Financial Markets Daily Report 23 September 2020
Investor sentiment improved yesterday as consumer confidence in the euro area rose to -13.9 points in September (-14.7 in the previous month), beating expectations. Nevertheless, the risk of a second wave of COVID-19 infections increases the chances of additional stimulus in the coming months.
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- Investor sentiment improved yesterday as consumer confidence in the euro area rose to -13.9 points in September (-14.7 in the previous month), beating expectations. Nevertheless, the risk of a second wave of COVID-19 infections increases the chances of additional stimulus in the coming months.
- In fact, the ECB board member Fabio Panetta said that the central bank should err on the side of providing too much stimulus, as "the risks of a policy overreaction are much smaller than the risks of policy being too slow or too shy".
- In this context, stock indices were mixed in the euro area and rose in the US. In fixed-income markets yields on core euro area sovereign bonds edged up and peripheral risk premiums narrowed, particularly so in Italy. In FX markets, the euro weakened for the third day in a row and fluctuated slightly above $1.17.
- Today the focus will be on the September Flash PMIs and on Jerome Powell's speech on the Fed's COVID-19 response.