Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Volatility and risk aversion continued to set the tone across financial markets in the last session of the week. On the one hand, investors sentiment continued to be impaired by liquidity concerns in the banking sector, sparked by the crisis and subsequent closure by regulators of a small tech-focused financial group in the US (SVB).
Investors continued to trade with caution, taking position ahead of the publication today of the crucial US payrolls report for February. Data released on Thursday showed an unexpected increase in new jobless claims last week (to 211,000), which contrasted with signals from other surveys pointing to further tightening in the labour market.
Speaking in the second day in Congress, Fed President Powell clarified that no decision had yet been made about the pace of monetary policy tightening, noting that the FOMC would consider higher rate hikes only if the totality of the data pointed in that direction. Before the next meeting, February inflation and employment data will be released.
Federal Reserve president Jerome Powell’s hawkish rhetoric before the US Senate pushed upwards the financial market expectations for interest rates path ahead. In particular, investors now attach a higher probability to a 50bp hike than to a 25bp move at March’s meeting.
The hawkish tone set by central bank officials continued to center the stage in financial markets at the start of the week. In particular, ECB chief economist Phillip Lane signaled that further interest rate hikes beyond next week's meeting will be appropriate to ease inflationary pressures.
Economic data releases on Friday boosted investors' sentiment and allowed sovereign yields to edge down and equities to advance. Price pressures continue to moderate but remain elevated, according to the ISM prices paid index in the US (which fell from 67.8 to 65.6) and the PPI in the euro area (which declined from 24.5% to 15.0% y/y).
Precaution and volatility continued to set the tone across financial markets on Thursday. Eurozone HICP inflation surprised on the upside (headline: 8.5% y/y in February after 8.6%; core: 5.6% after 5.3%) while, in the US, data showed unit labour cost accelerated in Q4 and new weekly jobless claims fell further last week.
Inflationary pressures and monetary policy actions remained the focus on Wednesday, following higher-than-expected HICP data in Germany (headline inflation rose to 9.3% y/y in February after 9.2% in January), ahead of the release of the data for the eurozone aggregate this morning. The ECB also releases the accounts of the last meeting.
Investors continued to trade with caution on Tuesday, taking on board the upside surprise in February HICP inflation in both France (7.2% y/y) and Spain (6.1%) and dialing up its expectations for policy interest rates hikes (money markets price the depo rate could near 4% by year end). Today, the German HICP data is released.
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.