European stock indices inched down from their record levels on Friday as the pullback in sovereign yields was halted. The Euro STOXX 50 eased 0.3% to 6,302 and the STOXX Europe 600 dropped 0.2% to 636. Iran delayed the start of talks over its nuclear program and war with the US to halt a streak of de-escalation between both countries that lowered energy prices and propped European equities to a rally this week. Still, plans to restore trade through the Strait of Hormuz progressed with reports that tankers flowed through the chokepoint. Luxury brands closed lower with LVMH, Hermes, and Ferrari dropping between 2.5% and 2.3%. Tech was also lower with ASML and Prosus dropping 1% and 2.2%, respectively. German auto producers rebounded slightly following the guidance decrease from BMW this week, although Volkswagen dropped 4.5% as it was detached from its dividend. On the week, the Euro STOXX 50 gained 1.9% and the STOXX Europe 600 rose 0.4%.

UK 10-year gilt yields climbed to 4.8%, extending their rebound from recent lows as markets weighed political uncertainty and global risk sentiment. Greater Manchester Mayor Andy Burnham’s victory in the Makerfield by-election has bolstered his profile as a potential challenger to Prime Minister Keir Starmer, with markets increasingly focused on the possible fiscal implications of a future leadership bid. However, with limited policy detail so far, the impact on public finances and borrowing remains difficult to assess. Meanwhile, crude prices sought to recover from recent steep losses after planned US-Iran peace talks in Switzerland were abruptly canceled, reigniting concerns over the durability of the tentative agreement to end the Middle East conflict. On monetary policy, the Bank of England maintained a cautious stance amid uncertainty over energy-driven inflation risks, while the US Fed signaled that some policymakers still see scope for further tightening later this year.

Brent crude oil prices were near $80 per barrel on Friday and were heading toward a weekly decline of roughly 8% after Israel and Hezbollah reached a ceasefire agreement set to begin on Friday. The truce, if maintained, could remove a major obstacle to broader peace efforts between the US and Iran. Meanwhile, Tehran said vessels passing through the Strait of Hormuz would require mandatory insurance policies, which are currently free but could incur charges later, reinforcing its claims over the strategic waterway. Market data suggested shipping activity slowed after an earlier surge in tanker movements, with no outbound vessels seen leaving the Persian Gulf on Friday morning. In contrast, nearly 10 million barrels of crude were observed transiting or positioned near the strait on Thursday, including the first Saudi-owned tankers to move since the conflict began more than three months ago. Uncertainty continues after planned US-Iran talks in Switzerland were canceled.

Retail sales in Canada surged by 1% from the previous month in May of 2026, according to a preliminary estimate. If confirmed, it would mark a fifth straight increase in retail sales. In April, retail turnover rose by 0.5% to C$73 billion, revised slightly lower from the initial estimate of 0.6%. Sales soared by 5.1% to C$7.51 billion for gasoline stations and fuel vendors, as the continued increase in fuel costs due to the war in the Middle East magnified a 0.8% increase in volume of sales. Meanwhile, turnover also rose for health and personal care retailers (1.2% to C$6.58 billion), building supplies and materials (3.3% to C$3.81 billion), and furniture, electronics, and appliances retailers (0.7% to C$3.4 billion). On the other hand, retail turnover fell for food and beverage stores (-2% to C$13.27 billion).

The Bank of Russia cut its policy rate by 25bps to 14.25% in its June 2026 decision, contrasting with the median market consensus of a 50bps cut to 14%. The central bank noted that pro-inflationary risks prevailed in the medium term when citing the warrant for restrictive monetary policy. Such pro-inflationary risks are supported by the external backdrop of higher energy prices due to the war in the Middle East, higher energy prices domestically as refineries are targeted by Ukraine, and higher inflation expectations as wage growth outpaces productivity growth. On top of that, the CBR stated that fiscal policy is more accommodative than previously expected, adding to the requirement that monetary conditions must remain restrictive to prevent further inflation. The inflation rate in Russia eased to 5.3% in May, remaining above the CBR target of 4%.

Producer prices in Germany increased 2.2% year-on-year in May 2026, after a 1.7% rise in April, marking the second straight month of inflation. It was the fastest increase in producer prices since May 2023, though below market forecasts of 2.5%, mainly driven by higher prices for intermediate goods (4.2%) and energy (2.5%), with a sharp rise in mineral oil prices (34.9%) due to the Middle East conflict. Prices also rose for capital goods (2.0%), boosted by higher machinery costs, as well as motor vehicles, trailers, and semi-trailers, while durable consumer goods advanced 2.0%. By contrast, prices for non-durables dropped 1.7%, mainly due to cheaper food, particularly butter and pork. Excluding energy, producer prices rose 2.3%. On a monthly basis, producer prices rose 0.3%, slowing sharply from a 1.2% gain in April and falling short of expectations for a 0.7% increase, marking the softest monthly increase since February, when producer prices fell.