Financial markets ended the week in a risk-off mode despite Friday's inflation data showing that disinflation is progressing on both sides of the Atlantic: US core PCE came in at 2.6% YoY, as expected; and in the eurozone the HCPI prints for Spain, France and Italy were also broadly in line with expectations at 3.5% YoY, 2.5% YoY, and 0.9% YoY, respectively.
However, political uncertainty weighed on investor sentiment as the first US presidential debate kicked off the campaign on Thursday and French parliamentary elections loomed. This caused government bond yields to rise across the board, with eurozone peripheral spreads mixed.
n stock markets, indices fell across the board, led by the French CAC 40 in the eurozone, while in the currency markets the euro made some marginal gains against the dollar as the encouraging inflation data should allow the Fed to cut interest rates. Commodities were also mixed, with Brent, the European oil benchmark, flat on the day.