Sovereign bond yields ended the week at higher levels after US inflation hit its highest for 30 years. The headline CPI index climbed to 6.2% last month, a level not seen since December 1990 with the figure some 30 basis points (bps) ahead of market expectations. Underlying price gains were broad based with energy and food sizeable contributors. Used car prices also continued to accelerate, a reflection of the ongoing supply chain issues which have dogged car manufacturers throughout this year. Core CPI, which excludes the volatile energy and food components form the calculation climbed to 4.6%, a 29 year high and significantly above the 4.0% expected by the market.
The US 10-year treasury yield rose by 11bps to 1.57% by the weekend having been as low as 1.41% during the early week’s trading. In the UK, the equivalent gilt yield rose to 0.92%, a 7bps increase over the previous Friday’s close. Moves on the Continent were more muted with the 10-year benchmark rising by 3bps although it remained in negative territory at -0.23%.
Equity markets were somewhat mixed as traders assessed the inflation data coming from the US. The S&P500 declined by -0.3% with consumer discretionary names leading the fall with Tesla in particular enduring a difficult week after CEO Elon Musk announced his intention to sell some of his stock. European bourses enjoyed a stronger week, the German DAX rising by +0.3% and the French CAC40 by +0.7%. UK stocks also concluded the week in positive territory with the FTSE100 adding +0.6% despite a slowdown in economic growth during the third quarter. Meanwhile in Japan, the Nikkei 225 was flat.
In the commodity markets, gold enjoyed a strong week reflective of the increase in inflation expectations. The precious metal rose by +2.9% to $1,862 an ounce despite an uptick in the US Dollar. Elsewhere, Brent Crude declined by -0.7% to $82.39 a barrel whilst copper continued its recent resurgence with the metal concluding the week at $9,841 a tonne.
It’s a relatively steady week for US data releases with Tuesday’s retail sales figure the standout on this occasion. Several closely watched figures from the housing sector are also due with building permits and housing starts published on Wednesday afternoon. In the UK, CPI inflation data is expected to show a sharp jump from Septembers 3.1% figure with forecasts pointing towards a 70bps increase last month. Unemployment, retail sales and government borrowing are also released throughout the week.
Revised third quarter GDP is the standout data published in the Eurozone this week with growth expected to be unchanged from the previously calculated +2.2% quarterly figure. Trade and inflation figures are also released on the Continent this week. Moving to Asia, Q3’21 GDP data has already been released in Japan with the -0.8% figure a 60bps downgrade from the previous estimate. A raft of data was also published in China during the early hours of Monday morning with retail sales, industrial production, and unemployment all either inline or ahead of market expectations. 
Read last week's market update
 US Bureau of Labor Statistics - Consumer price index - October 2021
 T Rowe Price - 12.11.21
 Forex Factory - 14.11.21
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