Financial Markets Daily Report
29 November 2022

Risk aversion continued to dominate in yesterday's session, with the key themes remaining the COVID situation in China and hawkish comments by central bank officials. In the euro area, both Christine Lagarde and Joachim Nagel said that inflation will remain elevated and might not have peaked yet, justifying a tighter monetary policy stance.

FMDR
  • Risk aversion continued to dominate in yesterday's session, with the key themes remaining the COVID situation in China and hawkish comments by central bank officials. In the euro area, both Christine Lagarde and Joachim Nagel said that inflation will remain elevated and might not have peaked yet, justifying a tighter monetary policy stance.
  • In the US, several FOMC members pointed at higher interest rates in the coming months. In particular, James Bullard signaled that financial markets might be underestimating the terminal rate (currently below 5.0%) and Lael Brainard said risks around inflation are still tilted to the upside.
  • In this context, yields on sovereign bonds rose in the euro area while remaining broadly flat in the US. Stock indices fell across the globe while the USD appreciated against its peers. Commodity prices hovered around recent levels.
  • This morning we knew that November Spanish inflation declined from 7.3% to 6.8%, pushing yields further down.
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