• Macro:Global equities had a mixed day yesterday with the US trending lower as investors reduced risk ahead of the Fed Chairs update at Jackson Hole later this week. European stocks finished higher, by 0.70%. The S&P 500 fell 0.59% whilst the Nasdaq dropped 1.46%. In the US, seven of eleven sectors were positive with 69.4% of stocks in the green. Real Estate (+1.76%) and Consumer Staples (+0.95%) were the strongest sectors. Information Technology (-1.91%) and Communication Services (-1.18%) were the weakest. AI related companies had a particularly bad day with Palantir falling 9.24%. In Europe ten of eleven sectors were positive with 79.5% of companies finishing higher. Consumer Discretionary (+1.88%) and Materials (+1.58%) were the two strongest sectors. Real Estate (-0.17%) was the only negative sector on the day. JD Sports rose 6.95% after the British sports retailer received a price target upgrade from a leading investment bank. In macro news yesterday the focus remained on potential trilateral talks between the US, Russia and Ukraine in an effort to reach a peace deal. Trump extended a call to Hungarian Prime Minister Victor Orban to understand Hungary’s reasoning for blocking Ukraine’s membership of the EU. This morning UK CPI for July increased by 0.1% MoM, which reflected an annualised rate of 3.8% (vs Est 3.7%). The rise was mainly attributed to airfare costs. In macro news today, EU July final CPI will be released at 10:00, with the annualised rate expected to remain at 2%. In the US MBA Mortgage Applications for the week ended 15th August will be released at 12:00. At 19:00, FOMC Minutes from the July meeting will be released. Central bank speakers today include the ECB’s Lagarde at 8:10 whilst the Fed’s Waller and Bostic will speak at 16:00 and 20:00 respectively.
• Debt: The Japanese 10-year yield reached its highest level since 2008, at 1.62%. The news highlights the ongoing pressure on longer dated sovereign debt.

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Risk assets endured a difficult week last week contending with an initial further move higher in global bond yields, hawkish comments from Federal Reserve Chairman Jerome Powell, and at the end of the week, weakness in the banking sector caused by uncertainty over the solvency position of US venture capital funding bank Silicon Valley Bank. The combination of all these factors resulted in average declines of circa 3.2% for global equity markets. In our recent Weekly Trader and Daily Note commentaries we have been highlighting the headwind that rising bond yields, as a result of a repricing higher for central bank terminal rates, were posing for risk assets. In the first part of last week this continued to be the case as core bond yields moved to multi-month highs. This move higher in yields continued to be driven by the recent higher-than-expected global inflation data, but was exacerbated by a more hawkish than expected tone from Fed Chair Jerome Powell during his semi-annual testimony to the US Senate Banking Committee. During his testimony, Chair Powell stated that the Fed is prepared to speed up the pace of rate increases if data indicates that a faster pace of tightening is warranted and that the ultimate level of interest rates may be higher than previously expected.