Financial markets adopt a risk-off stance amidst rising energy prices and anticipation of ECB and Fed policy decisions.

A prevailing risk-off sentiment has been observed across financial markets, largely influenced by escalating energy prices, with Brent crude approaching $100 and TTF natural gas climbing above €75. This environment has led to increased market-based inflation expectations, particularly in the U.S., where there is now a 60% probability of a Federal Reserve interest rate hike next week. While sovereign bond yields rose in the U.S., they decreased in the Eurozone. Investors are closely watching the upcoming European Central Bank meeting, with current pricing suggesting three rate hikes over the next 12 months, commencing tomorrow. The U.S. dollar has experienced a slight weakening.