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In the last session of the week, investors weighed better-than-expected economic data releases in the US with a hawkish tone from Federal Reserve officials. In particular, Christopher Waller and Thomas Barkin highlighted that inflation remains too high and stubbornly persistent, which might prompt a 25bp rate hike at the July meeting.

In the first session of the week, investors traded cautiously in the absence of relevant economic data releases while continuing to digest last week's Fed and ECB monetary policy meetings. With the US markets closed due to a holiday, attention centered to messages from ECB officials.

Trading in global markets was subdued on Tuesday as US markets were closed due to a domestic holiday and there was little in the way of data releases to guide investors. The most notable of these was German exports, which fell -0.1% m/m in May, missing analysts’ expectations of a 0.3% rise.

In the last session of the week, investors traded cautiously in absence of key macroeconomic data releases and as they waited for monetary policy meetings this week in the main central banks.

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.

Investors ended the week digesting a raft of month-end economic data on both sides of the Atlantic. In the Eurozone, Thursday's release of August inflation figures, which showed headline inflation stable at 5.3%, sent sovereign bond yields higher and major stock indices lower on Friday, despite an encouraging slowdown in core inflation.

In yesterday's session, investors' attention focused on the ECB monetary policy meeting, where interest rates were hiked by 25bp to 4.0% (depo) and 4.5% (refi). More importantly, the ECB said that these levels, if maintained for a sufficiently long period, might not need to be raised further to return inflation back to 2%.

Yesterday investors traded cautiously as the threat of a possible US government shutdown by the end of the week and “high for longer” interest rates continue to lead the narrative. Investors were also at odds with Minneappolis Fed President Neel Kashkari’s dovish tone regarding interest rates path ahead.

In yesterday’s session investors traded cautiously as they awaited today’s release of September US employment report, which should give further signs for the future path of interest rates. Weekly US unemployment claims, released yesterday, ticked up modestly as expected and set the stage for today’s data.

Investors’ concerns over economic growth outlook ahead, and the decrease in the probability of an additional interest rate hike from the US Federal Reserve this year were the main drivers in yesterday’s session.  

Solid US economic data released yesterday showed a still resilient economy reinforcing the the case for the Federal Reserve to keep interest rates higher for longer. September US industrial production rose to the highest level in nearly five years to 103.6 and retail sales increased 0.7%, up from 0.6% beating expectations.

The week started off with a volatile session as markets await key economic data this week (PMIs for advanced economies and US 3Q GDP), 3Q euro area Bank Lending Survey, the ECB's rate decision, further 3Q earnings, and news from the Middle East.

In yesterday's session financial markets continued to digest the last US Federal Reserve monetary policy decision, where interest rates were held unchanged at the 5.25%-5.50% target range and President Jerome Powell hinted that we might already be at the peak of the hiking cycle, although new rate hikes were not definitely ruled out.

The possible end of the central banks’ hiking cycle continued to weigh on financial markets’ sentiment yesterday. A list of FOMC members said yesterday that the US economy remains strong but expressed a generalized preference for remaining patient amid rising uncertainty in the coming months.

Investors continued to trade cautiously yesterday amid messages from central banks signaling the end of the interest rates hiking cycle. Nevertheless, Christine Lagarde said that more evidence is needed to be sure that inflation returns sustainably to the 2% target.

Investors remained trading cautiously yesterday, as they still expect no further tightening of monetary policy and as economic data came in slightly better than expected. In the eurozone, the consumer sentiment indicator rose slightly from -17.8 to -16.9 in November, although it remains at quite a low level. 

In Tuesday’s session, investors continued to focus on the narrative that US growth is slowing and that the next move by major central banks will be to cut interest rates at some point next year. This extended the market’s risk-on sentiment of recent weeks, with government bond yields falling across the board and major equity indices rising.

Markets took a pause after last week’s rally which brought the main stock indices to post their best monthly advance in years, and sovereign bond yields their largest monthly cuts in two years. Investors have now turned cautious ahead of this week’s US employment data while still pricing in the likelihood of interest rate cuts as soon as March 2024.

Investors ended the week by revising their expectations for future interest rates upwards as Friday’s US employment report for November beat expectations for job creation and a lower unemployment rate. This caused Treasury yields to rise across the board, as it should force the Fed to remain hawkish and potentially delay any interest rate cuts.

Investors started the week on a subdued note as they await key central bank meetings and data releases this week. Sovereign bond yields were little changed ahead of today's US CPI report. Yesterday, the NY Fed's 1-year inflation expectations index for November extended its decline to 3.4% showing the impact of interest rate hikes.