Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
The hawkish tone of the ECB at its yesterday's meeting centered the stage in financial markets. The ECB raised official interest rates by 50bp, as expected, but noted that ongoing increases at a "steady pace" will be necessary to bring inflation back to the 2% target and announced that the QT will start in March by not reinvesting €15bn/month.
In yesterday’s session, the US Federal Reserve meeting centered the stage. It raised official interest rates by 50bp up the 4.25%-4.50% target range, a slowdown in the pace of monetary policy tightening, but still a large move by historical standards. Jerome Powell signaled that ongoing interest rate hikes will be necessary to return price stability.
In yesterday’s session, the lower-than-expected release of US CPI inflation pushed down the expectations of a far too tightened monetary policy in the Federal Reserve. Headline inflation moderated from 7.7% to 7.1%, confirming the downward trend but still at very elevated levels, while core inflation edged down 0.3pp to 6.0%.
Ahead of today's key CPI data release in the US, which is expected to show a deceleration in inflation, investors traded cautiously. Yields on 10-year sovereign bonds edged modestly up in the euro area while increasing more notably in the US.
Investors continued to trade with caution during the last session of the week. In the US, a stronger-than-expected rise in PPI inflation (0.3% m/m and 7.4% y/y in November) triggered a pickup in sovereign bond yields and a decline in stock indices, as investors reassessed their expectations for monetary policy ahead.
Investors continued to err on the side of caution during a session with mixed results on Thursday. The key focus remained the outlook for global growth and inflation and the implications for monetary policy decisions.
Risk aversion continued to set the tone during a volatile session on Tuesday, as a better-than-expected sentiment data in the US revived concerns among investors about the pace of monetary policy tightening by the Fed.
Investors closed the week trading cautiously, taking on board data confirming a slowdown in the pace of job creation in the US but at a reduced pace relative to expectations.
A wave of weaker-than-expected economic data both in the US and the euro area yielded a moderation in the expected path of policy interest rates which, in turn, pushed sovereign yields downs in both sides of the Atlantic. Stock indices edged up in the euro area and in emerging markets while closing mixed in the US.
A speech by the president of the Federal Reserve, reinforcing the expectation that the central bank will hike rates by 50bp in December, centered the stage in yesterday’s session. In the euro area, headline inflation decreased in November from 10.6% to 10.0% y/y while the core measure remained unchanged at 5.0%.
Investors traded cautiously in yesterday's session amid lower-than-expected inflation data in some euro area countries. In particular, November HICP year-on-year inflation decreased 0.3pp and 0.7pp in Germany and Spain to 11.3% and 6.6%, respectively.
Risk aversion continued to dominate in yesterday's session, with the key themes remaining the COVID situation in China and hawkish comments by central bank officials. In the euro area, both Christine Lagarde and Joachim Nagel said that inflation will remain elevated and might not have peaked yet, justifying a tighter monetary policy stance.