Equity markets under pressure again

Equity markets remained under pressure amid the on-going tensions between the US and North Korea, with European and US stocks shedding around 1% and 1.5% respectively yesterday. Donald Trump has upped the ante in terms of rhetoric at least, saying that perhaps his previous comments about directing ‘fire and fury’ at North Korea were not strong enough

Bond yields in the core markets continued to edge down in this environment, with US yields further pressured by soft producer price inflation readings for July published yesterday (10-year yields fell by 5bps to close at 2.20%)

The Swiss franc and Japanese yen advanced further while the euro was firmer across the board, trading up to an intra-day high of almost $1.18 against the dollar and close to 91p against sterling

Manufacturing output in the UK was flat in June having fallen by 0.1% (month-on-month) in May, while construction output fell for a second consecutive month, according to data published yesterday, which contributed to downward pressure on sterling

Fed member Dudley says the outlook is for continued moderate growth in the US, with some further strengthening in the labour market and an increase in inflation over the medium-term towards its 2% target

Data due today are expected to show the annual rate of headline CPI inflation in the US ticking up to 1.8% in July, according to the consensus forecast, with the core rate expected to remain at 1.7%