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Bond market sell-off highlights fiscal risks

The increase in euro-zone bond yields earlier this week seems to have been mostly a function of shifting global sentiment rather than a response to news from Europe itself. But it is a reminder that there are still underlying concerns about euro-zone public finances, particularly with some governments loosening fiscal policy. Next week we expect to learn that euro-zone retail sales fell and unemployment was stable in August, while the final PMIs for September will have remained weak.

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