Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
The upside surprise in the US CPI figure for May led to a sell-off session on Friday as investors reinforced their bets for additional 50bp interest rate hikes from the Federal Reserve beyond the June and July meetings. Headline inflation accelerated to 8.6% y/y while core inflation ticked down to 6.0%.
Financial markets extended losses on Thursday, following the confirmation by the ECB to accelerate the withdrawal of policy accommodation, including ending net purchases on July 1st and starting a rate liftoff cycle on the 21st.
Investors traded cautiously on Wednesday, amid persisting worries about high inflation and slowing economic growth, and ahead of the crucial ECB meeting today. We expect the ECB to confirm the end of net asset purchases in early July and to signal the start of a hiking cycle in the policy rates thereafter.
During a volatile session, financial markets closed the day with no clear direction, with investors taking position ahead of the crucial ECB meeting on Thursday and the release of the US CPI inflation on Friday.
Investors started the week with a risk-on mood, with sentiment supported by easing COVID restrictions in China, including reports that Chinese regulators are relaxing some rules against some tech giants. Data also showed the decline in the Chinese services sector eased in May (the services PMI rose from 36.2 to 41.4).
A risk-on session across financial markets on Thursday, with sentiment boosted by the recent decision by the OPEC to ramp up plans to increase its oil supply (+650k barrels a day in both July and August) and solid economic data (eg the decline in new weekly jobless claims in the US).
In yesterday's session investors traded cautiously amid mixed economic data and hawkish comments by Federal Reserve members. US manufacturing PMI and ISM moved in opposite directions, both remaining comfortably above the 50-threshold, and US job openings in April confirmed that the labor market remains tight.
Inflation and monetary policy continued to center financial markets’ stage in yesterday’s session. Euro area HICP surprised again to the upside and reinforced the views of those in the ECB Governing Council pushing for a 50bp interest rate hike in July.
A positive start of the week across financial markets, with sentiment boosted by resilient survey data in Europe and a relaxation of COVID restrictions in China. Markets were closed in the US due to a public holiday.
Risk appetite extended across markets during the last session of the week, boosted by signs that inflation in the US may have peaked while consumer spending remained strong at the start of Q2, according to the April’s PCE report.
Investors continued to trade with a risk-on mood on Thursday, lifting demand for “buying the dip” and after the release of positive economic data (e.g. the decline in weekly jobless claims in the US).
Investors traded with an optimistic mood as the minutes of the FOMC last meeting showed a wide consensus among its members on the following steps on the interest rate path. Most participants think that further 50bp interest rate hikes in the coming two meetings (June and July) would be appropriate.