US inflation rose to 3.7%, well above the 2% target, increasing pressure for further monetary tightening. However, markets now price just a 15% chance of an October rate rise, down from 50% earlier in the week. A 25bp increase in December is widely expected, while persistent price pressures could prompt further tightening in 2027.
Technology stocks came under pressure as investors questioned the financing and cash flow behind the AI investment boom, pushing major US indices lower. Several AI infrastructure stocks fell more than 25%, amid concerns over higher capital costs. Strong underlying chip demand, however, suggests the sell off may reflect a recalibration of expectations rather than a collapse in AI spending.
Italy plans to raise about €5bn from banks and insurers next year to help plug its budget gap, with further contributions planned in subsequent years. The measures come as its bond spread over Germany has risen to around 110bp, highlighting fiscal vulnerability from high public debt. Growth is forecast at 1% this year, up from 0.6%.
The 6M Euribor increased with 3 basis points to 2.95% compared to previous business day. The 10Y Swap increased with 4 basis points to 3.54% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
US equities recovered from early losses on Thursday as investors shifted away from rate-sensitive technology stocks towards more defensive sectors, with the S&P 500 closing 0.33% higher and the Dow gaining 1.08%. Semiconductor stocks declined for a seventh consecutive session, while persistent inflation and elevated borrowing costs continued to raise concerns about highly capital-intensive technology investment.
US producer prices rose sharply in September as record-high diesel costs spread through freight, agriculture and manufacturing, increasing the risk of further consumer price pressures. Freight transport costs climbed 19% year-on-year, while early-stage food input costs rose 15.6%, suggesting elevated energy prices could increasingly feed into food and goods inflation. Persistent cost pressures may reinforce expectations that US interest rates will remain higher for longer.
The US is expanding strategic reserves of critical minerals as tight global copper supply and trade uncertainty raise concerns about access to materials essential for power infrastructure, data centres and manufacturing. Copper prices have approached $15,000 per tonne, while approximately $7 billion of copper has flowed into the US since late June amid expectations of potential tariffs. The development reflects the growing economic importance of securing critical mineral supply chains as structural copper shortages emerge.
The 6M Euribor increased with 1 basis point to 2.92% compared to previous business day. The 10Y Swap decreased with 5 basis points to 3.50% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The Bank of England’s chief economist expressed scepticism about market expectations for four quarter-point interest-rate increases over the next year. Although three Monetary Policy Committee members supported a rate increase in September, the majority preferred to wait for clearer evidence of the Iran war’s inflationary impact. Continued conflict has made persistent inflation risks clearer, while slowing UK wage growth is positive but remains at the upper end of levels considered consistent with the 2% inflation target.
US Treasury yields may rise further as the Federal Reserve could deliver one or two additional interest-rate increases before its tightening cycle ends, according to PIMCO. The bond manager expects rates to remain unchanged in October, with another increase potentially coming later in 2026. Although further tightening is considered largely priced into long-term yields, rate-sensitive sectors, particularly housing and commercial real estate, face greater risks, with commercial property already showing substantial weakening.
Japan’s Government Pension Investment Fund is supporting the functioning and liquidity of global financial markets, according to the country’s vice finance minister for international affairs. Japan’s early response to population ageing, including universal pensions and healthcare introduced in 1961, contributed to both a healthier workforce and significant pension-fund accumulation. The fund is now the world’s largest institutional investor and recently recorded a record quarterly investment gain, increasing attention on potential changes to its investment strategy.
The 6M Euribor increased with 2 basis points to 2.91% compared to previous business day. The 10Y Swap increased with 1 basis point to 3.55% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
ECB President Christine Lagarde ruled out a central bank intervention to support French bonds, stating firmly that the solution to France’s debt problems “lies at home” and must come through domestic fiscal consolidation. Lagarde acknowledged France as a particular case in point amid the global bond selloff, but played down speculation about activating the ECB’s Transmission Protection Instrument. On monetary policy, she flagged that Iran war-driven energy prices remain the primary inflation driver, with the ECB watching closely for second-round effects in wages ahead of an expected further rate hike in December.
Rising bond yields are reviving interest in the traditional 60/40 portfolio, with yields above 5% across parts of the US Treasury curve offering investors substantially more income than in recent years and potentially cushioning against further price declines. Fund flows reflect a cautious approach, with investors channelling 14.5 billion dollars into short-term government bond funds in September while withdrawing from corporate and high-yield debt. Analysts argue the “40” has evolved beyond Treasuries and investment-grade credit to encompass securitised assets, floating-rate instruments and CLOs.
Gold held steady at around 4,165 dollars per ounce on Wednesday as investors await US CPI data due later in the day, with markets pricing in a 22% chance of a Fed rate hike this month and an 88% probability of a move in December. Fed officials sent mixed signals with New York Fed President Williams flagging one more hike this year and Governor Waller arguing that rising yields reflect stronger growth rather than entrenched inflation. Analysts noted gold’s resilience alongside rising oil as a potential sign of an emerging bullish catalyst, particularly if upcoming inflation and retail sales data disappoint.
The 6M Euribor decreased with 2 basis points to 2.89% compared to previous business day. The 10Y Swap decreased with 2 basis points to 3.54% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The International Monetary Fund (IMF) warned that government bond yields could rise in a disorderly fashion, driven by rising inflation, mounting debt and borrowing linked to artificial intelligence (AI). Hyperscalers’ share of global investment-grade bond issuance has risen to 10% from less than 1% since 2024. The IMF flagged circular AI financing: since 2023, 14 deals channelled about $300 billion of equity and $650 billion of debt into weaker AI firms, in return for $1.4 trillion of future revenue commitments.
World Bank President Ajay Banga warns that job creation must be the top priority in emerging markets. Some 1.2 billion young people will reach working age there over the next twelve to fifteen years, against around 400 million jobs expected to be created. Without job growth, he says, unrest will rise. The World Bank raised a record $112 billion from private lenders in fiscal year 2025-2026, triple the amount before Banga took office in 2022.
India’s headline inflation rose to 5.54% in September from 4.82% in August, above expectations of 5.40% and a 22-month high. Food inflation climbed to 7.74% from 5.97%. Earlier this month, the Reserve Bank of India (RBI) raised interest rates for the first time since 2023 and said rate cuts were off the table in the near term. The RBI expects headline inflation of 5.2% for the financial year ending March 2027, above its medium-term 4% target.
The 6M Euribor decreased with 3 basis points to 2.91% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.56% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Asian equities traded unevenly ahead of earnings season, as investors weighed stretched technology valuations and rising refinancing costs. Oil fell, with Brent down 1.3% to $103.38 a barrel, while a regional equity benchmark slipped 0.4%. Markets are also bracing for US inflation data, with headline CPI seen accelerating to 3.7%, reinforcing expectations of further rate rises.
The number of Japanese companies operating in China has fallen more than 22% to around 10,000, the lowest level in sixteen years. Intensifying local competition, rising labour and energy costs, and US trade barriers are squeezing margins and accelerating a shift of production towards other Asian markets. Geopolitical tensions have further weakened the investment case, underscoring a broader realignment of regional supply chains.
The EU remains divided over its 2028 to 2034 budget after Ireland proposed cutting €160bn from a €1.985tn spending plan. The Netherlands, Germany and other member states are pushing for deeper reductions as public finances come under pressure. The dispute highlights growing tensions between fiscal discipline and investment in European competitiveness, defence and innovation.
The 6M Euribor decreased with 1 basis point to 2.94% compared to previous business day. The 10Y Swap increased with 1 basis point to 3.57% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
US financial markets came under pressure as renewed tensions in the Middle East and supply disruptions pushed Brent crude up 4.1% and WTI crude up 3.6%, adding to inflation concerns. With US oil prices now more than 60% higher year-to-date, investors increasingly expect interest rates to remain elevated, with markets assigning a roughly 69% probability to a Federal Reserve rate hike in December. The episode highlights the growing influence of energy markets on inflation expectations and monetary policy.
US Treasury markets stabilized after a well-received 30-year bond auction, easing concerns that investors were retreating from long-dated government debt despite yields remaining near multi-decade highs. The benchmark 10-year Treasury yield fell to around 5.23% after reaching a 24-year high earlier in the week, suggesting that demand for US government debt remains resilient even amid inflation worries and expectations of further monetary tightening.
The UK financial regulator proposed requiring investors in funds predominantly invested in illiquid assets such as property, infrastructure and private companies to provide 90 days’ notice before withdrawing money. The measures are designed to reduce liquidity risks and prevent market disruptions similar to those seen during the 2020 pandemic and the 2022 UK market turmoil. Around 17 funds with combined assets of approximately £7.2 billion are expected to be affected, reflecting a broader push to improve financial stability and investor protection.
The 6M Euribor is unchanged at 2.95% compared to previous business day. The 10Y Swap decreased with 2 basis points to 3.56% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Foreign investors withdrew $26.3 billion from emerging market stocks and bonds in September, marking the first monthly outflow since June. A hawkish U.S. Federal Reserve pushed Treasury yields and the dollar higher, reducing the appeal of emerging market assets. Fixed income experienced its first outflow since March, while substantial selling of South Korean equities contributed to large equity outflows. Analysts warned that continued policy tightening in advanced economies could further pressure emerging markets.
Moody’s upgraded its outlook for sub-Saharan African countries to positive, citing successful reforms, stronger commodity prices and improved access to financing. The rating agency expects regional growth of 4.3% in both 2026 and 2027 and forecasts lower borrowing requirements and stabilising public debt levels. However, it warned that heavy debt-servicing burdens, climate risks, inflation pressures and security challenges remain significant vulnerabilities for the region.
Business confidence among large Japanese manufacturers rose in October to its highest level in nearly five years, supported by strong semiconductor-related demand. Confidence in precision machinery, metal products, and steel sectors improved. In contrast, sentiment among non-manufacturers deteriorated sharply due to higher costs, weaker consumer spending, rising interest rates and construction costs. Manufacturers expect a modest improvement over the next three months, while non-manufacturers anticipate further weakening.
The 6M Euribor decreased with 4 basis points to 2.95% compared to previous business day. The 10Y Swap is unchanged at 3.58% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
US credit card spending on luxury goods fell 6% year-on-year in September, the third consecutive monthly decline, as political uncertainty ahead of the November midterms, rising Treasury yields and the economic fallout from the Iran war weigh on consumer confidence. The weakness is particularly acute in watches and jewellery, while leather goods and ready-to-wear showed some sequential improvement, with brands most exposed to the US market including LVMH, Tapestry and Ferragamo. LVMH reports third-quarter sales on 12 October, with analysts expecting luxury groups to flag softer US demand after two consecutive years of sector-wide contraction.
Singapore’s state investment firm Temasek has identified an unwinding of the AI trade as the biggest near-term risk to markets, warning that roughly half the stocks in the Russell 3000 are already more than 20% below their June highs despite the S&P 500 holding near record levels. Chief Investment Officer Rohit Sipahimalani flagged tighter AI regulation or disappointing returns on corporate AI spending as potential triggers for a reversal, though he does not see either as imminent. Temasek remains bullish on AI over the longer term and is looking to shift its AI exposure from around 50% in public markets toward 70 to 75%, to retain greater flexibility to adjust positions as the industry evolves.
France’s 10-year bond yield briefly hit a 24-year high above 5% last week, as investors grow increasingly concerned about the country’s fragile public finances and political instability ahead of the 2027 presidential election. A senior Citadel executive warned that France has “no room for mistakes,” adding that while the country does not yet pose a systemic risk to Europe, a fiscal crisis of that scale would have continent-wide consequences. Far-right frontrunner Marine Le Pen sought to bolster her credibility by pledging 140 billion euros in budget savings over five years, though economists questioned whether cuts of that scale were achievable given the lack of detail in her proposals.
The 6M Euribor decreased with 7 basis points to 2.99% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.58% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The World Bank has raised its growth forecast for East Asia and Pacific to 4.5% this year, 0.3 percentage points above its April projection, driven by exports linked to artificial intelligence (AI). Vietnam received the largest upgrade, to 7.4%. AI-related goods account for more than half of export growth in most economies and over 70% in Malaysia, the Philippines, Thailand and Vietnam. The bank warns that a reversal in AI spending would be material for the region.
United States President Donald Trump signed an executive order on Monday to expand access to tax-exempt diesel, as prices hit a record of about $6.50 a gallon last month. The order waives the off-road requirement for dyed diesel and defers the federal excise tax on its on-road use for the rest of the year, without interest or penalties. High fuel costs are a risk for Trump ahead of the November 3 midterm elections, with his approval rating at 32%.
German industrial orders fell 10.6% in August from the previous month, far worse than the 1.0% decline analysts expected. The drop was entirely due to a 61.5% fall in other transport equipment, after large orders for ships, trains and aircraft more than doubled the category in July. Excluding large-scale orders, new orders were 0.1% lower. Domestic orders declined 17.3% and foreign orders 5.4%. Orders in the three months to August were 1.3% higher than in the previous three months.
The 6M Euribor increased with 2 basis points to 3.06% compared to previous business day. The 10Y Swap increased with 1 basis point to 3.59% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
