Financial Markets Daily Report 27 February 2023
Investors continued to err on the side of caution during the last session of the week, with sentiment impaired by data releases pointing to lingering inflationary pressures and the likely need for further monetary policy tightening.
- Investors continued to err on the side of caution during the last session of the week, with sentiment impaired by data releases pointing to lingering inflationary pressures and the likely need for further monetary policy tightening.
- In particular, PCE inflation in the US, the preferred metric by the Federal Reserve, surprised on the upside with a 5.4% y/y increase in January, after 5.3% in December. The core measure also ticked up: 4.7% y/y after 4.6%. In Europe, PPI inflation in Spain eased in January, although remaining very elevated (8.7% y/y after 14.9%).
- In this context, sovereign bond yields picked up, reaching new year-to-date records, while stock indices fell. In addition, the USD continued to appreciate modestly against peers, trading near 1.05 against the EUR.
- This week, flash HICP data for February are released for Spain (Tuesday), Germany (Wednesday) and the euro area (Thursday). In addition, the ECB publishes on Thursday the accounts of the last GC policy meeting.