Market Information Thursday 2 November 2023

The U.S. Federal Reserve kept interest rates unchanged at 5.25 to 5.50 percent. The decision was unanimous. The central bank reported that inflation remains too high, and the job market remains robust. The economy performed well in the third quarter, however there is an expectation that higher interest rates will dampen growth in the coming period. The markets showed little surprise in response to this decision.

The U.S. Department of the Treasury announced it would issue fewer government bonds than anticipated, easing investors’ concerns and causing both bond and stock prices to rise. Following the announcement, the yield on ten-year bonds briefly dropped to 4.83%. Next week, $112 billion worth of bonds will be auctioned, slightly less than the expected $114 billion, with the proceeds used to pay off existing debt and raise new capital. The yield on ten-year bonds had risen by approximately 75 basis points since August.

In Belgium, the construction sector is also facing problems, with a nearly 20% decrease in the production of construction materials in recent months. This is a result of a reduced new construction market and concerns within the renovation sector. Higher construction costs due to rising mortgage expenses and price increases of construction materials following the COVID-19 pandemic have resulted in less work for construction companies. Additionally, there is uncertainty about the continuation of the reduced 6% VAT rate for demolition and renovation, which has reduced demand.

The 6M Euribor decreased with 2 basis points to 4.09% compared to previous business day. The 10Y Swap decreased with 6 basis points to 3.29% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.