Financial Markets Daily Report 03 November 2022
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 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 particular, he said that already in December the rate hike could be lower (e.g. 50bp) but given the tightness in the labor market and the intensity of elevated inflation, it could be necessary to push rates higher for longer.
- In this context, yields on sovereign bonds rose and equities declined markedly in the US. In the euro area, losses were less pronounced as markets closed before the Fed meeting. In FX markets, the US dollar strengthened against most advanced and emerging currencies and the euro fluctuated around $0,98.
- Today the focus will be on the BoE meeting (+75bp expected) and on the October employment report in Spain.