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Investor risk appetite eased slightly yesterday as government bond yields weighed on equities. In the eurozone, sovereign yields rose, curves flattened and peripheral spreads narrowed. Data released yesterday showed downside surprises in German retail sales and factory orders, and negative sentiment across the EU from the December EC's confidence indicators.

Spain's real estate sector is entering a more mature phase of the cycle characterised by a slowdown in growth in demand and prices. The factors supporting the property market boom (job creation, favourable financial conditions and high foreign demand) are still enjoying a positive trend but have eased slightly.

Financial markets traded without a clear direction ahead of the US CPI report expected today. In the US, assets had a choppy trading session, as early optimism driven by unexpectedly low US wholesale inflation in December (PPI +0.2% mom vs. +0.4% expected) was muted later on. In this context, US sovereign bonds and equities closed the session flat.

With US markets closed for the Martin Luther King Jr. holiday, the rest of global markets traded cautiously ahead of Donald Trump's inauguration. Investors were especially attentive to announcements regarding trade policy, but a memo suggesting he would not impose new tariffs on day one (which he in fact, did not) kept markets at ease.

Investors kicked off the week on a cautious tone following President Trump's tariff threats over the weekend, which he said would include a 25% tariff on aluminium and steel imports (eventually signed via executive order late last night) as well as a series of further reciprocal tariffs on all trading partners.

Investor sentiment ended the week on a mixed note. Eurozone government bond yields rose moderately after the second reading of Q424 GDP came in slightly better than the first (0.1% QoQ vs. 0.0%), with peripheral spreads widening.

Investor risk appetite remained relatively high on Tuesday. In the eurozone, government bond yields were broadly unchanged. The ZEW index showed a rise in German investor sentiment in February, and ECB's Cipollone had some dovish comments on future interest rates, both of which offset news of future higher public spending on defence in the EU.

Markets were mixed during last session as several data releases for the euro area and the US was digested by investors. In the euro area, February's flash composite PMI came slightly below expectations (50.2 vs 50.5 expected), with manufacturing PMI still in contractionary territory (47.3) and services PMI still in expansion (50.7).

Risk-off session in financial markets following the largest monthly drop (seven points) in three years in the U.S. Conference Board Consumer Confidence Index, which fell to 98.3 (the lowest level since July 2024), while twelve-month inflation expectations surged by almost 1 percentage point.

Mixed sentiment in financial markets as the week came to a close amid political uncertainty in Germany (where Merz has started coalition talks), tariff threats from the Trump Administration (tariffs on Canadian and Mexican imports are expected to be reinstated this week) and inflation data on both sides of the Atlantic.

Markets were mixed across the globe during yesterday's session. In the euro area, renewed talks on increasing defense spending and finding a peace deal for Ukraine drove positive sentiment, while in the US, President Trump's announcement that 25% tariffs to Canada and Mexico would be reinstated on March 4th sent markets into a risk-off trading session.

Investors remained cautious on Friday in an uncertain global political environment. Eurozone government bond yields were flat, although peripheral spreads widened slightly. US Treasury yields were also slightly higher, with curves flattening, after the Fed's Powell said that tariffs could fuel inflation but that the economy was fine so the Fed should remain cautious.

Risk-off sentiment dominated investors for most of yesterday's session. In the Eurozone, peripheral spreads narrowed and the German Bund yield curve steepened as talks between political parties over new spending plans continued. US Treasuries rose as well after the JOLTS report showed an increase in job openings in January.

Correction session for the markets, characterised by nervousness ahead of the looming tariff threat on April 2nd, as referenced by central banks, and an upcoming corporate earnings season that may begin to reflect these concerns in companies' forecasts.

Risk appetite recovered somewhat yesterday. In a volatile session ahead of today's announcement by Trump of reciprocal US tariffs on virtually every other country in the world, investors assessed a series of price and activity data as increasing the chances of rate cuts.

Yesterday all eyes were on Trump's tariffs announcement, which took place after US markets had closed. Trump finally set  tariffs close to the worst expectations, with a 34% tariff for China, 20% for the EU and 24% for Japan. Asian equities are  down at today's session (Nikkei around -3%), while stock index futures for Europe and the US point to similar losses.

Financial markets had a mixed session on Friday, closing off a highly volatile week with large swings in asset valuations amid chaotic tariff announcements, increased trade tensions, and heightened uncertainty. The latest announcement came from China, which retaliated against the US by increasing the tariff on US imports to 125%.

Financial markets saw a mixed session as investors navigate trade policy unpredictability and weigh the economic outlook. In the euro area, industrial production rose +1.1% mom in March, while the German ZEW economic sentiment index registered its largest monthly decline since 2022 due to uncertainty derived from US tariffs.

Investor risk appetite recovered somewhat on Tuesday. In the Eurozone, government bond yields fell as several ECB officials commented that inflation could stabilise at its 2% target sooner than expected just a few weeks ago. The US Treasury curve steepened, as short-term yields rose as traders bet that the US could strike some favourable trade deals with key partners.

Investors' risk appetite remained high yesterday as US Treasury Secretary Bessent said that the current level of US-China tariffs is unsustainable. Trump also seemed confident over an eventual deal with China. The end point for tariff levels remains unclear, but Bessent said about the deal's term that a "reasonable estimate" would be to have it in place by Q3.