Financial Markets Daily Report
07 January 2022

During a volatile session, financial markets ended the day with further losses, as investors digested the more hawkish tone in the minutes of the December Fed meeting, which hinted at the possibility that policy interest rates could be raised “sooner or at a faster pace” than officials had initially anticipated.

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  • During a volatile session, financial markets ended the day with further losses, as investors digested the more hawkish tone in the minutes of the December Fed meeting, which hinted at the possibility that policy interest rates could be raised “sooner or at a faster pace” than officials had initially anticipated.
  • Sovereign bond yields continued to trade higher, more notably at the short end of the curve. In Europe, the yield on the German 10-year government bond rose to -0.06%, the highest level since mid-2019, while periphery spreads widened, in Italy also reflecting the uncertainty around the upcoming presidential elections.
  • In equity markets, stocks fell in both sides of the Atlantic, driven by the ongoing rotation in favour of cyclical stocks.
  • On the calendar, the key focus today will be on the December eurozone HICP flash inflation reading and the US employment report. In addition, a number of Fed officials are due to deliver speeches.
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