Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Yesterday, volatility rose amid investor inflation worries. U.S. CPI inflation jumped in April to +4.2% yoy (headline index, +1.6pp) and 3.0% (core index, +1.4pp). Fed Vice Chair Richard Clarida reiterated the central bank's view that the inflation rebound is largely transitory as it is mostly driven by base effects and short-term supply bottlenecks.
Volatility rose and stocks sold off as investors focused on the outlook for supply shortages and inflation. Stock market losses were widespread across sectors and countries while commodity prices advanced, the USD weakened, and U.S. sovereign yields nudged up.
In the first session of the week, investors traded in a cautious mood amid an increase in market-based measures of inflation expectations (the U.S.' 5Y5Y inflation breakeven rate reached 2.36%, a level not seen since 2014).
In the last session of the week investors traded with optimism after April's US employment report came in lower than expected and eased concerns of higher inflation and monetary policy tightening from the Fed.
Investors traded with optimism, following upbeat corporate earnings and signs of further improvement in the labour market, with initial jobless claims in the US edging down last week to the lowest level since the start of the pandemic.
During a volatile session, stocks almost wiped out their initial gains as technology shares turned lower, offsetting optimism over solid corporate earnings and positive economic data (service ISM and ADP employment surveys).
Global stocks tumbled on Tuesday, with the tech sector in Europe suffering its biggest drop since October, mirroring a selloff on the Nasdaq (-1.9%, sharpest fall since March). The decline was driven by comments from U.S. Treasury Secretary Janet Yellen warning that interest rates may need to rise to prevent the economy from overheating.
Investors traded with cautious optimism at the start of the week, looking through the persistent threat of the pandemic while focusing instead on the relative success of the vaccine rollouts in much of the developed world.
Volatility edged up amid a bunch of economic releases on Friday. In the euro area, GDP contracted moderately in Q1 (-0.6% qoq) while inflation rose to 1.6% in April (+0.3pp) due to base effects in energy prices. U.S. consumer spending rose +4.2% mom in March as consumers received stimulus checks, and PCE core inflation advanced to 1.8% yoy.
Markets went through a mixed session as investors digested solid U.S. activity figures. U.S. GDP growth accelerated to +1.6% qoq in Q1 2021 (Q4 2020: +1.1%) on the back of stronger private consumption (+2.6% qoq), which found support on easing restrictions and fiscal stimulus. U.S. stocks advanced and yields on Treasuries nudged up.
Markets ended yesterday's session with no major movements. Risk assets gained, with commodity prices and most stock markets advancing moderately, but U.S. equities nudged down as investors eyed Biden's presentation of the $1.8trn American Families Plan – to be financed with higher taxes on the wealthy.
Investors traded in a more cautious way in yesterday's session. U.S. and euro area sovereign yields nudged up on the back of a surge in U.S. consumer confidence (the Conference Board's index rose to 121.7 points in April, its highest level since February 2020), while global stock markets were mixed.