In yesterday's session investors traded with a less optimistic tone amid rising global COVID-19 cases and new lockdown measures in Germany. Additionally, Fed President Jerome Powell played down concerns of an overheating US economy as he said that the increase in inflation "will be neither particularly large nor persistent".
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In yesterday's session, volatility declined, US stock indices rose led by gains in the tech sector and euro area equities were mixed.
In the last session of the week, investors traded cautiously as they continued to weigh accelerating economic growth and inflation expectations for the US. In this context, the S&P 500 ticked down, the Nasdaq rose and euro area indices declined following previous' day losses in the US.
European equities performed well on Thursday after the Federal Reserve raised its growth forecast for the US, and the Eurostoxx50 rose 0.5%. Banks and automakers led the gains, as they are favored by rising market interest rates.
During yesterday's meeting, the Federal Reserve sharply upgraded its forecasts for growth in the U.S. and signalled that interest rates would remain unchanged until at least 2024 and that it would continue to buy bonds at a pace of $120 billion per month until it made "substantial further progress" towards its goals.
European stocks and bond yields fell yesterday as Italy, France, Germany and Spain suspend vaccinations with the AstraZeneca vaccine over worries about the jabs' side-effects. Meanwhile, Italy has taken more stringent lockdown measures. The Eurostoxx50 was down by 0.1%.
The U.S. bond sell-off continued last Friday after President Joe Biden said every U.S. adult would be eligible for a Covid-19 vaccination by May 1st and set July 4th Independence Day as a new target for a return to normality.
Markets traded in a risk-on mood as investors signaled greater optimism about the economic recovery and lower concerns over inflation risks in yesterday's session. Volatility declined, stocks rose across advanced and emerging economies and tech-equities resumed their rally. Commodity prices also gained amid greater risk appetite.
Stocks rose across the board as Biden's $1.9tn fiscal package won final approval in the U.S. Congress and CPI data calmed inflation worries. In particular, U.S. CPI inflation rose to 1.7% yoy in February but core inflation nudged down to 1.3% (see our take and why we expect inflation to be under the spotlight in the coming months here).
The global stock rout deepened on Thursday as the sell-off in US Treasuries continued affecting markets across the world. The yield on 10-year US sovereign bonds rose sharply to 1.53%, and the 5-year yield jumped 21 basis points, the second-largest one day increase seen in the past decade, as investors anticipated large stimulus measures.
Investors traded in a more cautious mood in yesterday's session. Optimism about the medium-term economic outlook and recovering inflation expectations led to steeper sovereign yield curves. Yet, stock markets were mixed and closed moderately lower.
Investors turned more cautious in yesterday's session. Stocks declined moderately in most advanced economies and a lower risk appetite led to USD appreciation against the major currencies.
Markets displayed a lower risk appetite in yesterday's session – as investors pondered the impact of rising interest rates on equity markets. Volatility rose and stocks dropped across advanced and emerging economies.
Investors traded in a mixed mood on Friday as they became more confident in the economic recovery but also pondered the possibility of rising inflation.
The sell-off in the US bond market continued on Monday as worries about inflation erode expected bond returns. The yield on 10-year Treasury notes rose 3 basis points to 1.37%. These worries also hit Asian markets, where Japan's 10-year yields rose to 0.13% and Australia's rose to its highest level since June 2019 (1.61%).
Markets were volatile during yesterday's session, as US stocks reversed the losses of earlier in the day. The S&P 500 gained 0.1% on the day after being down 1.8% at one point earlier on Tuesday. The tech-heavy Nasdaq Composite was down 3.9% in early trading before reversing part of the losses and ending the day down just 0.5%.
Investors traded with optimism during yesterday's session. In Europe, the upward revision of the German Q4 GDP (from +0.1% qoq to +0.3%), supported by exports and construction, led to a rise of 0.5% in Eurostoxx50. European sovereign yields also rose and peripheral spreads widened slightly.
Investors traded in a mixed mood in the last session of the week. While European and emerging-market equities declined across the board, U.S. stocks bounced back from losses on the back of stronger-than-expected labor market data (nonfarm payrolls + 379k in February) and their turnaround reversed last week’s losses in the S&P 500.
In yesterday's session, investors extended the sell-off of equity and most stock indices across advanced economies registered losses. Jerome Powell reiterated in a speech that the Fed is committed with its objectives and that it will keep easy credit conditions even when economic conditions improve.
Investors traded with a cautious mood in yesterday's session amid improving economic sentiment indicators. In particular, services PMIs improved in the euro area but remain in contraction territory (below 50).