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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.

US November CPI report came mostly in line with expectations: prices grew 0.1% MoM (vs. 0.0% expected) and 3.1% YoY (as expected) down from 3.2% in October, reinforcing the view the Fed will leave rates unchanged at its meeting today. The lack of surprises left markets rather muted, with treasury yields flat and stock indices slightly advancing.

In yesterday's session investors traded with a somewhat risk-on mood as they downplayed the messages from central bank officers. From the US Federal Reserve, Raphael Bostic said that inflation will come down relatively slowly, which will not urge a fast change from the restrictive monetary policy stance.

Market sentiment remained subdued on Tuesday as investors awaited Thursday’s US inflation report for December, which could shed some light on the Fed’s future interest rate decisions. In this context, government bond yields rose in the eurozone, despite the negative surprise from German industrial production for November, and fell slightly in the US.

In yesterday’s session, investors traded with a risk-on mood as the US Senate passed a bill that averted a government shutdown. The bill still has yet to pass the House of Representatives, but if it succeeds, the Federal government will be able to fund itself until early March.

In yesterday’s session, global stock markets advanced as investors increased risk appetite following reports about a Chinese stimulus to support the local stock market, a better-than-expected earnings season in the U.S. so far, and a favorable US PMI reading. Sovereign bond yields edged lower in the euro area and slightly rose in the U.S.

In a session with no big economic data releases, except for the -1.1% m/m December retail sales in the euro area, investors reassessed their expectation on the upcoming central bank interest rate cuts.

In this issue of the Real Estate Sector Report we take stock of a more positive 2023 than expected and offer our forecasts for 2024-2025, which we have also revised upwards. In addition, we analyse how population growth has driven up housing demand in Spain in recent years; how the real estate markets of the main advanced economies have responded to the tightening of financial conditions, and what we expect for Spain’s commercial real estate market.

During Friday’s session, markets traded with a slightly higher risk appetite to end a week without any major economic data releases. Sovereign bond yields fell across the board, most notably on the longer ends of the curves, while the main equity indices advanced slightly.

Financial markets started the week with a slight risk-averse tone as investors await inflation data, to be released later this week, that will be key in determining interest rates’ future path. Sovereign bond yields rose across the board, while equity indices edged lower in the US and the euro area.

In yesterday's session, investors traded cautiously amid mixed economic data releases. In the US, the services ISM declined from 53.4 to 52.6 in February, with the prices paid subcomponent declining from 64.0 to 58.6,. easing analysts' concerns of a further spike in inflationary pressures.

Yesterday’s session was driven by the US February CPI report, which showed inflation last month was 3.2% yoy, slightly higher than January’s reading at 3.1%. Despite the slight acceleration, markets still expect the Fed to begin cutting rates this year, betting on a total of 4 cuts, with the first one being on June (with 77% probability).

In yesterday's session, new data supported investors' expectations that interest rate cuts could begin this summer, which sent euro area and US sovereign bond yields down. Specifically, weekly unemployment benefit claims rose in the US, and the minutes from the ECB's March meeting confirmed officials are confident inflation is moving in the right direction.

The ECB monetary policy meeting yielded, as expected, no change in the official interest rates and a communication consistent with a first rate cut in June, at the next meeting. Christine Lagarde reiterated, though, that the ECB will be data-dependent and added that it will not be Fed-dependent.

In yesterday's session investors adjusted their interest rate expectations amid monetary policy and fiscal news in the euro area, while corporate profits centered the stage in the US.

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.

At its meeting yesterday, the Federal Reserve kept interest rates on hold at 5.25-5.50%, as expected, and the Fed's policy statement kept its economic assessment and policy guidance without changes. Powell signaled the next move is unlikely to be an interest rate hike as the Fed is still leaning towards an eventual cut, despite needing greater confidence to do so.