Renewed U.S.-Iran strikes weighed on investor sentiment and led to a volatile session. Energy prices rose, with Brent oil and TTF gas around $90 and €70, respectively. Stock markets declined across the board and the USD weakened against a basket of major currencies, with the euro strengthening moderately above $1.16.
Sovereign yields rose both in the U.S. and Europe. Euro area peripheral spreads were little changed while yields on 10-year Treasuries and Bunds reached their highest levels since early 2025 and late 2011, respectively. Market-implied odds of 25bp rate hikes by the Fed and the ECB in their September meetings rose to 65% and 99%, respectively.
On the data front, China's official composite PMI remained below the 50-point threshold (49.5 in August). In Europe, Germany's headline HICP inflation rate accelerated to 2.9% yoy in August from 2.8% in July. Today, the focus will be on the euro area's aggregate HICP figures and the U.S. ISM surveys.
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