Financial Markets Daily Report 17 April 2023
Hawkish comments by officials from the ECB and the US Federal Reserve were the main drivers for investor sentiment in the last session of the week. In the euro area, Pierre Wunsch urged the ECB to speed up the reduction of its balance sheet and to stop reinvesting the maturing bonds while Joachim Nagel called for further interest rate hikes.
- Hawkish comments by officials from the ECB and the US Federal Reserve were the main drivers for investor sentiment in the last session of the week. In the euro area, Pierre Wunsch urged the ECB to speed up the reduction of its balance sheet and to stop reinvesting the maturing bonds while Joachim Nagel called for further interest rate hikes.
- In the US, several FOMC members insisted that monetary policy needs to be kept restrictive and called for, at least, one more 25 bp rate hike. On the economic data front, March retail sales surprised to the downside (-1% m/m) while industrial production rose more than expected (+0.4% m/m).
- In this context, yields on sovereign bonds rose markedly in both sides of the Atlantic, particularly so in the short end of the curve, while equities edged lower in the US and rose in most euro area trading floors.
- This week the focus will be on the ECB last meeting accounts (Thu.) and on April preliminary PMIs (Fri.).