Financial Markets Daily Report18 October 2023
Solid US economic data released yesterday showed a still resilient economy reinforcing the the case for the Federal Reserve to keep interest rates higher for longer. September US industrial production rose to the highest level in nearly five years to 103.6 and retail sales increased 0.7%, up from 0.6% beating expectations.
- Solid US economic data released yesterday showed a still resilient economy reinforcing the the case for the Federal Reserve to keep interest rates higher for longer. September US industrial production rose to the highest level in nearly five years to 103.6 and retail sales increased 0.7%, up from 0.6% beating expectations.
- As a result, sovereign bond yields rose sharply, with the 10Y treasury rising 12 bps and the 2Y treasury 11 bps, both reaching 16-year highs. In the euro area yields followed suit and gained 10 bps both in core and periphery economies. Probability of an interest rate hike by the Fed in December rose to 47%, up from 36% on Monday.
- Elsewhere, the main stock indices remained mostly flat. Brent prices hovered around $89 per barrel as markets await results from diplomatic efforts to contain the Israeli-Hamas conflict from spreading. Today, markets will be reacting to China GDP data released early in the morning which showed 4.9% y/y growth vs an expected 4.3% (+1.3% q/q).