Financial Markets Daily Report
24 May 2022

Investors traded with a risk-on mood on Monday after Joe Biden signalled he would reconsider tariffs imposed to China by the Trump administration and Christine Lagarde offered a clear guidance on the next steps for the ECB.

FMDR
  • Investors traded with a risk-on mood on Monday after Joe Biden signalled he would reconsider tariffs imposed to China by the Trump administration and Christine Lagarde offered a clear guidance on the next steps for the ECB.
  • Lagarde explained in the ECB blog that the inflation outlook has changed and that "disinflationary dynamics of the past decade are unlikely to return". In this context, she favoured an end of APP net purchases in early July and rate hikes in July and September, in order to exit negative interest rates in the third quarter.
  • Financial markets received positively these comments and stock indices rose across the board. In fixed-income markets, yields on sovereign bonds rose while euro area peripheral spreads narrowed. The euro strengthened by more than 1% against the US dollar and fluctuated near $1.07.
  • Today the focus will be on the May's flash PMI releases for the main advanced economies.
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