Financial Markets Daily Report05 May 2023
In yesterday’s session, the focus was still on monetary policy decisions, as the ECB decided to raise the official interest rates by 25 bp (depo and refi rate at 3.25% and 3.75%, respectively). Despite lowering the pace of rate increases, Lagarde clearly signaled that the ECB cannot pause rate hikes yet as inflation is still too much elevated.
- In yesterday’s session, the focus was still on monetary policy decisions, as the ECB decided to raise the official interest rates by 25 bp (depo and refi rate at 3.25% and 3.75%, respectively). Despite lowering the pace of rate increases, Lagarde clearly signaled that the ECB cannot pause rate hikes yet as inflation is still too much elevated.
- Also, the ECB announced that starting from July it will not reinvest any maturing asset under the APP programme, which will imply some further tightening in its monetary policy stance.
- In this context, yields on sovereign bonds declined in the euro area, as some investors were expecting a 50bp rate hike, and equities fell across advanced economies, led by the banking sector. In FX markets, the euro weakened against most of its peers and fluctuated around $1.10.
- Today the focus will be on the US labor market report for the month of April.