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Investors traded with a risk-on mood yesterday, after the confirmation that the Fed will begin this month to taper its net asset purchases, but that it will keep its policy interest rates unchanged for the foreseeable future, at least until the economy reaches full employment.

Financial markets ended the day with mixed results, as stronger-than-expected inflation data in both the U.S. and China reinforced investors’ fears about the persistency of the pickup in prices.

Investors closed the week with a cautious mood amid mixed economic data releases in the U.S. and dovish comments from ECB officials. In particular, the Finnish and Lithuanian central banks' chiefs insisted that the current inflation is transitory, although it may last longer than initially expected.

Investors continued trading with a risk-off mood, with sentiment gloomed by the deterioration of the COVID situation across Europe and mixed signals from economic sentiment data. Investors were also taking position ahead of the bank holiday in the US later this week.

In yesterday's session, investors traded cautiously despite easing concerns on the omicron variant. On the data front, the euro area economic sentiment indicator eased in November from 118.6 points to 117.5 and inflation numbers continued to increase in the region. Germany's HICP inflation rose 1.4pp to 6.0% while in Spain it rose 0.2pp to 5.6%.

In yesterday's session, investors traded cautiously as they weighed concerns about the omicron variant with data confirming the tightness of the U.S. labor market (layoffs hit a 28-year low in November) and mounting inflation pressures (euro area producer prices rose by 21.9% y/y in October).

Volatility declined but remained elevated, as investors continue to digest mixed information about the potential risk of the spread of the omicron variant and hawkish signals from central banks. Labour data in the US (job openings surged in October while hiring decreased) also suggested that shortages are persisting.

At the start of a key week for the central banks, investors traded cautiously as they expect a hawkish shift in tone in monetary policy, in particular from the US Federal Reserve.

Investors traded cautiously on Wednesday, digesting the December inflation print in the US, which showed headline inflation rising to 7.0%, highest since June 1982, and core inflation increasing by 0.6 pp to 5.5% yoy. Even if in line with consensus expectations, these figures add pressure to the Fed to start hiking interest rates as soon as in March.

In yesterday's session, the economic impact of the omicron variant together with investors' expectation for central banks were the main drivers in financial markets.

Another volatile session with mixed results on Thursday, with the focus still on the potential impact of tighter monetary policy on rate-sensitive sectors. Investors are also monitoring the Q4 earnings results.

During a volatile session, the risk-on mood recorded during the first hours of trading was eclipsed by a hawkish stance during the first Federal Reserve meeting of the year.

Financial markets started the week with a risk-on session, as investors shifted their focus to corporate earnings and economic indicators, taking a breath from the prospect of monetary policy tightening by the major central banks.

In the last session of the week investors focused on the increasing bets for a tightening of monetary policy across advanced economies and the better-than-expected corporate earnings releases.

Investors closed last week trading cautiously, increasing their bets that the jump in inflation is likely to force central banks across advanced economies to deliver a more aggressive withdrawal of monetary stimuli. Financial markets are pricing in by yearend more than 150 bp hikes in the US and more than 50 bp hikes in the eurozone.

A cautious approach was retaken by investors on Wednesday, driven by uncertainty on the geopolitical risk involving Ukraine and the exit strategy of major central banks in advanced economies. These headwinds more than offset better-than-expected data for January in the US (+3.8% m/m for retail sales and 1.4% for industrial production).

In the last session of the week investors traded with a risk-off mood amid escalating tensions around Russia and Ukraine. During the weekend, the White House accepted a summit between Biden and Putin as long as Russia does not invade Ukraine, a move that could help deescalating tensions.

In the last session of the week, investors' sentiment improved and their preference for riskier assets rose after the sharp sell-off sessions that preceded Friday.

Financial markets started the week with a risk-off session where investors' preference for safe assets rose as they assessed the impact of the sanctions imposed on Russia.

Financial markets started the week with a sell-off session in stock markets as energy prices rose sharply following threats from the US to restrict oil imports from Russia and Russia threats to cut gas flows to Europe. In addition, the euro area investor sentiment index Sentix declined to -7.0 in March, the lowest level since November 2020.