Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Markets ended the week on a cautious note as heightened tensions in the Middle East, renewed trade uncertainty, and monetary policy actions weighed on investor sentiment. Sovereign bond yields fell on both sides of the Atlantic as demand for safe-haven assets rose.
Yesterday, global markets ended the session on a cautious footing as mounting tensions in the Middle East and renewed trade uncertainty weighed on investor sentiment. European equities edged lower amid broad risk-off flows, while U.S. markets remained shut in observance of Juneteenth. In fixed income, eurozone sovereign yields rose, particularly at the long end of the curve, while peripheral spreads widened.
Amidst elevated geopolitical risks, investors traded cautiously ahead of the FOMC's meeting. The Fed left rates unchanged and still forecasts two rate cuts in 2025 (showing greater dispersion and a slightly hawkish bias than before) but signalling a slower pace of easing ahead. Powell warned that tariffs could push inflation for goods higher over the summer.
Investors turned cautious again on Tuesday as the Israel-Iran conflict continued. US Treasury yields fell ahead of the FOMC meeting, where the Fed is expected to leave rates unchanged as it seeks more clarity on the impact of tariffs. Yesterday's data releases showed a softening US economy in May: retail sales dropped by more than expected (although so-called "core" retail sales increased); import prices remained stable, surprising to the upside; and industrial production fell slightly.
Markets rebounded on Monday as geopolitical fears eased amid signs that Iran was seeking to end hostilities with Israel. Sovereign yields fell modestly across the eurozone with peripheral spreads narrowing slightly, as news that the EU would be willing to accept a broad 10% tariff on EU goods from the US were dismissed by the European Commission.
Markets turned defensive on Friday as geopolitical tensions in the Middle East escalated. Sovereign bond yields rose across the curve on both sides of the Atlantic, with eurozone peripheral spreads widening slightly. Concerns that surging oil prices could reignite inflationary pressures clouded other macro developments: in the US, the University of Michigan’s consumer sentiment index for June surprised to the upside, while Eurozone industrial production for April fell by more than expected.
Yesterday’s session was characterised by heightened investor caution and market volatility amid escalating geopolitical tensions in the Middle East. The intensification of hostilities between Israel and Iran dominated the headlines, while trade sentiment was further unsettled by Trump’s warning of potential unilateral tariffs to be announced within the next fortnight.
Financial markets were mixed during yesterday's session. US CPI for May came softer than expected, with core CPI increasing by 0.1% mom (vs. expected 0.3%) and 2.8% yoy (vs. 2.9% expected), and overall CPI climbed 2.4% yoy, as expected. Separately, Trump said that a US-China trade deal is "done", which could ease trade frictions between the two countries.
Markets traded cautiously as investors awaited news regarding trade negotiations between the US and China. The World Bank cut its global economic growth forecast, pointing to uncertainty brought by trade war as the main cause. In today's session, financial markets will focus on US CPI data for May.
Financial markets were mixed during yesterday's session, ahead of May US CPI data to be released tomorrow. US and euro area sovereign bond yields closed the session slightly lower. Separately, news that Japan would be considering buying back bonds with very long maturity to prevent abrupt rises in bond yields, weighed on Japanese yields.
Investor risk appetite ended the week positively, as US non-farm payroll figures for May came in higher than expected, with job creation gradually cooling (139k in May versus 147k in April), though there are still no major signs of strain from Trump's tariffs. This should give the Fed more time before cutting rates, causing Fed Funds futures and US Treasury yields to rise.
During yesterday's session, global markets adopted a stance of cautious optimism, navigating a landscape shaped by mixed economic data and ongoing geopolitical developments. Presidents Trump and Xi reportedly made headway in trade discussions during a phone call, particularly regarding tariffs and a potential accord on critical minerals and rare earths.
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.