Financial Markets Daily Report 29 July 2020
In yesterday's session, financial markets were mixed as traders digested worse-than-expected corporate earnings releases.
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- In yesterday's session, financial markets were mixed as traders digested worse-than-expected corporate earnings releases. However, support from US fiscal and monetary authorities (Republicans are negotiating a new stimulus package and the Fed extended most of its liquidity programs by 3 months) limited safe-haven flows.
- In this context, stock indices were mixed across the board while yields on sovereign bonds edged down in core euro area countries and the US. Euro area peripheral spreads widened and the euro weakened against most advanced economies' currencies.
- The ECB assessed the vulnerability of the banking system and found that, in its central scenario of a harsh recession, aggregate Tier 1 capital would fall by 1.9 pp to 12.6%, still leaving enough capacity to supply credit to the economy.
- According to the Spanish EPA, employment fell by 1.07 million people in Q2 and the unemployment rate rose to 15.3%.