Financial Markets Daily Report
18 November 2022

In yesterday's session, monetary policy took center stage again as US Federal Reserve comments pointed to a higher terminal interest rate than anticipated by financial markets. Investors priced in these comments and yields on sovereign bonds rose in the euro area and, especially, in the US.

FMDR
  • In yesterday's session, monetary policy took center stage again as US Federal Reserve comments pointed to a higher terminal interest rate than anticipated by financial markets. Investors priced in these comments and yields on sovereign bonds rose in the euro area and, especially, in the US.
  • In particular, St. Louis Fed President James Bullard, known to be one of the hawkish members in the current hiking cycle, said that even with dovish assumptions official interest rates should reach at least 5%.
  • As sovereign yields rose, stock indices declined modestly across the board and the US dollar strengthened against most advanced and emerging currencies (the euro fluctuated below $1.04).
  • Yesterday we knew that the October HICP headline inflation for the euro area was revised 0.1pp downwards to 10.6%, still a historical maximum far away from the ECB target.
     
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