Financial Markets Daily Report

Financial Markets Daily Report
10 December 2021

Risk-aversion dominated financial markets on Thursday, as fears about the potential impact of the omicron variant regained investors’ attention, which were also taking position for the key US November CPI inflation report, to be released today (consensus: 6.8% y/y, after 6.2% in October).

FMDR
  • Risk-aversion dominated financial markets on Thursday, as fears about the potential impact of the omicron variant regained investors’ attention, which were also taking position for the key US November CPI inflation report, to be released today (consensus: 6.8% y/y, after 6.2% in October).
  • In Asia, the Chinese Evergrande Group officially defaulted on their dollar debt (Fitch downgraded its rating to “restricted default”), while the People’s Bank of China raised its foreign currency reserve requirement ratio for a second time this year after the yuan climbed to the highest level since 2018.
  • In this context, volatility rebounded, while equity prices fell across advanced economies and emerging markets. Save-haven currencies, such as the Japanese Yen or the Swiss Franc, strengthened while the EUR depreciated modestly against the USD. Sovereign bond yields also ticked down after three consecutive sessions rising.
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FMDR