Global Markets Swayed by Inflation Concerns and Geopolitical Risks

Global markets were dominated by inflation concerns and geopolitical risks this week. The US Treasury yields retreated after reaching multi-decade highs, with the 10-year yield easing from above 5.34 percent as investors sought safety amid growing concerns over France's fiscal deterioration.

Economic data presented a mixed picture in the US, with consumer spending rising 0.6 percent month-over-month, core PCE inflation moderating to 0.2 percent month-over-month and 3.0 percent year-over-year, and initial jobless claims falling to 197K. However, September nonfarm payrolls increased by just 29K, the unemployment rate rose to 4.2 percent, and wage growth eased to 0.1 percent month-over-month and 3.0 percent year-over-year.

ISM prices paid surged to 77.9, reinforcing concerns that inflation pressures remain sticky. Federal Reserve communication remained mixed, with Dallas Fed President Logan indicating rates may need to rise by at least another 50bps, while softer labor market data led investors to sharply reduce expectations for an October rate hike.