Financial Markets Daily Report11 May 2021
In the first session of the week, investors traded in a cautious mood amid an increase in market-based measures of inflation expectations (the U.S.' 5Y5Y inflation breakeven rate reached 2.36%, a level not seen since 2014).
- In the first session of the week, investors traded in a cautious mood amid an increase in market-based measures of inflation expectations (the U.S.' 5Y5Y inflation breakeven rate reached 2.36%, a level not seen since 2014).
- Stock market volatility rose and inflation fears weighed on growth equities (eg., tech) while favoring cyclicals. Euro area stock markets were mixed while U.S. indices closed lower.
- In fixed-income markets, U.S. sovereign yields nudged up ahead of tomorrow's CPI inflation release. In Europe, core sovereign yields were little changed and peripheral spreads narrowed as the ECB's Philip Lane acknowledged that the EA economy is at an inflection point but reiterated that it will be a long journey before it gets a full recovery.
- In FX markets, the USD appreciated moderately against the major currencies – except for the GBP, which strengthened as investors digested the outcome of the weekend's batch of local elections in the UK.