Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
In yesterday’s session, financial markets' expectation of a much more tightened monetary policy stance eased, as producer price data in the US increased by less than expected in October (0.2% and 0.0% m/m the overall and core indices). Also, speeches from ECB and Fed members favored slowing down the pace of rate hikes.
In the first session of the week, monetary policy centered the stage, with important voices from the ECB and the Federal Reserve advocating for a slower pace of interest rate hikes in the coming months.
In the last session of the week, investors' sentiment kept the upbeat tone seen on Thursday following the decrease in the October US CPI inflation figures. Money markets continued to price a lower monetary policy tightening from the ECB and the Fed than the one implied before the CPI release.
A risk-on session was recorded across markets on Thursday after the softer-than-expected inflation data in the US and the uptick in new weekly jobless claims reinforced hopes for a slowdown in the pace of rate hikes by the Fed.
Investors continued to trade with a cautious mood on Wednesday, as results from the US midterm elections suggested the Republicans may gain control of the House but the Democrats could hold on the Senate. Investors were also taking position ahead of a crucial CPI inflation report in the US today.
In yesterday session, investors traded cautiously amid ECB officials’ comments pointing towards further normalization in the assets' holdings and as they waited for the outcome of the US midterms. Early this morning, the most probable outcome is that Republicans have won the House while Democrats will control the Senate by a small margin.
Investors started the week trading with a cautious approach. On the positive side, sentiment continued to be supported by expectations that the Chinese government could relax some of its COVID zero policy. On the opposite direction, data showed further weakness in China’s economic recovery.
Investors closed the week trading with a risk on mood. Sentiment was supported by news reporting that the Chinese government may scrap some COVID restrictions affecting the airline sector. In addition, investors shrug off the upside surprise in the pace of job creation in the US (+261.000 in October versus 200.000 expected by the consensus).
Central banks continued to center the stage on Thursday. On the one hand, investors continued to digest the Fed meeting, where Chairman Powell signaled a “slower for higher” approach in interest rates hikes, and, on the other, the Bank of England’s decision to increase rates by 75bp, albeit diminishing market expectations for the path ahead.
In yesterday's session, investors focused their attention on the Federal Reserve meeting, where interest rates were raised by 75bp to the 3.75%-4.00% target range. Crucially, president Jerome Powell explained that the pace of the upcoming hikes could moderate but that the terminal rate might be higher than previously anticipated.
In yesterday's session, investors traded cautiously amid better-than-expected labor market data in the US. In particular, September job openings and the employment component of the ISM surprised the consensus, increasing the bar for a Fed pivot in the meetings beyond today's (where we expect a 75bp rate hike).
In the last session of the week, inflation and GDP releases centered the stage in European trading floors. HICP inflation for October surprised on the upside in most euro area countries as well as Q3 GDP figures for Germany (+0.2 q/q instead of the expected contraction). Today aggregated figures for the euro area will be released.