Investors continued to trade with a positive mood ahead of the Thanksgiving holiday in the US (markets will remain closed today). Hopes that central banks could allow less tightening were reinforced by feeble sentiment data and the minutes of the last Fed meeting, where a “substantial majority” of officials backed reducing the pace of rate hikes.
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In the last session of the week, investors weighed better-than-expected economic data in the euro area with mixed signals from central banks about the pace of rate hikes in the coming meetings, including from ECB member Schnabel.
Volatility and risk aversion continued to set the tone during the last session of the week, as investors were still digesting the hawkish rhetoric during the last monetary policy meetings of 2022 at major central banks.
After a year in which demand for housing exceeded all expectations, in 2023 we expect the real estate market to cool down, the first signs of which have already begun to be perceived.
Investors started the year trading with a risk-on mode, taking on board data showing receding inflationary pressures in Europe, a slowdown in economic growth in the US and a further decline in energy prices across the globe. As a result, investors revised down modestly their expectations for future policy interest rate hikes.
In yesterday's session, investors continued to trade with a risk-on mood, taking position ahead of potential surprises in the crucial CPI inflation report in the US due to be released today. The headline index is expected to decline m/m, increasing the odds for a 25bp hike in the next Federal Reserve meeting, instead of a 50bp hike.
In yesterday’s session, the US CPI data for December centered the stage and confirmed the downward trend kicked off last summer. In particular, the headline index fell by 0.1% m/m and the core measure rose by 0.3%. On year-on-year terms, inflation eased to 6.5% (headline) and 5.7% (core), both in line with consensus expectations.
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.
Investors continued to err on the side of caution during the last session of the week, with sentiment impaired by data releases pointing to lingering inflationary pressures and the likely need for further monetary policy tightening.
The hawkish tone set by central bank officials continued to center the stage in financial markets at the start of the week. In particular, ECB chief economist Phillip Lane signaled that further interest rate hikes beyond next week's meeting will be appropriate to ease inflationary pressures.
Investors continued to trade with caution, taking position ahead of the publication today of the crucial US payrolls report for February. Data released on Thursday showed an unexpected increase in new jobless claims last week (to 211,000), which contrasted with signals from other surveys pointing to further tightening in the labour market.
In the last session of the week, investors’ concerns about liquidity shortage in the banking system continued to dominate the scenario and risk-aversion set the tone in financial markets.
On Monday, volatility continued to dominate financial markets. While the session started with losses in stock indices and sharp declines in sovereign yields, sentiment improved throughout the day following the communication by some ECB officials. Equities closed higher and yields on sovereign bonds rose in the US and were mixed in the euro area.
Investors started the week trading with more appetite for risk, as concerns about the banking sector receded following the announcement that SVB is to be acquired by another institution (First Citizens Bank & Trust) and news reporting additional support from the US authorities for regional banks.
Precaution remained the key theme during a session with mixed results on Tuesday. Positive survey data in the US (the Conference Board’s consumer confidence index surprised by rising to 104.2 in March) suggested limited spillovers so far from the banking sector turmoil on consumer confidence.
Equity markets extended a rally across the globe on Thursday, as investors continued to switch their focus away from the stress in the banking sector and instead pondered about the likely path of monetary policy decisions ahead.
A session with mixed results across markets on Tuesday, as investors returned from the Easter holiday and took position ahead of the March inflation report in the US today. The Fed also releases the account of its March meeting.
Investors continued to err on the side of caution on Wednesday, balancing out data showing US inflation cooled slightly more than expected in March with warnings set out in the minutes of the last Fed meeting of the risk of a mild recession in the US later this year.
In yesterday’s session investors traded cautiously amid mixed corporate profits reports and lingering worries of persistent inflationary pressures, after the upside surprise in the CPI March data in the UK. Also, the US Beige Book released yesterday stated that the US economy stalled in recent weeks, with slowing hiring and inflation.
Investors continued to err on the side of caution on Wednesday, taking position ahead of the release of the Q1 GDP flash estimates for the US today and across the eurozone tomorrow.