Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
The week began on a cautious note, with US Treasury yields remaining flat, equities posting modest gains, and the US dollar edging lower amid reports that Fed Chair Jerome Powell has been threatened with a criminal indictment related to the costs of a building renovation, which he described as a pretext by President Trump to exert influence over monetary policy.
Investors ended the week on a mixed note after US December jobs data showed the unemployment rate falling to 4.4%, prompting markets to push back expectations for the next Fed rate cut from March to June. As a result, 2-year Treasury yields edged higher and the US dollar strengthened. Equities nonetheless advanced to new highs.
On Thursday, German Bund yields rebounded by +5bp, partially reversing the broad decline seen earlier this week, following a positive surprise in the country’s industrial orders data in November (+5.6% mom). Other euro area sovereign yields were broadly stable, leading to a further narrowing of peripheral spreads.
Euro area sovereign bond yields continued to fall during yesterday's session, as earlier data releases that showed a lower-than-expected inflation in France and Germany were complemented with an inflation in the euro area in December of a 2% annual variation. Expectations of an ECB rate hike fell as well, as now the market does not price one until 2028.
In yesterday's session, European government bond yields broadly fell after December inflation numbers for Germany and France came in lower than expected, lowering odds of future rate hikes from the ECB. Investors will be attentive to today's release of December CPI in the euro area, looking for more hints on the rate path in the short term.
Yesterday's session ended on a mixed tone with relatively small movements, as investors traded cautiously ahead of today's important data releases in the US, particularly Q3 GDP, which will be released today. Sovereign yields barely changed, with a small flattening of the US curve, while European stock indices receded and the US ones ticked higher, pushed by tech firms.
Friday’s session had a risk-on tone, with global bond yields rising after the Bank of Japan raised rates to 0.75% and signaled further tightening. European yields were additionally supported by higher ECB inflation forecasts for 2026 and plans to fund new aid to Ukraine through increased debt issuance.
Markets rallied on Thursday as US inflation eased more than expected in November (2.6% vs. 3.0% YoY), boosting risk appetite. The moderation may partly reflect delayed data collection due to the recent government shutdown. Separately, initial jobless claims fell by 13,000 last week. Treasury yields dropped and investors' rate-cut expectations for the Fed remained broadly unchanged.
Financial markets had a mixed session on Wednesday. Eurozone sovereign yields edged higher, with curves steepening and peripheral spreads widening, even as the Ifo index surprised to the downside, signaling weaker business sentiment in Germany. Final CPI figures for November came in a tenth lower in the general year-on-year rate.
Financial markets had a mixed session on Tuesday. Sovereign bond yields fell on both sides of the Atlantic after a choppy session, driven by US employment figures distorted by the recent shutdown. The data showed job growth rebounded in November, while the unemployment rate rose in October following a methodological change due to the shutdown.
During yesterday's session, Government bond yields fell on both sides of the Atlantic ahead of several central bank meetings this week. The ECB meets on Thursday, with markets pricing an almost sure decision of keeping depo rate at 2%. Other banks meeting are the BoE (expected to cut to 3.75%) and the BoJ (expected to hike to 0.75%).
Markets ended the week lower as long-term yields surged and several Fed officials expressed their worries about inflation. Sovereign curves steepened: short-end rates eased but long and ultra-long maturities rose, after hawkish remarks from Cleveland Fed President Hammack calling for higher rates to curb inflation.