European stocks hit three-week low amid inflation and bond market concerns

European stocks have fallen to a three-week low as rising oil prices and inflation concerns outweigh relief from declining bond yields. While the US Treasury's decision to increase liquidity support for long-term debt helped lower Eurozone bond yields, energy-dependent Europe remains vulnerable to inflationary pressures, especially with oil prices exceeding $90 per barrel.

In the currency markets, the US dollar has experienced volatility and a weekly decline, nearing a three-month low. This comes as US Treasury Secretary Scott Bessent suggested expanding government operations to repurchase Treasury bonds to curb rising yields. Analysts warn that these unconventional fiscal policies could undermine confidence in the dollar. Meanwhile, the Euro and British Pound have seen gains against the greenback.

In Asia, the Japanese Yen remained steady following data showing accelerated core inflation in July, raising expectations for potential interest rate hikes by the Bank of Japan. Investors are now looking toward the upcoming Jackson Hole symposium for signals from Federal Reserve Chair Kevin Warsh regarding central bank policy and the impact of Treasury Department actions.