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Markets kicked-off the week on a risk-on tone following the release of weak manufacturing data in the US which boosted expectations the Fed will have room to lower interest rates this year. Specifically, the ISM manufacturing purchasing managers index for May fell to 48.7 from 49.2, and the prices paid component surprised to downside.

Thursday’s session saw a mixed performance across assets as investors grappled with a mixed bag of economic data and the latest Fed decision. In the US, Treasury yields were lower after the rise in initial jobless claims and the decline in the Producer Price Index raised investors’ expectations of a Fed rate cut in September.

Tuesday saw a risk-on mood in financial markets. In the US, retail sales data for May barely grew and showed a weaker than expected consumer, supporting hopes for interest rate cuts this year. Fed officials commenting during the day also highlighted good progress on disinflation, pushing Treasury yields lower and equities slightly higher.

The week began with eurozone investors digesting the results of the French parliamentary elections, in which Le Pen's RN did slightly worse than polls had predicted. Eurozone peripheral spreads tightened, although government bond yields rose as Lagarde said in Sintra that the ECB was in no hurry to cut rates further.

Investors' risk appetite increased on Wednesday as the ADP jobs report for June surprised to the downside and the ISM services report came in below expectations at 48.8. Separately, the release of the latest FOMC minutes showed that Fed officials acknowledged a slight slowdown in the economy as well as easing price pressures.

Market sentiment improved during yesterday’s session as investors turned their attention away from political instability in the euro area to monetary policy in the US. On his second day in Congress, Fed Chairman Powell said the Fed doesn’t need inflation below 2% before cutting interest rates and signaled the balance sheet run-off still has “ways to go”.

Investors ended the week with a modest appetite for risk. In the US, Treasury yields edged lower as June producer price data and the University of Michigan's one-year inflation expectations pointed to easing price pressures, bolstering expectations for a Fed rate cut in September.

Financial markets started the week with all eyes on the ECB’s Governing Council meeting on Thursday.  The ECB is expected to leave interest rates unchanged and stick to its "data dependency" approach. European sovereign bond yields fell and peripheral spreads tightened yesterday ahead of the meeting and today's Q2 Bank Lending Survey.

Investors ended the week with renewed risk appetite as inflation data released during the day was broadly in line with expectations. In the US, the core PCE price index rose 0.2% month on month in June, as expected, bolstering hopes of a Fed rate cut in September. In the eurozone, 1 and 3 year inflation expectations remained at 2.8% and 2.3% respectively.

Investors ended August digesting inflation data which confirmed prices are moving in the right direction for the ECB and the Fed to cut interest rates in their September meetings. Specifically, euro are inflation cooled to 2.2% y/y last month, and the US PCE Price Index (the Fed's preferred inflation gauge) for July was unchanged at 2.5% y/y.

Markets traded on a risk-off tone for a second session in a row after data showed the US labor market continues to cool, boosting expectations the Fed will cut interest rates at its next meeting. In particular, job openings in July (JOLTS) fell to the lowest level since 2021.

Risk-off mode took over financial markets on Friday, as the US employment report showed a cooling labour market. Hiring in the US is slowing down, but not falling off a cliff, so implicit interest money market rates are still discounting a 25 b.p. cut from the Fed at its September meeting.

Investors ended the week on a risk-on tone as monetary policy expectations drove sentiment during Friday's session. The likelihood of a 50 b.p. rate cut by the Fed this week rose to almost 50%.

The Federal Reserve's decision to lower interest rates by 50 bp sent global stocks soaring during yesterday's session. Equities climed more than 2% in the euro area, and in the US, the S&P 500 reached a new all-time high, as stocks priced in the soft-landing scenario.

Investors ended the week on a slight risk-off sentiment. With no major macroeconomic data releases on either side of the Atlantic, traders seemed to consolidate the gains made on Thursday following the Fed's large rate cut amid a heavy trading environment as Friday was the quarterly expiration date for several options.

Financial markets experienced a risk-on session on Friday as the US employment report for September came in better than expected, shrugging off geopolitical concerns. The strength of the labour market underlined the dynamism of the economy and eased pressure on the Fed to cut interest rates more aggressively to support the economy.

Financial markets had another mixed session on Tuesday, with little in the way of data releases to guide investors. In the money market, interbank rates moved higher on both sides of the Atlantic as investors reassessed their expectations for central banks' policy. Fed officials speaking yesterday stressed the importance of a cautious Fed in achieving its twin target.

Wednesday saw another mixed session in the financial markets ahead of today's US inflation report. Government bond yields rose slightly in the eurozone and more sharply in the US. The move in the eurozone came as some ECB officials expressed doubts about a rate cut in October, which had so far been favoured by most of the bank's officials who spoke.

Financial markets ended the week on a slightly positive note as the earnings season in the US kicked off with the big banks posting solid results. Investors also continued to digest inflation data received during the week which confirmed expectations of a 25bp rate cut instead of a 50bp cut from the Fed. 

Financial markets started the week with subdued trading, as debt and money markets in the US were closed for a Federal holiday. Eurozone sovereign bond yields were fairly flat, with peripheral spreads narrowing slightly, as investors continued to focus on Thursday's ECB meeting, for which they expect a 25bp interest rate cut.