Markets traded cautiously during yesterday’s session, ahead of key inflation US data releases today (Producer Price Index) and on Wednesday (Consumer Price Index). Sovereign bond yields edged higher on both sides of the Atlantic, with investors still pricing in a more "hawkish" Fed.
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Financial markets were mixed in yesterday's session. In the US, sovereign bonds yields continued on a decreasing path, following dovish remarks from Fed Governor Waller, suggesting that rate cuts are possible by June if future inflation data remains favorable. In this context, Euro area sovereign bonds yields also decreased.
Financial markets traded on a mixed tone during yesterday's session. In the euro area, sovereign bond yields edged lower as Eurozone PPI came close to expectations (0.0% yoy, 0.4% mom) and French industrial production contracted by 1.7% yoy, more than expected (-1.2% yoy). ECB office members expressed potentially stronger policy easing ahead.
Uncertainty and risks surrounding US trade policy drove sentiment in financial markets during the session. President Trump imposed 25% tariffs on all steel and aluminum imports, to which European Commission President von der Leyen responded "will not go unanswered" while Canada's PM stated that his country will give a "firm and clear" response.
In yesterday's session, investors' caution prevailed amid uncertainty over geopolitical risks, this Sunday's elections in Germany, and the trade war.
Euro area sovereign bond yields rose significantly after Merz, expected to become Germany's next chancellor, announced a political deal to raise hundreds of millions of euros for defense and infrastructure, claiming, "the rule for our defense has to be 'whatever it takes'". Germany's 10-year sovereign yield saw its largest single-day gain since 1990 (+30bp).
Financial markets traded on a risk-on mode during Friday session following losses from previous sessions. US equities registered gains despite consumer sentiment preliminary estimates plunging to 57.9 in March, the lowest since November 2022, from 64.7 in February and below forecasts of 63.1, as a consequence of higher uncertainty surrounding tariff policy.
Investors started the week in a cautious mood awaiting Trump's comprehensive tariff announcements due on Wednesday.
In yesterday’s session, global financial markets registered mixed movements, underscoring investor caution amid persistent geopolitical tensions and lingering economic uncertainty. In the United States, expectations for a potential rate cut in June gained traction after several Federal Reserve officials indicated a willingness to ease policy should signs of labour market weakness emerge.
Euro area financial markets were closed during yesterday’s session for May 1st holiday. In the US, a better-than-expected ISM manufacturing index, which also showed signs that input prices have been kept elevated due to tariff policy, lowered expectations of four interest rate cuts in 2025 and sent US Treasury yields higher.
During yesterday's session, global markets adopted a stance of cautious optimism, navigating a landscape shaped by mixed economic data and ongoing geopolitical developments. Presidents Trump and Xi reportedly made headway in trade discussions during a phone call, particularly regarding tariffs and a potential accord on critical minerals and rare earths.
Financial markets were mixed during yesterday's session, ahead of May US CPI data to be released tomorrow. US and euro area sovereign bond yields closed the session slightly lower. Separately, news that Japan would be considering buying back bonds with very long maturity to prevent abrupt rises in bond yields, weighed on Japanese yields.
Financial markets were mixed during yesterday's session. US CPI for May came softer than expected, with core CPI increasing by 0.1% mom (vs. expected 0.3%) and 2.8% yoy (vs. 2.9% expected), and overall CPI climbed 2.4% yoy, as expected. Separately, Trump said that a US-China trade deal is "done", which could ease trade frictions between the two countries.
News of a ceasefire agreement between Israel and Iran boosted risk appetite during yesterday's trading session. Global stocks rallied, while crude oil prices fell amid reduced fears of a potential supply disruption in the Middle East eased. Brent prices fell below $70 per barrel, marking an almost 15% drop from last week's high.
Stocks rallied across advanced economies in yesterday's session, with investors shrugging off Donald Trump's latest round of tariff announcements, but emerging market equities dropped. Sovereign yields declined after a few sessions on the rise.
Data released yesterday, which continued to point to a cooling US labor market, including higher-than-expected unemployment benefit claims and slower private job creation, reinforced expectations of a Fed cut later this month. Dovish remarks from NY Fed President Williams, who sees gradual rate cuts, further supported this narrative.
Financial markets had a mixed session on Wednesday. The US Treasury curve flattened, with short term yields rising due to stronger than expected data: initial jobless claims came in below expectations, and durable goods orders (excluding non-defense and aviation goods) for September posted a positive surprise.
Risk sentiment improved during yesterday’s session. US Treasury yields edged higher after weekly unemployment benefit claims declined, reinforcing expectations that the Fed will keep interest rates on hold in January. Equities advanced, supported by renewed optimism around artificial intelligence following strong results from Taiwanese semiconductors.
Investor risk appetite improved after Trump ruled out using force to acquire Greenland and signaled a NATO framework for a potential deal over it, abandoning earlier tariff threats on Europe. This supported most US financial assets during the session and made implied volatility fell markedly across asset classes.
Risk-on dominated markets for a second day as Trump’s Greenland spat faded. US short-term Treasury yields slipped after upbeat macro data: Q3 GDP was revised to 4.4% SAAR, November consumer spending stayed firm, while initial jobless claims ticked higher in the week ended January 17.