Financial markets continued on a risk-off mode during Friday's session, as investors tried to assess the potential consequences of China retaliating on US tariffs, enacting duties on all US imports and export controls on rare earths. In this context, US sovereign yields fell, as investors expected the Federal Reserve will cut its intervention rate twice by July.
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Yesterday marked the third consecutive session with an intense risk-off mode and high volatility in financial markets amid heightened tariff uncertainty and ongoing fears of a global economic slowdown. In this context, sovereign bond yields increased on both sides of the Atlantic, with euro area peripheral risk premia edging higher.
Global markets endured heightened volatility on Thursday following President Trump's surprise announcement of a 90-day suspension of tariffs for most countries, excluding China. The European Union responded by delaying the implementation of its reciprocal measures.
Global financial markets had a subdued start to the week on Easter Monday, with only the US and Asian markets open, while European markets remained closed.
Financial markets traded cautiously during yesterday's session, ahead of Q1 GDP growth data to be released today, both for the US and for the euro area. Yesterday’s preliminary data showed Spanish GDP grew +0.6% qoq (+2.8% yoy) in Q1. Euro area Economic Sentiment Indicator dropped to 93.6 in April from 95.0 in March, and below market expectations of 94.5.
Investors traded cautiously during yesterday's session despite some political noise in Germany, where Frerich Merz was finally elected chancellor in a second round of voting, after having surprisinly lost in the first round. Euro area sovereign bond yields edged only slightly higher, peripheral risk premia held steady, and the region's main equity indices ended lower.
Risk appetite remained relatively high in the market yesterday as US inflation figures for April came in slightly below expectations at 2.3% YoY, with core inflation holding at 2.8%. Separately, the NFIB survey showed that small business optimism fell moderately in April. Against this backdrop, US Treasury yields were broadly unchanged.
In yesterday's session, global financial markets delivered a mixed performance, shaped by the release of subdued economic data and growing expectations of potential interest rate cuts in the US. Investors also remained cautious amid ongoing speculation over possible peace talks between Russia and Ukraine.
Financial markets ended the week on a slightly positive note. News from early in the week of US-China trade negotiations helped sustain sentiment in equity markets, despite survey data showing a sharp deterioration in US consumer sentiment and an uptick in inflation expectations.
Relatively quiet session in financial markets, with no major macroeconomic data released and U.S. markets closed for Memorial Day. Sentiment in the euro area was supported by President Trump’s decision to extend the deadline for imposing 50% tariffs on EU imports to July 9, easing immediate trade tensions.
Investors traded cautiously during yesterday’s session, awaiting progress in trade negotiations and digesting the latest minutes from the Fed’s May meeting, which revealed officials’ concerns about inflation, growth, and financial market volatility amid ongoing trade tensions.
Investors ended the week by trading cautiously amid ongoing trade uncertainty, after Trump accused China of breaching a trade deal and said he expected to speak to Xi. US Treasury yields fell slightly, with some Fed officials maintaining their wait-and-see approach despite data released on Friday showed US consumer spending and PCE inflation slowed down in April.
Financial markets remained mixed yesterday. US Treasury yields fell as data releases pointed to a higher risk of stagflation. The May's ADP survey showed job creation was much lower than expected; while May's ISM services survey showed the sector contracted slightly and prices paid by businesses rose. Attention will now turn to Friday's non-farm payrolls report.
Investors traded cautiously in a session without any major macroeconomic data releases. Attention shifted to the NATO meeting —where members agreed to increase defense spending to 5% of GDP—, ongoing trade uncertainty, the so-far upheld ceasefire between Israel and Iran, and evolving monetary policy expectations.
A downward revision of US Q1 GDP, primarily due to weaker private consumption growth (0.1% qoq vs. 0.3% previously estimated), increased market expectations that the Fed could lower interest rates as much as 75bp this year compared to the 50bp expected before.
Markets had a muted reaction to a U.S. federal appeals court which ruled 7–4 that tariffs imposed under the IEEPA exceed congressional authority, affecting general bilateral tariffs but not sector-specific ones. The tariffs remain in place until October 14 while parties may seek Supreme Court review.
Dovish remarks from Fed Governor Chris Waller and a JOLTS job report that showed US job openings fell in July to the lowest in 10 months, reniforced market expectations of a Fed rate cut in its September meeting. US Treasruy yields fell and stocks advanced, while the dollar edged lower.
Risk-off sentiment drove markets after a weaker-than-expected U.S. labor market report (nonfarm payrolls +22k in August, and June-July revised down to a cumulative +66k [prior: +87k]). Advanced-economy stock markets declined and sovereign yields dropped amid stronger market expectations over Fed cuts. The euro strengthened above $1.17 and gold rose.
Investors seemingly recovered some appetite for risk in yesterday's session. Stock markets rose moderately across advanced economies and sovereign yields increased both in the U.S. and Europe. The euro reversed Monday's gains and fluctuated close to $1.17 while commodity prices were mixed.
Global stocks advanced, with the S&P 500 and Nasdaq hitting new record highs, while sovereign bond yields rose on both sides of the Atlantic.