Oil Prices Soar Amid Escalating Trade Tensions, Global Markets Feel the Pinch

Global markets were hit hard this week due to rising oil prices and escalating trade tensions. The price of oil surpassed $100 per barrel, causing concerns about inflation and leading to a hike in Treasury yields. This move was further exacerbated by a hot Producer Price Index (PPI) reading and a hotter monthly core Consumer Price Index (CPI) reading, which increased expectations for a near-term Federal Reserve rate hike.

Canada's markets were particularly affected by the retaliatory tariffs imposed on U.S. goods, with Ottawa imposing duties of 15% to 50% on C$28 billion worth of imports. The move was swiftly met with a ban on selected Canadian products and 50% tariffs on steel, aluminum, paper, furniture, motorboats, and golf carts from the U.S.

The ECB raised interest rates by 25 basis points in an attempt to contain inflationary pressures, which have been driven largely by higher energy prices. The decision was made as eurozone inflation rose to 3.3% in August, with projections showing headline inflation averaging 3.0% in 2026 and above target for an extended period.