Financial Markets Daily Report 02 February 2023
As expected, the Federal Reserve increased policy interest rates by 25 bp to the range 4.50%-4.75% but surprised by giving a dovish tone, noting that disinflationary pressures have started while the economy is starting to slow. The Fed reiterated that “ongoing increases” on interest rates would still be needed.
- As expected, the Federal Reserve increased policy interest rates by 25 bp to the range 4.50%-4.75% but surprised by giving a dovish tone, noting that disinflationary pressures have started while the economy is starting to slow. The Fed reiterated that “ongoing increases” on interest rates would still be needed.
- On the data front, economic sentiment and job creation deteriorated in the US (the ISM manufacturing fell to 47.4 in January from 48.4 and private payrolls halved to 106k, according to the ADP survey) while HICP inflation surprised to the downside in the eurozone (8.5% y/y in January after 9.2% in December).
- In this context, stocks rose in both sides of the Atlantic, sovereign bond yields fell notably in the US and the USD depreciated against peers. Oil prices also fell after an OPEC+ panel recommended keeping production unchanged.
- Today, the ECB and the BoE will announce their monetary policy decisions.