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Yesterday's session showed a risk-off tone amid escalating tensions in the Middle East. Brent crude prices hit $100/barrel after Mojtaba Khamenei, Iran's new supreme leader, vowed to keep the Strait of Ormuz and after Iran reportedly attacked oil tankers and other energy facilities.

Markets remained caught between geopolitical tensions and a key run of central bank meetings. With no progress reported in US–Iran negotiations, energy prices moved higher, with Brent crude rising above USD 110/bbl for the first time in three weeks. Risk sentiment stayed subdued, while concerns over the inflationary impact of higher energy costs persisted.

Yesterday's session showed a risk-on sentiment, after news of Iran reportedly reviewing a peace proposal from the US increased the expectations of the conflict ending in the short term. Energy prices slid more than 2%, but have rebounded as of this morning as the strikes continue while the two countries review the terms.

Sentiment deteriorated as stalled US–Iran negotiations and reports that Washington may be preparing for a prolonged conflict pushed energy prices sharply higher. Meanwhile, the Fed left rates unchanged, as expected, but highlighted rising inflation risks, with the statement drawing three dissents from officials opposed to maintaining an easing bias.

Yesterday’s session saw a sharp turnaround in sentiment. Markets initially opened under pressure, with equities declining and sovereign yields rising amid escalating tensions in the Middle East and rising energy prices. Sentiment shifted after President Trump announced a temporary halt to planned strikes on Iranian energy infrastructure, following reports of constructive talks between the Washington and Tehran. Brent prices quickly fell just below $100/barrel.

Risk-off sentiment drove markets after a weaker-than-expected U.S. labor market report (nonfarm payrolls +22k in August, and June-July revised down to a cumulative +66k [prior: +87k]). Advanced-economy stock markets declined and sovereign yields dropped amid stronger market expectations over Fed cuts. The euro strengthened above $1.17 and gold rose.

Yesterday's session was marked by late optimism after President Trump called off the US-planned strikes on Iran, after reportedly having advanced negotiations with Tehran. Brent crude prices dropped nearly 3%, to settle just above $90/bbl, while gold rebounded more than 3%, being priced above $4200/ounce at session-ending.

Investors shifted gears across asset classes on Friday, as the US employment report showed robust job growth in May for a third month in a row. The resilient labour market and inflation risks led markets to fully price in a Fed rate hike by year‑end. US Treasury yields rose accordingly, especially at the short end, further flattening the curve.

Investors started the week with mixed results, taking on board hawkish commentaries by some ECB officials and news reporting that the US government may announce a decision to lift certain tariffs on Chinese imports.

Risk aversion returned to the fore during a volatile session on Tuesday, as investors reassessed the risk of a global recession amid ongoing disruptions in gas supply in Europe and reports of new COVID cases in some regions in China.

Markets closed on a mixed note on Friday, as a blowout US employment report showed job creation well above expectations in August (162,000 vs. 55,000 expected), alongside an upward revision to July's figures. Hawkish comments from the Fed's Hammack also pushed up market expectations for a Fed rate hike, with a September move priced in again.

Risk appetite extended across markets on Thursday, as fears about inflation and monetary tightening eased following soft labour data in the US (weekly jobless claims rose to the highest level since January). Meanwhile, news reported that China’s government is considering more fiscal support by raising by $220bn the issuance of special bonds.

A broad risk-off move dominated Wednesday's session, with Brent crude remaining above $100/barrel amid reports of increased Iranian attacks on tankers crossing Hormuz. In the eurozone, concerns over France's fiscal situation deepened after comments from the Banque de France governor ruling out an ECB intervention.

Stock indices were mixed as financial markets digested the downward revision of global growth forecasts from the OECD and the downbeat economic releases in the US (2018's trade deficit, the largest since 2008, and ADP employment report slightly below consensus).

Investor sentiment improved on the back of hope of progress in the negotiations between China and the U.S. According to media reports, Chinese officials are open to accept a partial deal, although a broader one is unlikely.

Investors started the week trading cautiously, taking on board weak sentiment data, hawkish commentary by some ECB officials and news reporting that Russia is due to reduce gas supplies to Europe.

Risk aversion took over the session amid disappointing economic indicators and as media reports suggested that the U.S. and China are struggling to resume negotiations.

Investors kicked-off the week on a cautious note as they await the ECB's Governing Council meeting (on Thursday), widely expected to lower interest rates by 25bp, and US inflation figures for November (released on Wednesday), a key report for the Fed's decision next week.

In the last session of the week, investors continued to trade with a risk-on mode, taking on board the fall in HICP inflation in the eurozone (9.2% in December after 10.1%) and the US employment report for December. On balance, the data suggested central banks will continue hiking policy interest rates but likely at a reduced pace.

In the first session of the week, investors digested the US employment report and the HICP inflation data released last Friday together with comments from central bank officials. In particular, San Francisco's Fed President Mary Daly said that a 25bp or 50bp hike in the next meeting are both on the table and pointed to a terminal rate over 5%.