Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
Investors started the week shunning risk, with most equity indices around the world posting some losses, which were more pronounced in the US. Chipmakers and other AI companies, particularly Nvidia, suffered a rout as a newly released Chinese AI model proved more efficient and investors questioned how much value US AI companies would add in the future.
Investor sentiment was mixed across the globe on Friday. In the eurozone, government bond yields rose as preliminary PMI data for January came in above expectations thanks to a slight improvement in the manufacturing sector to 46.1. US Treasury yields fell as both the services PMI and the U. of Michigan consumer sentiment index surprised to the downside.
In yesterday's session, global stocks rose for a ninth day, boosted by comments from US President D. Trump, in a virtual participation at Davos, hinting at a potentially softer approach to tariffs on China. He also urged OPEC to lower crude prices and said he will push for interest rate cuts.
Markets traded without a clear direction as investors remained cautious awaiting further announcements from the Trump administration and central bank meetings next week. ECB officials' remarks continued to support further interest rate cuts, while Fed officials are in the "blackout" period ahead of the meeting and cannot comment about monetary policy.
With no major macro data to trade on, financial markets continued to digest President Trump's first executive orders. Overall, investors were relieved that tariffs were not imposed on the first day, and while Mexico and Canada appear to become the first targets, a more gradual approach towards China and Europe is now expected.
With US markets closed for the Martin Luther King Jr. holiday, the rest of global markets traded cautiously ahead of Donald Trump's inauguration. Investors were especially attentive to announcements regarding trade policy, but a memo suggesting he would not impose new tariffs on day one (which he in fact, did not) kept markets at ease.
Investors traded without a clear direction during the last session of the week, as they continued to digest a raft of macro data and central bankers' remarks to assess the monetary policy path ahead. Sovereign bond markets were mixed, with yields slightly rising in the US but edging lower in the euro area. Stock markets advanced on both sides of the Atlantic.
Financial markets were mixed in yesterday's session. In the US, sovereign bonds yields continued on a decreasing path, following dovish remarks from Fed Governor Waller, suggesting that rate cuts are possible by June if future inflation data remains favorable. In this context, Euro area sovereign bonds yields also decreased.
Risk-on mode in financial markets during yesterday’s session, as December US CPI data signaled cooling core inflation. Headline CPI rose 0.2pp to 2.9% (+0.4% mom), as expected by consensus, while core CPI, expected to stay at 3.3% yoy (+0.3% mom) fell to 3.2% (+0.2% mom).
Financial markets traded without a clear direction ahead of the US CPI report expected today. In the US, assets had a choppy trading session, as early optimism driven by unexpectedly low US wholesale inflation in December (PPI +0.2% mom vs. +0.4% expected) was muted later on. In this context, US sovereign bonds and equities closed the session flat.
Markets traded cautiously during yesterday’s session, ahead of key inflation US data releases today (Producer Price Index) and on Wednesday (Consumer Price Index). Sovereign bond yields edged higher on both sides of the Atlantic, with investors still pricing in a more "hawkish" Fed.
Unexpectedly strong US employment data released on Friday, posting 256,000 new jobs (165,000 expected) and a decrease in the unemployment rate (from 4.2% to 4.1%) cooled market expectations of interest rate cuts and drove treasury yields higher, especially for the policy-sensitive 2-Year bond.
In yesterday's session, global investor caution prevailed as markets awaited the release of U.S. employment data. Meanwhile, some Fed members commented yesterday that it is quite likely that interest rates will remain at current levels for a long time and will only be cut when inflation decreases.