Financial Markets Daily Report 30 octubre 2020
Volatility declined and stock markets steadied as market sentiment was encouraged by strong Q3 U.S. GDP data (+7.3% qoq and -2.9% yoy) and investors weighed the prospect of renewed ECB stimulus against a worsening euro area economic outlook.
- Volatility declined and stock markets steadied as market sentiment was encouraged by strong Q3 U.S. GDP data (+7.3% qoq and -2.9% yoy) and investors weighed the prospect of renewed ECB stimulus against a worsening euro area economic outlook. U.S. stocks rebounded while European equities closed mixed.
- The ECB left its monetary policy stance unchanged but made clear that new stimulus will come in December. President Lagarde described the outlook as "fairly dark" and said all instruments will be considered for the ECB's next steps. Our take is that the ECB will expand purchases and extend favorable TLTROs, but rate cuts cannot be ruled out.
- Euro area sovereign yields declined across core and peripheral countries and the euro depreciated below $1.17.
- Today the focus will be on the release of a batch of European Q3 GDP data (euro area aggregate, Germany, France, Italy, Spain, Portugal, etc.) as well as on euro area flash inflation figures for October.