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During Friday’s session investors’ sentiment was mixed as markets continued to digest Powell’s speech and hawkish remarks from Lagarde. The University of Michigan U.S. Consumer Sentiment Index dropped again in November for the fourth straight month to 60.4 (63.8 in October), and households’ expectations for long term inflation rose to 3.2%.

Financial markets started the week on a cautious note as investors await for US October CPI data released today. The consensus expects price growth to have slowed to 0.1% m/m from September's 0.4%, implying a 3.3% y/y change in October, down from 3.7% last month.

Euro area and US sovereign bond yields continued to fall during Friday's session as investors continue to expect interest rate cuts by mid-2024. Speaking last Friday, Federal Reserve chair Jerome Powell remarked that policy is "well into restrictive territoy" further fueling the rally in bond markets.

In yesterday’s session, investors traded cautiously amid weaker-than-expected economic data releases in the US. In particular, Q3 GDP was revised slightly downwards from 5.2% SAAR to 4.9% while the core PCE price index edged down in Q3 to 2.0% from 2.3%.

The FOMC kept US interest rates on hold, saying it needed more confidence that inflation was moving toward 2% on a sustainable basis before cutting rates. Powell later stated that the FOMC was unlikely to have such confidence by March.

Yesterday’s session in financial markets was a quiet one without any major macroeconomic data releases and with the Q4 2023 corporate earnings season nearing its end. All eyes remain attentive to today’s release of January’s US PCE deflator, the Fed’s favored inflation gauge, and some euro area countries’ CPI.

US January PCE deflator came in line with expectations (2.4% yoy down from 2.6% the previous month), and euro area countries’ CPI did not surprise either (Germany: 2.5% yoy, France: 2.9% yoy, Spain: 2.8% yoy), boosting markets’ expectations of a first interest rate cut starting in June and July.

In yesterday’s session, investors traded cautiously ahead of today’s US February CPI release, which is expected to show prices grew by 0.4% m/m, implying a 3.1% y/y change, down from 3.4% last month. The report will also give a clearer picture of price dynamics before the Fed's meeting next week.

In yesterday's session, stronger-than-expected macroeconomic data revived fears that the Fed might delay its first interest rate cut. In particular, the US JOLTS job report showed job openings rising by 8,000 in February and factory orders increasing by 1.4% m/m last month after falling 3.8% in January. 

In yesterday’s session, investors traded cautiously in absence of key macroeconomic data releases. Despite the delivery of some hawkish comments from ECB and US Federal Reserve officials, yields on sovereign bonds edged down on both sides of the Atlantic.

Investors ended the week on a cautious note following a weaker-than-expected consumer confidence index in the US, combined with higher short-term inflation expectations at 3.5%, and hawkish remarks from certain Fed officials. Meanwhile, comments from ECB's Elderson once more pointed to a 25 bp cut in June.

Yesterday’s session was filled with macro data releases. US CPI cooled from 3.5% yoy in March to 3.4% in April (+0.3% m/m), as expected by consensus, and the core index dropped from 3.8% yoy to 3.6% (+0.3% m/m), suggesting inflation resumed its downward trend. US April retail sales were unchanged from the previous month vs +0.4% expected.

Tuesday saw a risk-on mood in financial markets. In the US, retail sales data for May barely grew and showed a weaker than expected consumer, supporting hopes for interest rate cuts this year. Fed officials commenting during the day also highlighted good progress on disinflation, pushing Treasury yields lower and equities slightly higher.

In yesterday's session, euro area sovereign bond yields advanced, with a slight widening of peripheral spreads, while equities retreated amid weak sentiment. Consumer confidence indices in both Germany and France fell from their May readings. Several remarks from ECB officials including Lane and Schnabel reiterated the ECB's data-dependent strategy.

Thursday's session saw light trading volumes as US markets were closed for the 4th of July holiday. Without any major macroeconomic data releases yesterday, investors' focus remained on political sources of instability, as the UK held a general election (which Labour won by a Landslide) and polls suggested Le Pen's RN will not win an absolute majority.

Sentiment was mixed in yesterday's session amid a raft of economic data. In the euro area, slightly higher than expected Q2 GDP (0.6% yoy vs. 0.5% expected), with France (1.1% yoy vs. 0.7% expected) and Spain (2.9% yoy vs. 2.5% expected) leading the surprises, supported equity markets. Sovereign bond yields edged lower ahead of today's inflation data.

Commodity markets took centre stage during yesterday's session after Israel's missile strike on Iran did not target oil and nuclear facilities, avoiding energy supply disruptions. Brent crude fell 6%, to close slightly above $71/barrel, and the global commodity index lost as  much as 2% on the day.

With no relevant macro data releases, investors struggled to find a direction for their trades on Thursday. Eurozone government bond yields fell, with peripheral spreads widening, as the consumer confidence index came in below expectations and several ECB officials warned of a significant hit to growth from Trump's tariffs.

Investor sentiment soured slightly on Wednesday ahead of today's US Thanksgiving holiday. In the eurozone, government bond yields fell as Germany's GfK consumer confidence index for December fell on fears of job losses; and despite hawkish comments from ECB's Schnabel, who favoured gradual cuts and played down the risks of inflation undershooting 2%.