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Macroeconomic events and data releases shadowed latest developments of the Ukrainian war, as the ECB meeting and US CPI inflation centered stage in financial markets. On the latter, headline inflation rose as expected in February from 7.5% to 7.9% and core inflation rose from 6.0% to 6.4%.

In yesterday's session, investors' sentiment improved amid optimistic comments from Russian officials, which increased the odds of a diplomatic solution, and following the description of the outlook from Jerome Powell, who said the US economy is very strong and with an extremely tight labor market.

Investors traded with cautious optimism at the last session of the week, still hopeful a resolution in the Ukraine-Russia conflict could be possible. In addition, a meeting by US President Joe Biden and his Chinese counterpart Xi Jinping over the crisis in Ukraine ended without big surprises.

Financial markets started the week with cautious optimism as headlines on the war in Ukraine continued to weigh on investors' sentiment. Today, Russian and Ukrainian delegates are holding meetings in Turkey, with the Ukrainian authorities reportedly willing to discuss neutrality and other conditions.

Investors ended the week with mixed results, balancing out a solid employment report in the US (payrolls rose by 431.000 in March and the jobless rate fell to 3.6%) with upside surprises in inflation in the eurozone (HICP went up by 7.5% y/y in March). Ongoing talks between Russia and Ukraine also remained in focus.

Sentiment deteriorated across financial markets on Wednesday, as investors digested the hawkish narrative in the accounts of the Fed’s latest meeting and the likely new imposition of sanctions against Russia.

Volatility continued to dominate across financial markets at the start of the week, as investors took position ahead of the Federal Reserve meeting staring today and following the release of feeble economic sentiment data (final manufacturing PMIs). EU leaders were still evaluating a new round of sanctions against Russia.

Risk-aversion returned to the fore during a volatile session on Thursday, as investors continued to digest recent monetary policy decisions by central banks (Fed, BoE) and took on board disappointing economic data (e.g. the fall in factory orders in Germany and the uptick in new jobless claims in the US). 

In the first session of the week, investors' sentiment deteriorated amid concerns on whether the ongoing withdrawal of monetary policy accommodation will be able to tackle inflationary pressures without leading to a recession.

A global selloff in stock markets continued on Thursday, as worries mounted about the direction of the global economic recovery and the potential spillovers on the outlook for companies’ earnings.

Investors continued to trade with a risk-on mood on Thursday, lifting demand for “buying the dip” and after the release of positive economic data (e.g. the decline in weekly jobless claims in the US).

A risk-on session across financial markets on Thursday, with sentiment boosted by the recent decision by the OPEC to ramp up plans to increase its oil supply (+650k barrels a day in both July and August) and solid economic data (eg the decline in new weekly jobless claims in the US).

Investors started the week with a risk-on mood, with sentiment supported by easing COVID restrictions in China, including reports that Chinese regulators are relaxing some rules against some tech giants. Data also showed the decline in the Chinese services sector eased in May (the services PMI rose from 36.2 to 41.4).

During a volatile session, financial markets closed the day with no clear direction, with investors taking position ahead of the crucial ECB meeting on Thursday and the release of the US CPI inflation on Friday.

Financial markets extended losses on Thursday, following the confirmation by the ECB to accelerate the withdrawal of  policy accommodation, including ending net purchases on July 1st and starting a rate liftoff cycle on the 21st.

In yesterday's session, investors traded cautiously as they continued to assess whether central banks will be able to tame inflationary pressures without causing a hard landing. Geopolitical news centered the stage too, after the G7 meeting in Germany and ahead of today's NATO summit in Madrid.

A shocking inflation release in the US centered the stage yesterday in financial markets. Headline CPI rose in June by 9.1% y/y and 1.3 m/m, reinforcing the Federal Reserve intention to raise rates by 75bp again at its July meeting. Additionally, investors have started to price in a 100bp hike, in line with yesterday's decision of the Bank of Canada.

In yesterday's session, investors traded with a risk-off mood following the downward revision of the European Commission forecasts. While 2022 GDP for the euro are was barely revised to 2.6%, 2023's changed from 2.3% to 1.4%. The EC revised its inflation forecasts from 6.1% and 2.7% to 7.6% and 4.0% for 2022 and 2023, respectively.

In the last session of the week, investors' sentiment improved as the odds for a 100bp hike in the next US Federal Reserve meeting decreased.

Risk aversion continued to set the tone across financial markets on Tuesday as investors took position ahead of the Federal Reserve’s policy meeting today, with money markets pricing another 75 bp hike in the policy rate.