In a quiet session due to the President's Day holiday in the US, traders continued to weigh incoming economic data (eg consumer confidence in the eurozone rose to -19 from -20.7) with the hawkish tone from central bank officials. In this context, yields on sovereign bonds ticked up in the euro area, nearing year-to-date highs.

In the first session of the week, investors traded with a cautious mood amid hawkish rhetoric from regional Federal Reserve presidents and an upbeat revision of the euro area forecasts done by the European Commission. 

In yesterday’s session, investors continued to trade with caution amid intensifying political negotiations in the US to raise the debt ceiling and mixed economic data releases. In Europe, the May’s ZEW survey fell in the euro area and Germany, showing that investors’ sentiment remains gloomy.

In yesterday's session, weak PMI data for August, which signalled a slowdown in economic growth across the Atlantic, but most acutely in Europe, caused sovereign bond yields to fall across the board (around 13bps. for the long-term references). In the eurozone, PMI data for the services sector fell below the 50 threshold for the first time in 2023.

In yesterday's session, economic data releases continued to center the stage. In the US, Q2 GDP figures were revised downwards from 2.4% q/q SAAR to 2.1%, while, in the euro area, country members' inflation figures failed to prove a decisive trend towards the 2%. Euro area aggregate data will be released today.

In yesterday's session, euro area economic releases took center stage. Lower-than-expected October y/y inflation in Germany (3.0% vs 3.3% expected) and in Spain (3.5% vs 3.8% expected) pushed euro area sovereign yields down and the area's main stock indices up. 3Q German GDP growth came in at -0.1% vs -0.2% expected.

In yesterday’s session, which was closed in the US due to Thanksgiving holiday, investors traded cautiously amid signs of weak economic growth in the euro area in Q4. Although the Composite euro area flash PMI rose modestly from 46.5 points to 47.1, it remained in contractionary territory.

En la mesa de expertos “Perspectivas económicas 2024: desafíos en clave económica”, organizada por El Periódico de España y El Periódico, con Judit Montoriol, lead economist de CaixaBank Research,  María Jesús Fernández, economista sénior en el área de Coyuntura Económica de Funcas; Juan Pablo Riesgo, de EY Insights y People Advisory Services; Luciana Taft, consultora del área de Economía y Mercados de Analistas Financieros Internacionales (AFI), y Judith Arnal, investigadora senior del Center for European Policy Studies y del Real Instituto Elcano debaten los retos a los que se enfrenta la economía española en 2024.

In the final session of the week, market sentiment was mixed on both sides of the Atlantic. In Europe, government bond yields remained fairly flat following Thursday’s ECB meeting, after which investors see a first rate cut in April as more plausible. Major European stock market indices rallied on this expectation, posting a week of strong gains.

In yesterday’s session, investors had to weigh mixed economic data indicators, as flash PMIs showed how the manufacturing sector in the euro area weakened slightly in March, deep below the 50-points threshold, while the services index managed to increase (52.9 for the euro area).

Investors traded cautiously in yesterday’s session as they await key economic releases this week, including euro area 1Q GDP (today), which is expected to show the economy grew 0.2% yoy, euro area April inflation (today) expected to stay at 2.4% yoy, and the Fed’s FOMC meeting tomorrow, where markets anticipate no changes to the Fed’s target rate.