Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Stock markets rebounded at the start of the week, as investors digested a new batch of mixed economic indicators and took advantage of attractive valuations, following the sharp decline in stock indices in recent weeks. Sovereign bond yields ticked down in the US and continued to edge higher across Europe.
Investors continued to err on the side of caution during the last session of the week, with sentiment impaired by data releases pointing to lingering inflationary pressures and the likely need for further monetary policy tightening.
Investors traded cautiously in yesterday’s session following revisions of some key economic indicators. In the euro area, headline and core inflation for January were revised by +0.1pp to 8.6% and 5.3%, respectively, and, in the US, 4Q GDP growth was revised by –0.2pp to 2.7% q/q SAAR, mainly due to a softer private consumption.
Central bank communication continued to center the stage on Wednesday. The release of the minutes of the last Fed meeting showed that almost all FOMC members favored a 25bp rate hike, while just a few would have opted for keeping the 50bp pace. They noted that, despite remaining elevated, inflationary pressures had begun to moderate.
On Tuesday, the better-than-expected release of February PMIs fueled an increase in investors’ expectations for the path of official interest rates, which, in turn, pushed sovereign bond yields up in the euro area and in the US.
In a quiet session due to the President's Day holiday in the US, traders continued to weigh incoming economic data (eg consumer confidence in the eurozone rose to -19 from -20.7) with the hawkish tone from central bank officials. In this context, yields on sovereign bonds ticked up in the euro area, nearing year-to-date highs.
In the last session of the week, investors digested the hawkish comments offered by key central bank officials in the US Federal Reserve and ECB. In the former, Michelle Bowmen and Thomas Barkin signaled that interest rates will need to raise further but warned against reading too much into January’s retail sales and employment data.
Volatility and precaution continued to set the tone yesterday, with investors digesting hawkish messages from FOMC officials and hotter-than-expected PPI inflation data in the US (+0.7% m/m in January, the largest gain since June).
Another session with mixed results across financial markets on Wednesday, with investors keeping the focus on solid economic data and the likely implications for monetary policy decisions by major central banks.
Investors continued to err on the side of caution during a volatile session marked by the release of US CPI inflation for January. The report showed headline CPI rose by 0.5% m/m (+0,1% in December), while the year-on-year rate eased only mildly (6.4% after 6.5% in December), above expectations (6.2% according to Bloomberg).
Investors started the week with no clear direction, with all eyes focusing on the release of the January CPI inflation print in the US today, where the consensus (according to Bloomberg) expects headline inflation to ease to 6.2% y/y (from 6.5% in December). The second release of Q4 GDP in the eurozone is also published today.
Risk aversion continued to set the tone during the last session of the week, fueled by a further upward revision in investors’ expectations for the likely path of policy interest rates ahead. These worries were compounded by the announcement from Russia that the country will cut its oil production by 500k barrels a day next month.