Financial Markets Daily Report28 July 2023
The last stages of this cycle of monetary policy tightening centered the stage in yesterday’s session as the ECB hiked interest rates by 25bp (depo at 3.75% and refi at 4.25%). Nevertheless, Christine Lagarde said that this might not be the last hike and insisted that interest rates will remain high for a long period of time to break the back of inflation.
- The last stages of this cycle of monetary policy tightening centered the stage in yesterday’s session as the ECB hiked interest rates by 25bp (depo at 3.75% and refi at 4.25%). Nevertheless, Christine Lagarde said that this might not be the last hike and insisted that interest rates will remain high for a long period of time to break the back of inflation.
- Also, the BoJ said that the 0.5% ceiling for the 10-year yield was a reference point and not a rigid limit, an early hint of policy normalization. On the data front, the US GDP grew by 0.6% q/q in Q2, an acceleration from the Q1, although there are some deceiving figures in the external sector and in private consumption.
- In this context, sovereign yields declined in the euro area and surged in the US, which led to an increase of stock indices in Europe and slides in the US’. The euro weakened and fluctuated below $1.10.
- The daily report will not be released again until August 21st. Enjoy the holidays!