Financial Markets Daily Report20 January 2023
Investors continued to err on the side of caution on Thursday, still digesting weak economic data pointing to a global economic slowdown and a new round of hawkish signals from the ECB.
- Investors continued to err on the side of caution on Thursday, still digesting weak economic data pointing to a global economic slowdown and a new round of hawkish signals from the ECB.
- In Davos, President Christine Lagarde said the ECB will continue to restrict its monetary policy, noting that inflation remains «way too high» and urging financial markets «to revise their positions». According to the minutes of the December meeting, a «large number» of ECB officials initially backed a 75 bp hike, instead of the 50 bp announced.
- In the US, Treasury Secretary Janet Yellen noted in a letter to Congress that the Treasury is beginning the use of special measures to avoid a US payments default, after the federal debt limit was reached on Thursday.
- In this context, equity prices dropped, sovereign bond yields rose while the EUR appreciated modestly. In addition, oil prices ticked up after the IEA noted demand is likely to reach a new all-time high this year as China reopens.