Financial Markets Daily Report 29 August 2022
Volatility and risk aversion continued to dominate across markets during the last session of the week, following hawkish signals from central bank officials in Jackson Hole and a further increase in natural gas prices in Europe.
- Volatility and risk aversion continued to dominate across markets during the last session of the week, following hawkish signals from central bank officials in Jackson Hole and a further increase in natural gas prices in Europe.
- Fed chairman Jerome Powell reiterated that the central bank will continue to hike interest rates to a level that will be “sufficiently restrictive” to return inflation to 2%, although noting that decisions will be made based on data.
- Separately, ECB board member Isabel Schnabel and François Villeroy de Galhau, governor of the Banque de France, said that there should be no doubt about the ECB’s willingness to raise interest rates beyond the neutral level.
- In this context, stocks fell notably while bond yields rose across the board. The USD continued to trade slightly below parity against the EUR. On the data front, this week the key focus will be in the Economic Sentiment Indicator (Tue.) and the flash HICP inflation for August in the eurozone (Wed.) and the employment report for August in the US (Fri.).