Financial Markets Daily Report 07 October 2022
Monetary policy tightening centered the stage again, with several US Federal Reserve members arguing that interest rates needed to be hiked further and that there were no clear signs of inflation having peaked yet. In the euro area, the accounts of the last ECB meeting revealed a broad-based concern of GC members about current inflation figures.
- Monetary policy tightening centered the stage again, with several US Federal Reserve members arguing that interest rates needed to be hiked further and that there were no clear signs of inflation having peaked yet. In the euro area, the accounts of the last ECB meeting revealed a broad-based concern of GC members about current inflation figures.
- In the discussion, only some members supported a smaller hike (50bp instead of 75bp) but there is consensus that rates are still significantly below the neutral level, although no details were given about its estimated level.
- In this context, yields on sovereign bonds rose across the board and equities declined in both sides of the Atlantic. In FX markets, the US dollar strengthened against most currencies and the euro fluctuated below $0.98.
- Today the focus will be on September's US employment report, where the increase in payrolls is expected to slow down to 255k and the unemployment rate to remain unchanged at 3.7%, according to the Bloomberg consensus.