Financial Markets Daily Report
06 September 2023

Sovereign bond yields rose across Europe yesterday after an ECB survey showed consumer expectations for inflation edged up, which could pressure the ECB for further rate hikes. Inflation concerns were also stoked by Brent crude oil reaching a new year high after Saudi Arabia and Russia announced an extension of supply curbs through year's end.

FMDR
  • Sovereign bond yields rose across Europe yesterday after an ECB survey showed consumer expectations for inflation edged up, which could pressure the ECB for further rate hikes. Inflation concerns were also stoked by Brent crude oil reaching a new year high after Saudi Arabia and Russia announced an extension of supply curbs through year's end.
  • Separately, in the US, factory orders grew more than expected in July, confirming the country's economic resilience and in stark contrast with the Eurozone and China, where August PMI data showed weak business activity. This data, and a flurry of corporate bond deals in high-grade debt markets, pushed sovereign bond yields higher.
  • In this context, stocks fell across the board. Chinese indices were among the worst performers, as investors assessed the the latest government support measures for property developers. In the FX market, the dollar appreciated ¬†against its major peers, with particular strength against the euro and the Japanese yen.¬†
     
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