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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.

In yesterday’s session investors continued to assess the probability that the Fed will deliver 3-4 rate cuts this year given the strength of recent macroeconomic data. In particular, the February PCE deflator grew 2.5% y/y, up from 2.4% last month, and manufacturing activity rebounded sharply in March as the PMI increased to 50.3 from 47.8.

Economic activity data and central bank decisions centered the stage in yesterday’s session. On the one hand, the Bank of England kept interest rates unchanged and hinted that the next move could be a rate cut, as there have been “further encouraging signs that inflation is coming down”. The Swiss National Bank cut rates by 25bp to 1.50%.

The future path of central bank official interest rates continued to be the main driver in financial markets, as investors reacted to the US Federal reserve meeting and to several ECB members’ speeches.

In yesterday’s session monetary policy continued to take center stage in financial markets. Investors positioned themselves ahead of today’s US Federal Reserve meeting (where no change in interest rates is expected and the focus will be placed on the dot plot) and weighed comments from ECB officials.

Markets kicked off the week with a tranquil session ahead of a week full of central bank meetings, starting with the Bank of Japan today, and continuing with the Fed and the BoE later on. In this context, sovereign bond yields slightly rose across the board, while equities advanced modestly in the US led by tech stocks, and were mixed in the euro area.

In yesterday’s session, a mixed release of February’s flash PMIs and a patient tone on inflation from the ECB, according to the last meeting minutes, were the main drivers in financial markets. Sovereign yields edged down in the euro area while increasing in the short end of the US treasury curve. Stock indices managed to advance across the board.

In the first session of the week, investors continued to reassess their expectations on the upcoming easing of the ECB and Fed’s monetary policy stance. The January PMI and ISM data releases showed a stronger-than-expected start of 2024 that decreased further the probabilities of seeing the first rate cut in April and May for both central banks.

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 yesterday’s session investors took note of the different central bank speeches offered by Fed and ECB officials. In general, policymakers would like to see more evidence that inflation is decisively in the route to reach 2% before easing the monetary policy stance.

In a session without any major economic news, investors traded cautiously as they continued to assess the probability of future interest rate cuts given the current inflation and activity dynamics.

The week ended with markets trading without a clear direction as investors continued to monitor central bank officials' speeches to adjust their expectations of the timing of the first interest rate cuts, and as they awaited key economic data to be released this week. 

Markets kicked off the week in a rather calmed tone as investors await key economic data this week which will provide them further clues regarding future interest rate cuts. On the data front, NY Fed’s January Consumer Expectations Survey found that respondents expect 1-year inflation to remain at 3%, the lowest reading in three years.

In yesterday's session, mixed macroeconomic data releases were the main drivers in financial markets. On the one hand, Q4 GDP figures showed that Japan and the UK are in technical recession (with -0.1% and -0.3% q/q growth rates) and US retail sales and industrial production fell by 0.8% and -0.1% m/m, respectively.

In the last session of the week, higher-than-expected US PPI inflation data in January (0.3% m/m from -0.1% in the previous month) pushed back the expectations of interest rate cuts from the Federal Reserve and favored an increase in sovereign bond yields on both sides of the Atlantic.

The week started with a very quiet session, as there were no macroeconomic data releases and the US financial markets were closed due to the President’s day festivity. All eyes will remain attentive to the release of the Fed and ECB last meeting minutes (Wed. and Thu., respectively) and the flash PMIs for the main advanced economies (Thu.).

In yesterday’s session investors traded cautiously as they await PMIs for advanced economies to be released on Thursday, the Fed’s and ECB’s minutes (out today and tomorrow, respectively) and key corporate earnings in the US.

The hawkish rhetoric from central bank officials was the main driver in yesterday's session, which saw sovereign yields on the rise in the euro area and in the US. In the ECB, Pierre Wunsch said that interest rates might remain at restrictive levels for longer than previously anticipated considering the labor market strength and increasing wages.

In yesterday’s session, investors traded cautiously ahead of today’s ECB monetary policy meeting, where we expect official interest rates to remain unchanged (depo and refi at 4.00 and 4.50%, respectively) and a continuation of the data dependency approach.

In the first session of the week investors traded cautiously as they wait for new messages coming from central bank officials on the interest rate path ahead. In particular, all eyes are on the ECB Governing Council meeting on Thursday, where the ECB is expected to keep rates unchanged and reiterate the data dependency approach for 1H2024.