On Friday’s session investors traded cautiously as they continued to digest a more-hawkish-than-expected read on recent monetary policy path indications. Sovereign bond yields slightly increased on both sides of the Atlantic and equities were mostly flat, while the dollar slightly strengthened. On the commodities side, metals prices rebounded, while oil prices dropped as worries of declining demand strengthened.
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Investors kicked-off the week on a cautious tone. US Treasury yields continued to tick slightly higher, following the tendency of the last sessions. Global equities were mixed, rising in the US and declining across the euro area. A study published by the ECB found eurozone consumers have been shifting away from US goods and reducing overall discretionary spending.
With little macro news to trade on, markets had a somewhat quiet session. Sovereign yields were mostly flat around the largest economies, with the exception of the US, where an increase in supply of government bonds drove long-term yields slightly higher. The dollar strengthened, following Fed's chair Powell cautious comments regarding future easing.
In the US, the latest revision of Q2 GDP growth confirmed the economy is expanding at a stronger pace driven by resilient personal consumption and solid private investment. Investors pared back expectations for future Fed rate cuts to four by the end of 2026. This shift pushed Treasury yields higher.
Investors recovered some risk appetite in the last session of the week. Advanced-economy stocks rebounded after a few mixed sessions, while the USD weakened on expectations that the Fed may continue cutting rates in the coming weeks. Commodity prices rose across the board.
Investors traded cautiously in the first session of the week as they pondered over the risk of a U.S. government shutdown (federal funding expires on September 30 unless Congressional leaders agree on a spending bill). The VIX rose, stocks were mixed, sovereign yields declined across the U.S. and the euro area, the USD weakened and gold rose.
Stocks rose while sovereign yields and the USD were little changed and gold advanced as investors eyed a looming U.S. government shutdown (which just began this midnight). In commodity markets, the barrel of Brent declined to $67 as investors continued to brace for an OPEC+ output hike next month.
Markets seemed to shrug off the U.S. government shutdown in yesterday's session. Global stocks rose and U.S. sovereign yields declined amid weak U.S. labor market data. Euro area sovereign yields were little changed, and the euro held steady at $1.17. Gold also steadied after having rallied in the last few days.
Markets were mixed in yesterday's session as the U.S. government shutdown clouded data releases. Technology equities drove the U.S.' Nasdaq to record highs, while the S&P 500 was barely changed and euro area stocks were mixed. Sovereign yields nudged down and the USD inched higher. Brent oil prices continued to fall ahead of the weekend's OPEC+ meeting.
Investors ended the week with a mixed session as the US government shutdown, which prevented the release of the employment report, clouded sentiment. Sovereign yields edged lower in the euro area and stocks mostly advanced, while US Treasury yields ended higher, and equities were mostly flat weighed down by the underperformance of tech stocks.
Following the resignation of French premier Lecornou, French assets sold off with stocks paring losses and the yield on the 10-year sovereign benchmark rising to push the country's risk premium to 85bp, above Italy's. Contagion to the rest of the euro area was limited, with peripheral risk premia stable and stocks paring mild losses. The EURUSD held at 1.17.
Without relevant macro data to trade on, no advances in negotiations to reopen the US government, nor any new developments in France, markets traded cautiously during yesterday's session. Euro area sovereign yields ended mostly flat while US Treasury yields edged lower, and stocks retreated globally. The euro weakened to 1.16 against the dollar.
Sentiment recovered in the euro area after a few sessions of cautious trading following the resignation of France’s Prime Minister. Sovereign yields fell and peripheral risk premia narrowed slightly, although France’s remains elevated and above Italy’s. The region’s main equity indices advanced.
Markets were mixed in yesterday's session as uncertainty about the situation in France and the US government shutdown continued to dampen investors' sentiment. Sovereign yields edged higher on both sides of the Atlantic and the euro weakened to $1.15 against the dollar. Euro area stocks were mixed and US stocks fell as the tech-fueled rally took a pause.
Investor risk appetite soured and global risk assets fell after President Trump threatened a “massive” tariff hike on Chinese exports, citing “hostile” export controls over rare earths. Equity indices declined across the Atlantic, with the tech-focused Nasdaq among the worst performers. Trump’s threats were watered down over the weekend.
Investor sentiment improved at the start of the week as President Trump softened Friday’s rhetoric on China and both sides signaled openness to resuming trade talks. Risk appetite also benefited from the de-escalation in the Middle East. Global equity indices advanced, led by the technology sector, while volatility declined sharply.
Wednesday saw another mixed session in financial markets. Eurozone sovereign bond yields fell, with curves flattening slightly, as August industrial production data in the eurozone surprised to the upside (though still contracted). The French spread also narrowed and sat below the Italian one, as Lecornu’s new government cemented its chances of survival.
Thursday saw another mixed session in financial markets. US Treasury yields declined after several Fed officials commented on further rate cuts, although they disagreed on the magnitude and pace of easing. Eurozone sovereign bond yields also fell, particularly Italian ones, following the Government’s submission of its Draft Budgetary Plan to the European Commission.
On Friday, equity markets on both sides of the Atlantic opened with losses as investors weighed concerns about credit quality in the US after two US regional lenders disclosed loan issues. However, during the day those concerns eased, allowing the US indices to close with gains and the Europeans to partially recover.
Monday’s session extended the risk-on sentiment from Friday. Strong earnings results from US companies and the easing of trade tensions between China and the US boosted global stock markets, with volatility dropping.