Financial Markets Daily Report 03 October 2023
Investor sentiment diverged slightly on both sides of the Atlantic at the start of the week. In the US, the ISM survey showed a manufacturing sector close to recovery while Fed's Bowman gave hawkish signals on future interest rates. This pushed Treasury yields higher while equities fared slightly better, with the Nasdaq up and the S&P500 flat.
- Investor sentiment diverged slightly on both sides of the Atlantic at the start of the week. In the US, the ISM survey showed a manufacturing sector close to recovery while Fed's Bowman gave hawkish signals on future interest rates. This pushed Treasury yields higher while equities fared slightly better, with the Nasdaq up and the S&P500 flat.
- Meanwhile, in the eurozone, the PMI survey showed a broad-based downturn in manufacturing, albeit most acute in Germany. Despite this, ECB commentators also struck a hawkish tone on the day, pushing government bond yields higher, but with peripheral spreads narrowing. Major equity indices, for its part, were broadly lower.
- Against this context, the USD appreciated strongly against the EUR. It also strengthened against the yen, despite the minutes of the BoJ's September meeting showed that more policymakers discussed the prospect of ending its ultra-loose policy. In this context, crude oil prices also fell, dragged down by concerns about higher interest rates.