Gas prices jumped to record levels in the Eurozone last week, hit by the dual impact of elevated demand and lower supplies from Russia. Increased competition from Asia and the likes of Brazil compounded the matter with fuel shortages being reported around the world. The ECB reiterated its belief that the recent rise in inflation is a temporary one although it acknowledged that the risks to this outlook are to the upside.
Sovereign yields continued to push higher reflecting those inflation concerns. The Eurozone 10-year index added 7 basis points (bps) to -0.19% whilst the equivalent duration gilt yield climbed by 16bps to 1.16%. Meanwhile in the US, the 10-year treasury yield jumped by 14bps to 1.60% after the US Senate voted to lift the country’s debt ceiling to prevent a default and the shutdown of the government.
Whilst volatility remained present throughout, equity markets ended the week broadly positive. The S&P500 posted a weekly gain of +0.8% despite a difficult start to the week whilst in the UK, the FTSE100 rose by +1.0%. On the Continent, solid gains were seen in the financials sector on expectations of higher rates with the German DAX and French CAC rising by +0.3% and +0.7% respectively. Japanese equities faced heavy selling pressure with a weekly loss recorded for the third consecutive week. The Nikkei 225 fell by -2.5% due to concerns related to the likely policies of new Prime Minister Fumio Kishida.
Crude prices continued to rise on the back of the global energy crisis. Brent crude increased by +4.0% to $82.52 a barrel with further support coming from OPEC which decided to maintain only a gradual increase in production at last week’s meeting. Elsewhere in the commodities sector, copper increased by +2.8% to $9,388 a tonne on supply disruption concerns whilst gold was largely flat, the precious metal concluding the week at $1,759 an ounce after a weekly rise of +0.2%
Unemployment data is amongst the standout data releases from the UK this week with the jobless rate forecast to have declined by 10bps to 4.5%. On Tuesday the British Retail Consortium publishes its monthly sales figure with the latest monthly ONS GDP data for August arriving a day later. In the US, CPI and producer inflation will receive plenty of attention with retail sales also due from the world’s largest economy. On Friday the University of Michigan releases its closely monitored consumer sentiment indicator.
In the Eurozone, research institute ZEW publishes its monthly economic sentiment index on Tuesday with industrial production covering September due the following day. Moving to Asia, producer and consumer inflation are also due in China this week alongside the latest trade data for the country. Meanwhile in Japan industrial production and producer inflation are the two headline data released this week. 
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