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Article | 13 September 2021 | Investments
US equity markets turned more downbeat, on growth and inflation concerns. European markets also edged lower, pulled down by regional economic uncertainty. Major Asian markets outperformed, with Japan buoyed by fresh stimulus hopes, while China’s Shanghai Composite index rallied for the third successive week.
US Treasury yields ended the week marginally higher, and prices slipped, in response to rising producer prices. In Europe, both core and peripheral bond yields also ended higher, after the adjustment to European Central Bank (ECB) monthly purchase plans. Investment grade corporate bonds saw heightened activity, with a daily record of new deals at the start of the week. In contrast, the high yield bond market was subdued, tracking developments in the equity markets.
The US dollar reversed recent weakness, rising against all majors in response to a more uncertain global backdrop. The yen only managed to make ground against the euro, which was weaker across the board.
The price of oil fell slightly, reflecting uncertainty as to the pace of the recovery in demand. Gold also fell, likely in response to the rising US dollar.
The European Commission will launch green bonds for the first time in October. The bonds will fund environmental projects, with a targeted total of EUR 250 billion in the next five years.
President Biden and President Xi held only their second conference call, aimed at cooling tensions between the two superpowers.
ECB president Christine Lagarde outlined a reduction in the monthly bond buying programme, while insisting that ‘the lady isn’t tapering’.
China’s August trade data beat forecasts, despite the temporary closure of a key container port.
Inflation data from the US, Europe and the UK will be closely analysed for hints of a sustained rise in prices.
Industrial production data from China is expected to show a slowing rate of growth, in response to Covid lockdown measures.