Trade tensions between China and the EU are escalating ahead of high-level negotiations, with China launching an antidumping investigation into European chemical imports after claiming prices fell by a cumulative 60% between 2022 and 2025. The dispute reflects wider concerns over Chinese industrial overcapacity and growing use of trade defence measures on both sides. Attention is also focused on the EU’s €103bn trade deficit with China in the second quarter of 2026 and the prospect of tougher European trade actions.
Asian equities advanced after weaker US labour market data reinforced expectations of a more accommodative monetary policy stance. The euro weakened against the dollar amid pressure in European bond markets, offsetting part of the benefit from lower oil prices. Attention now turns to third quarter earnings, while technology stocks continued to outperform, helping major indices remain near record highs.
Rising US Treasury yields are fuelling concerns over fiscal sustainability, with the 10 year yield above 5% and net interest costs reaching roughly $1.05tn in the first 11 months of fiscal 2026. However, economists argue a fiscal crisis is not imminent, as nominal GDP growth of 8.5% still exceeds the average interest rate on government debt of around 3.4%. Higher yields appear to reflect both strong economic activity and debt concerns, with markets watching for signs that elevated borrowing costs begin to slow growth or pressure risk assets.
The 6M Euribor decreased with 3 basis points to 3.04% compared to previous business day. The 10Y Swap decreased with 3 basis points 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.
Inflation accelerated across the euro area in September, driven by higher energy costs, increasing pressure on the European Central Bank to continue raising interest rates. Inflation rose to 3.4% in France, 4.1% in Italy, 3.3% in Germany and 5.0% in Spain, while euro area inflation is expected to reach 3.6%. Markets now anticipate additional rate increases over the coming year as elevated energy prices and a stronger U.S. dollar risk keeping inflation above the European Central Bank’s target for longer.
The U.S. goods trade deficit widened sharply to $132.6 billion in August, exceeding expectations, as imports surged 5.5% to a record $336.1 billion. Higher imports of industrial supplies, including petroleum, and capital goods linked to artificial intelligence infrastructure investment drove the increase. Exports rose 1.9%, supported by industrial supplies, but declines in consumer goods, food products and vehicle shipments limited gains. The data suggest trade may continue weighing on third-quarter economic growth despite rising inventories.
The Indian rupee remained one of Asia’s weakest-performing currencies in the third quarter, pressured by elevated oil prices, rising global bond yields and subdued investor sentiment. The currency fell 1.2% over the quarter, with interventions by the Reserve Bank of India helping prevent sharper losses. Markets are focused on next week’s policy decision, where a 25-basis-point rate increase is widely expected. Capital inflows of $143 billion since June have strengthened India’s ability to support the currency despite persistent external pressures.
The 6M Euribor increased with 3 basis points to 3.10% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.69% 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 consumer confidence has fallen to its lowest level since 2014, weighed down by persistent inflation, elevated fuel costs and a softer labour market. The confidence index dropped 6.7 points to 81.8 in September, while one year inflation expectations rose to 5.1%. Markets have reduced expectations for further rate hikes as policymakers assess weakening sentiment against ongoing price pressures.
China has warned it will retaliate if Europe imposes new restrictions on Chinese businesses, raising the risk of further trade tensions ahead of key negotiations next week. The dispute centres on Europe’s efforts to reduce its record trade deficit with China, with policymakers considering tougher market access measures. Despite bilateral trade reaching €880bn last year, signs of escalating protectionism are clouding the outlook for trade and investment flows.
The Dutch parliament has backed a proposal to curb speculative land prices by changing how development land is valued, aiming to remove a key obstacle to housing construction. Supporters argue the measure could channel more value gains toward public infrastructure and improve the viability of new housing projects. Municipalities warn the new valuation method could create legal disputes and delays, highlighting ongoing tensions between accelerating housing supply and maintaining planning certainty.
The 6M Euribor is unchanged at 3.07% compared to previous business day. The 10Y Swap is unchanged at 3.70% 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 Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.6%, the highest level in 15 years, as inflation remains sticky amid the Middle East conflict. This marks the fourth hike this year, totalling 100 basis points. Inflation has run above the 2 to 3% target band throughout 2026, reaching 3.5% in July. The RBA cited higher global energy prices and artificial intelligence related demand as key inflation drivers, and signalled readiness for further rate increases. Economic growth slowed to 2.1% in the second quarter.
The euro has fallen around 2% this month to two-month lows near $1.14, pressured by a US rate rise and political risk in Europe. Germany’s Chancellor Friedrich Merz faces pressure after far-right gains in state elections, while French bonds trade at a premium above 110 basis points over Germany. European gas prices above €80 per megawatt hour, the highest since late 2022, weigh on the euro’s outlook.
Spot gold rose 0.4% to $4,130 per ounce, hovering near a more than seven-week low, as markets weigh the possibility of the Federal Reserve keeping interest rates higher for longer. US gold futures fell 0.2% to $4,162. Markets now see a 72.5% probability of a Fed rate hike in October, up from 57.6% a week earlier. Fed Governor Lisa Cook cited continued inflationary pressure from artificial intelligence (AI) related demand and higher oil prices.
The 6M Euribor increased with 6 basis points to 3.07% compared to previous business day. The 10Y Swap increased with 3 basis points to 3.70% 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.
China’s industrial profit growth slowed to 4.2% year on year in August, marking a fourth consecutive month of deceleration as weak consumer demand and higher energy costs weighed on manufacturers. Profits rose 15.7% in the first eight months of 2026, down from 17.6% through July, highlighting a widening gap between strong technology sectors and weaker consumer industries. The data reinforce expectations of further policy support as economic growth and manufacturing activity lose momentum.
Oil prices rebounded above $107 a barrel after the US rejected Iran’s seven day truce proposal, renewing concerns over supply disruptions through the Strait of Hormuz. The move lifted bond yields and intensified inflation fears, with markets assigning a more than 65% probability of another US rate increase.
Swiss lawmakers have backed tougher capital rules for UBS, the country’s largest bank, requiring 90% of foreign subsidiary exposure to be covered by CET1 capital and potentially adding $16bn of extra buffers. The proposal could raise total additional capital requirements since the 2023 rescue of Credit Suisse to $33bn, limiting scope for shareholder distributions. Investors remain focused on the impact on profitability, capital returns and the bank’s competitive position.
The 6M Euribor is unchanged at 3.01% compared to previous business day. The 10Y Swap increased with 3 basis points to 3.67% 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.
Global government bond yields continued to climb as investors reassessed inflation and fiscal risks, with the 30-year US Treasury yield rising above 5.45%, its highest level since 2004. Strong economic activity, elevated energy prices and rising public borrowing needs across major economies are reinforcing expectations that interest rates may remain elevated for longer, increasing financing costs for governments, businesses and households worldwide.
US mortgage rates surpassed 7% for the first time in nearly two years as higher Treasury yields and persistent inflation concerns pushed financing costs higher. With the 10-year Treasury yield reaching its highest level since 2007, housing affordability has deteriorated further, adding pressure to an already slowing residential market and increasing risks for consumer spending and broader economic growth.
Global diesel markets remain under strain as geopolitical disruptions and refining constraints tighten fuel supplies, pushing US diesel prices above $6.50 per gallon. Policymakers are increasingly focused on securing domestic fuel availability, but any restrictions on diesel exports could further disrupt international trade flows and place additional pressure on inflation in import-dependent regions such as Europe and Latin America.
The 6M Euribor increased with 1 basis point to 3.01% compared to previous business day. The 10Y Swap increased with 2 basis points to 3.64% 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 European Central Bank (ECB) is paying increasing attention to oil prices when assessing monetary policy, although they remain only one of several factors influencing rate decisions. With energy prices rising and markets expecting further tightening, policymakers stressed that interest rates do not move automatically with oil prices. The ECB’s key rate stands at 2.5%, and the central bank remains open to moving into mildly restrictive territory if energy-driven inflation pressures intensify, while continuing its meeting-by-meeting approach.
Investors in the corporate bond market are becoming more selective toward artificial intelligence (AI)-related issuers despite generally strong credit quality. Rapidly rising borrowing needs to fund data centres, chips and AI infrastructure are expected to drive hyperscaler debt issuance to a record $420 billion in 2027. As a result, AI-related bonds trade at wider spreads and require greater pricing concessions, while demand remains strong for non-AI corporate borrowers. Investors cite supply concerns, concentration limits and uncertainty around future returns rather than default risk.
China’s central bank announced it may inject up to 1 trillion yuan ($149 billion) per day through overnight reverse repurchase operations between September 28 and October 8 to meet short-term liquidity needs ahead of the Golden Week holiday period. Liquidity demand typically rises before major holidays, while China’s interbank bond market will be closed during the Mid-Autumn Festival and National Day holidays. The central bank did not disclose the timing or borrowing cost of the operations.
The 6M Euribor increased with 1 basis point to 3.00% compared to previous business day. The 10Y Swap increased with 12 basis points to 3.62% 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.
Market participants at a New York Fed conference voiced support for allowing the US Treasury to invest a portion of its nearly 1 trillion dollar cash buffer, held in the Treasury General Account (TGA), into private repo markets rather than leaving it parked at the Fed. Proponents argue the move would stabilise money market liquidity and generate a return on idle government cash, though participants stressed the importance of a transparent and predictable process to avoid disruptive swings in market liquidity. The proposal comes as the Treasury has been struggling to contain rising borrowing costs through expanded debt buyback operations, with some speculation that TGA cash could be deployed to augment those efforts.
Trump used his address to the UN General Assembly to defend the Iran war, warning he faces a “big decision” on whether to strike a deal or “annihilate” the country, while predicting an agreement will follow the November midterm elections. He touted a new military deal with Greenland and Denmark and dismissed Cuba as a “failed state,” while expressing confidence that energy prices will fall sharply once the conflict ends. On AI, which Trump rebranded as “superintelligence,” he reaffirmed his opposition to regulatory guardrails, framing US dominance in the technology as central to global power.
The Clarity Act, a comprehensive crypto market structure bill, stalled in the US Senate, prompting the SEC and CFTC to move swiftly to fill the regulatory void using their existing authority. The SEC created a temporary pathway for trading tokenised stocks, while the CFTC submitted a separate rulemaking proposal to the White House for review. A bipartisan coalition of state attorneys general is meanwhile pushing back, arguing that federal legislation would undermine states’ ability to protect consumers from crypto fraud.
The 6M Euribor increased with 1 basis point to 2.99% compared to previous business day. The 10Y Swap increased with 1 basis point 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.
Oil and gas prices are set to keep pushing up inflation for longer than expected. European Central Bank (ECB) Chief Economist Philip Lane said geopolitical risks are now elevated again. He told Swiss newspaper Le Temps that this second wave of energy price increases should lead to higher and more persistent inflation. Inflation should recede towards target starting mid-2027. Spillover to services has been limited since February. Lane expects upward pressure on food, broader energy and goods prices, while services pressures stay relatively contained.
New US tariffs could halve Canada’s fourth quarter growth to below 1%. Bank of Canada (BoC) Governor Tiff Macklem warned that renewed uncertainty threatens investment and hiring. Canada’s economy grew 3.3% annualized in the second quarter. But a collapsed trade deal and fresh tariffs have widened the rift with the US. Annual inflation stands at 3%, above the BoC’s 2% target. It could rise further if oil prices stay near 100 dollars a barrel amid the Middle East conflict. Macklem said businesses are adjusting supply chains and adopting AI to reduce tariff exposure.
Upside risks to inflation may be materialising, according to Reserve Bank of Australia (RBA) Governor Michele Bullock. The RBA points to persistently high energy prices caused by the Middle East conflict. She also cited continued excess demand in the domestic economy. Markets are pricing a 95% chance of a rate hike to 4.60% at the RBA’s meeting on September 29. Rates are expected to peak at 4.85% in early 2027. Core inflation stands at 3.6%, above the RBA’s 2% to 3% target range.
The 6M Euribor increased with 2 basis points to 2.98% compared to previous business day. The 10Y Swap decreased with 6 basis points to 3.49% 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.
