Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
A subdued session across financial markets at the start of the week, as investors digested a move by some OPEC+ countries for new oil production cuts, disappointing economic sentiment data and a new round of hawkish messages from some key ECB officials, including a call for more policy rate hikes by Christine Lagarde.
Investors continued to trade with a positive tone as US Congress passed a law suspending the debt limit until January 1st 2025 and after further evidence of disinflationary pressures in some countries, which, in turn, is likely to lead to lower interest rates than previously expected from central banks.
In yesterday's session, investors traded cautiously ahead of a crucial vote in the US House of Representatives to raise the debt ceiling, which was finally approved. Also, disinflationary pressures were made more evident as inflation declined by more than expected in France and Germany while some Fed members insisted on pausing rate hikes.
Signs of disinflationary pressures and a worsening of household and firm’s economic confidence in the euro area were yesterday’s main drivers in financial markets. Investors’ expectation of the official ECB interest rates was revised downwards between 10 and 15bp for 2023 and 2024.
The first session of the week started with investors trading with a risk-on mode after a deal to raise the US debt ceiling between President Biden and House speaker McCarthy was reached. As the session advanced, however, optimism faded as traders looked forward to potential hurdles for passing the deal this week in the US Congress.
In the last session of the week, investors traded with an optimistic mood amid steady economic indicators and as the US debt ceiling deal seemed more likely. In fact, on Saturday President Joe Biden and House speaker McCarthy reached a deal to raise the ceiling that will now have to pass Congress.
Negotiations to raise the US debt ceiling progressed over the course of Thursday, with both the Government and the opposition party suggesting talks were in a better place, though not finalised yet. Should a deal be reached soon, Parliament would have to approve it before June 1, the deadline stated by Treasury Secretary to run out of cash.
Tensions around the US debt ceiling negotiations continued weighting on investors’ sentiment. Even though the opposition leader, McCarthy, signaled optimism about a deal after the latest round of talks, rating agency Fitch Ratings warned the nation’s AAA rating may be downgraded due to the political standoff.
The political impasse over the US debt ceiling continued weighing on investors sentiment in yesterday's session, as staff-level negotiations held on Tuesday yielded little progress.
Investors started the week with no clear direction, focused on the US negotiations over the debt ceiling, which were due to start after markets closed. The opposition leader, McCarthy, said his Monday meeting with President Biden set the talks “on the right path” while Biden called the meeting “productive”, but no agreement was reached yet.
Investors closed the week trading more cautiously than in previous days. Negotiations on the US debt ceiling, which had seemingly advanced since Monday, were halted on Friday, causing US stocks to slide after a generally positive session in Europe. Negotiations are set to resume today.
In yesterday's session, investors traded with an optimistic mood as negotiations between Democrats and Republicans to raise the US debt ceiling seemed to advance fast. Accordingly, House speaker (McCarthy) and Senate Majority Leader (Schumer) are already preparing the vote count for a bipartisan deal to avoid reaching the debt ceiling.