US wage growth picked up the pace during August despite the latest jobs report revealing a sharp slowdown in the rate of new job creation. Payrolls increased by just 235,000 last month, some way below analyst expectations of 720,000 as rising COVID cases put some businesses plans on hold. Regardless, wages climbed by +0.6% versus July or an impressive annualised rate of +4.3% which highlights the lengths employers are going to, to try and entice new potential workers. The acceleration in wage growth led to elevated concerns regarding the future path of inflation and what that could mean for interest rates. Last week’s Eurozone CPI data added to those worries with the headline inflation index jumping to 3.0%, an increase of 80 basis points (bps) and 30bps ahead of market forecasts.
The increased inflation expectations filtered through to the bond markets where sovereign yields moved higher over the week. In the US, the 10-year treasury yield rose by 3bps to 1.32% with larger increases recorded in the equivalent securities in both the UK and the Eurozone. The 10-year gilt yield jumped by 14bps to 0.72% whilst the benchmark index on the Continent added 10bps to -0.38%.
Moves in the equity markets were much more mixed. The FTSE100 was largely flat, closing the week -0.1% lower with the mid-cap centric FTSE250 rising by +0.6%. In the US, the S&P500 continued to press further into record territory after another +0.6% rise whilst it was a particularly strong week in Japan where the Nikkei 225 jumped by +5.4%. Meanwhile in Europe, the French CAC40 gained by a modest +0.1% whilst German DAX 30 fell by -0.5%.
Compared to recent weeks, moves in the major commodity markets were somewhat muted. Both Brent Crude and Copper were unchanged over the previous week at $72.72 a barrel and $9,421 respectively. Elsewhere, gold benefited from some weakness in the US Dollar with the precious metal climbing by +1.5% to $1,834 an ounce.
Monthly GDP data is amongst the standout data releases due in the UK this week. Industrial and manufacturing production numbers are also published whilst on Tuesday, the British Retail Consortium releases its latest sales data covering July. In the US, the Federal Reserve publishes its bi-monthly ‘Beige Book’ which covers various key economic indicators from the Central Bank’s 12 districts. Other US related numbers to keep an eye on include crude oil inventories and producer price inflation on Friday afternoon.
Revised Q2’21 GDP data (due Tuesday) from the Eurozone is expected to be unchanged from the previously calculated +2.0% quarterly figure. A closely monitored economic sentiment indicator from German economic research group ZEW is also due on Tuesday whilst on Thursday, the European Central Bank holds its latest monetary policy meeting. Moving to China, CPI inflation and updated trade figures will be monitored closely whilst in Japan, the final calculation of Q2’21 GDP is the main number to keep an eye on from the country this week. 
Read last week's market update
 US Bureau of Labor Statistics - 03.09.21
 T. Rowe Pricw - 03.09.21
 Forex Factory - 05.09.21
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