Financial Markets Daily Report15 December 2023
The ECB's caution regarding a pivot in its hiking cycle weighed on investors in yesterday's session. Lagarde's press conference appeared hawkish in contrast to Powell's and the Fed's dot plot on Wednesday, which cooled market expectations for rate cuts in 2024 in both sides of the Atlantic.
- The ECB's caution regarding a pivot in its hiking cycle weighed on investors in yesterday's session. Lagarde's press conference appeared hawkish in contrast to Powell's and the Fed's dot plot on Wednesday, which cooled market expectations for rate cuts in 2024 in both sides of the Atlantic.
- Government bond yields, which had fallen sharply across the board at the start of the session, reversed some of this move. The reaction in equity markets was very similar. Most European indices ended the session with some gains, but larger gains from earlier in the day were eventually erased. In the US, the main stock indices also posted modest gains.
- The slight divergence between the ECB and the Fed had the biggest impact on the FX market. The USD weakened sharply against the Euro, hovering around 1.10, while the Yen also extended its weekly gains against the Dollar. In commodities, oil traders remained focused on the Fed's message, with the Brent barrel extending its weekly gains.