Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Financial markets ended the week digesting Thursday’s ECB rate decision. If investors initially interpreted Lagarde’s speech as implying a slightly dovish bias going forward, several ECB officials pushed back against such interpretations on Friday, pushing European sovereign bond yields up, peripheral spreads to widen, and a steepening of the curve.
In yesterday's session, investors' attention focused on the ECB monetary policy meeting, where interest rates were hiked by 25bp to 4.0% (depo) and 4.5% (refi). More importantly, the ECB said that these levels, if maintained for a sufficiently long period, might not need to be raised further to return inflation back to 2%.
In yesterday's session, the US CPI report of August centered the stage in financial markets. Headline inflation surged from 0.2% m/m to 0.6% due to an increase in gasoline prices- (3.7% y/y) while core inflation ticked modestly up from 0.2% m/m to 0.3% (4.3% y/y).
Investors traded yesterday with most eyes on today’s US CPI report. Oil prices rose again after OPEC released its monthly report and kept its global oil demand forecast for the rest of the year and 2024 unchanged, despite Saudi and Russian cuts. Benchmark Brent ended the session at an annual high, fuelling concerns about inflation.
In yesterday’s session, investors traded cautiously as they awaited key economic data later this week (US CPI inflation) and the ECB monetary policy decision on Thursday. The main economic event yesterday was the downward revision of the European Commission’s summer GDP forecasts.
Investors ended the week on a cautious note: trading volumes were light and most asset prices were little changed. Sovereign bond yields were largely unchanged in the eurozone, while rising slightly in the US despite most Fed officials who spoke in recent weeks tended to lean towards a pause in the hiking cycle at the September meeting.
Yesterday’s session saw subdued trading volumes and a risk-off sentiment. In the Eurozone, the downward revision of Q2 GDP growth figures prompted sovereign bond yields to fall. Renewed signs of industrial weakness in Germany stoked concerns of economic malaise and pushed down stocks as well.
Risk-off appetite prevailed among investors yesterday. In the eurozone, a raft of negative data releases weighed on stocks, as both retail trade across the region and German factory orders surprised on the downside.
Sovereign bond yields rose across Europe yesterday after an ECB survey showed consumer expectations for inflation edged up, which could pressure the ECB for further rate hikes. Inflation concerns were also stoked by Brent crude oil reaching a new year high after Saudi Arabia and Russia announced an extension of supply curbs through year's end.
Yesterday’s session saw thin trading volumes in the market due to a holiday in the US. Chinese stocks ended higher, as authorities stepped up efforts to support a struggling property sector. The Shanghai CSI 300 index was up 1.4%, led by strong gains in developer companies, and drove stocks up all across Asia.
Investors ended the week digesting a raft of month-end economic data on both sides of the Atlantic. In the Eurozone, Thursday's release of August inflation figures, which showed headline inflation stable at 5.3%, sent sovereign bond yields higher and major stock indices lower on Friday, despite an encouraging slowdown in core inflation.