fed's next move regarding interest rates following Wednesday's FOMC meeting. In particular, markets seem to have taken Powell's downplay of the possibility of hiking rates given the recent inflation figures as a confirmation that the next move will be a cut.

In another session without major macroeconomic references, monetary policy took center stage. The Riksbank decided to reduce its official interest rate by 25 bp to 3.75%, the first cut since 2016, and ECB and Fed officials commented on their respective economic and monetary policy outlooks.

In yesterday’s session, investors paid attention to economic data in the US pointing to a further cool down in the labor market and to the BoE monetary policy meeting, where interest rates were kept unchanged at 5.25%, as expected.

In yesterday's session, investors traded with optimism as they weighed the details on the phase-one trade deal with the weaker-than-expected business sentiment data in advanced economies.

In yesterday’s session investors traded cautiously ahead of tomorrow’s release of US April inflation data, which will be key for the Federal Reserve’s policy decisions. In this context, sovereign bond yields were mostly unchanged on both sides of the Atlantic, while equities were flat in the US and modestly lower in the euro area.

Investors continued digesting this week’s data releases in the US, including the CPI report, retail sales, and new data showing industrial production stalled in April after growing 0.1% in March. In the euro area, remarks from ECB officials including De Guindos, Centeno and De Cos, all pointed to June for an interest rate cut but asserted caution thereafter.

Investors started the week trading cautiously in a session without major economic events. Central bank officials’ comments, then, took center stage with different FOMC members insisting that the latest inflation readings have not given them enough confidence to start cutting rates at this stage.

In yesterday’s session, investors focused their attention to the release of the last FOMC meeting minutes, which reinforced previous communication that Fed members still expect inflation to return to 2% over the medium term, while acknowledging that it will take longer than previously anticipated.

Investors started the week in a risk-off mood, albeit with no clear trigger or catalyst, suggesting that it was mostly about locking in profits. Sovereign bond yields rose across the board on both sides of the Atlantic, with steepening curves. In the eurozone, peripheral spreads widened despite Fitch's confirmation of Italy's rating and improved outlook late on Friday.

Investor optimism around trade talks led to a moderate risk-on mood at the end of the week. In particular, officials said that sections of the first phase of a trade deal between the U.S. and China are nearly completed.

Investors’ attention during Friday’s session focused on the worldwide cyber outage that affected banks, airlines, and telecommunications companies. The software glitch unnerved investors and dragged down overall sentiment, affecting mostly equity markets which ended the session lower across the globe.

Investors traded cautiously in the last session of the week and stock indices rose mildly in most euro area trading floors and in the US (where the S&P 500 reached a new record high).

Markets had a muted reaction to President Biden’s decision to drop out of the presidential race and endorse Vice President Harris as the Democratic candidate. Sovereign bond yields were mostly unchanged on both sides of the Atlantic and the US dollar was flat against its main counterparts.

A risk-on session across financial markets on Thursday, with sentiment boosted by the recent decision by the OPEC to ramp up plans to increase its oil supply (+650k barrels a day in both July and August) and solid economic data (eg the decline in new weekly jobless claims in the US).

Investors' risk appetite waned yesterday amid renewed tensions in the war in Ukraine. Government bond yields rose in the Eurozone, where data released yesterday showed that negotiated wage growth accelerated to 5.4% in Q3 from 4.6% in Q2, which could cause the ECB to reconsider its dovishness if this feeds through to inflation in the coming months.

Thursday's trading was driven by two US data points: September inflation, which came in slightly higher than expected, and weekly jobless claims, which came in higher than expected, indicating some weakness in the labour market. The debate on the Fed's next move was further fueled by Fed's Barkin words saying it was too soon to declare victory over inflation.