Washington: Worries that various inflation measures are ticking up after declining over the past few months helped European markets stay higher last week, despite another week of rising yields.

The German DAX had a strong week, posting its highest daily and weekly close in over a year, thanks to optimism on declining energy prices and a more robust global economy as China's economy recovers.

These factors have helped foster a slightly less pessimistic outlook on growth prospects. The FTSE100 lagged behind some of its more defensive names.

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US markets also managed to end the week in the black, breaking a three-week losing streak. When the S&P 500 and Nasdaq 100 found support at their respective 200-day SMAs, they were able to recover.

Friday's recovery came against a backdrop of a sharp decline in US 10-year yields, which fell from their highest since November to above 4%.

The ISM Services report released Friday offered little evidence that the significant recovery in the US economy in January was an anomaly.

The headline number eased slightly from 55.2 to 55.1 while employment rose to 54 and new orders rose to 62.4. Prices paid declined but still remained high at 65.4.

The US labor market is showing another sign of strength as a leading indicator for this week's delayed non-farm payrolls number for February; Additional information will likely be provided by ADP and Job Openings (JOLTS) data.

As we look ahead to this week, the main focus will be on Fed Chairman Jay Powell's testimony to US lawmakers tomorrow and Wednesday. He is likely to be asked how he views the US economy in light of strong recent data and what steps the Fed might be inclined to take if the data continues to be strong.

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Given how close we are to the next meeting, it is unlikely that he will provide many hints, and the key point will probably be data reliance. Still, don't be surprised if the market scrutinizes every little detail to support its own point of view.

Both the RBA tomorrow and the Bank of Canada on Wednesday make important rate decisions this week, and given the strength of recent economic data, the central bank may look back on its decision to signal pause at its last meeting.

The Chinese government announced over the weekend that this year's GDP target would be 5%, which seems a little short of last year's target of 5.5%, which was achieved despite more challenging conditions.

As a more restrained China means less demand, it could also be discouraging for global GDP prospects.

As China prioritizes stability above all else, the lower-than-expected target may also indicate that government officials there are less likely to push for economic stimulus.

It may also be a recognition that recent protectionist actions have reduced investor confidence in China as a potential investment destination, and as a result, investors may be more circumspect during the coming 12 months.

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As we look forward to the start of today's European session and a positive start to the week, with markets in Asia generally positive, this less-than-ambitious target appears to be weighing on commodity prices.