Search results

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.

In the last session of the week, investors traded with a risk-off mood amid fears of a escalating conflict in the Middle East. The VIX index, despite remaining at historically moderate levels, reached its highest level since March and stock indices declined across the globe.

Investors traded with a slightly higher risk appetite on Friday as several key inflation data points on both sides of the Atlantic fell and despite the risk of a US government shutdown, which was eventually averted over the weekend, rose. Eurozone inflation fell to a 2-year low, with core CPI showing positive momentum and US core PCE also moderating.

Investor sentiment diverged slightly on both sides of the Atlantic at the start of the week. In the US, the ISM survey showed a manufacturing sector close to recovery while Fed's Bowman gave hawkish signals on future interest rates. This pushed Treasury yields higher while equities fared slightly better, with the Nasdaq up and the S&P500 flat.

In yesterday’s session, economic sentiment data releases were the focus of investors’ attention. In both Europe and the US, better-than-expected, but still weak economic data, pushed sovereign yields down on both sides of the Atlantic amid an upward trend in previous sessions.

In the first session of the week, investors traded with a risk-off mood amid the escalation of Israeli-Palestinian conflict. In the macroeconomic front there were no relevant data releases.

Investors’ concerns over economic growth outlook ahead, and the decrease in the probability of an additional interest rate hike from the US Federal Reserve this year were the main drivers in yesterday’s session.  

Investors’ perception that  central banks will still need to increase interest rates in this hiking cycle was the main driver in yesterday’s session. The release of the last ECB meeting minutes and the somewhat higher-than-expected September CPI inflation data for the US fueled this expectation.

Friday´s session was clouded by the risk that geopolitical tensions in the Middle East could escalate further causing a sustained rise in oil prices. On the economic side, US University of Michigan Consumer Sentiment fell from 68 to 63 from last month and China exports fell, although by less than expected by the consensus.

Investor sentiment improved amid diplomatic efforts to avoid the Israeli-Hamas conflict from spreading in the Middle East, with US Secretary of State Blinken arriving in Israel for talks and both President Biden and German chancellor Scholz planning a visit later this week.

Solid US economic data released yesterday showed a still resilient economy reinforcing the the case for the Federal Reserve to keep interest rates higher for longer. September US industrial production rose to the highest level in nearly five years to 103.6 and retail sales increased 0.7%, up from 0.6% beating expectations.

In yesterday’s session, investors traded with mixed sentiment as they navigate through heightened tensions in the Middle East and a continued rhetoric of “higher for longer interest rates” supported by strong US economic data. President Biden arrived in Israel but has not been able to achieve major diplomatic breakthroughs to calm markets.

In yesterday’s session, investors once more weighed the growing tensions in the Middle East and the future path of interest rates. Fed Chair Jerome Powell said the central bank would proceed carefully with rates, highlighting that the rise in yields in bond markets is helping to tighten financial conditions.

In Friday’s session, markets traded again with strong risk appetite as investors continued to price in the end of the central banks’ tightening cycle. US employment data showed signs of a cooling labor market, further fueling investors’ expectations of no further rate hikes. Markets are now pricing in a rate cut in June by the Fed and in April by the ECB.

In yesterday's session, the FOMC decided to leave interest rates unchanged at the 5.25%-5.50% target range. Despite describing the economic outlook with similar words than in September and not ruling out an additional rate hike, markets lowered the probabilities of a further tightening in the monetary policy stance. 

In yesterday's session financial markets continued to digest the last US Federal Reserve monetary policy decision, where interest rates were held unchanged at the 5.25%-5.50% target range and President Jerome Powell hinted that we might already be at the peak of the hiking cycle, although new rate hikes were not definitely ruled out.

In yesterday's session, euro area economic releases took center stage. Lower-than-expected October y/y inflation in Germany (3.0% vs 3.3% expected) and in Spain (3.5% vs 3.8% expected) pushed euro area sovereign yields down and the area's main stock indices up. 3Q German GDP growth came in at -0.1% vs -0.2% expected.

In yesterday’s session markets were mixed across the globe in a day without major economic news. Sovereign bond yields rose on both sides of the Atlantic after days of declines, with euro periphery countries’ yields posting the largest increases and risk premia widening.

The possible end of the central banks’ hiking cycle continued to weigh on financial markets’ sentiment yesterday. A list of FOMC members said yesterday that the US economy remains strong but expressed a generalized preference for remaining patient amid rising uncertainty in the coming months.