Financial Markets Daily Report 08 February 2021
In the last session of the week, investor sentiment continued to improve amid a positive earnings season (51% of US companies reported a +10% surprise in earnings) and a mixed employment report in the US.
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- In the last session of the week, investor sentiment continued to improve amid a positive earnings season (51% of US companies reported a +10% surprise in earnings) and a mixed employment report in the US.
- Despite the modest increase in January's non-farm payrolls (+49k), the US unemployment rate fell by 0.4pp to 6.3%. The Congressional Budget Office has estimated employment would not return to its pre-pandemic level before 2024.
- In this context, the US Treasury curve steepened with the yield on 10-year bonds reaching a level not seen since March 2020. Euro area sovereign yields were broadly unchanged and peripheral spreads narrowed modestly. Gains were broad-based in the main advanced and emerging economies' stock indices.
- In FX markets, the USD weakened against most G10 currencies and the euro fluctuated above $1.20.
- This week the focus will be on the European Commission economic forecasts (Thursday).