The dollar more or less held its own during yesterday’s session, having fallen back quite sharply from its immediate post-US CPI inflation highs on Wednesday, amid the release of mixed economic data, lower bond yields, and a recovery in equity markets. In remarks overnight, Fed Chair Kevin Warsh said he doesn’t “believe in saying now what I might do at the (monetary policy) meetings that we have over the balance of this year,” though the market took his non-committal stance as an indication that the central bank is likely to keep interest rates on hold at its next meeting in just under a fortnight’s time. This is weighing on the US currency this morning, with the euro trading at around $1.1240 and sterling moving above the $1.33 level. EURGBP is a touch softer relative to yesterday morning’s levels at £0.8440, just shy of its intra-week (and year-to-date) low of circa £0.8425 reached on Wednesday.
Yesterday’s Events US government bond yields fell by 6-12bps across the curve, while German and UK yields were around 2-5bps lower on the day. European equity markets finished off their lows but still shed just under half a per cent, while US stocks recovered from early losses to end the day in positive territory (with the Dow Jones leading the way, registering gains of just over 1%). Asian stocks were on a firmer footing overnight, partially reversing Wednesday’s heavy losses.
Like Wednesday’s CPI data, yesterday’s producer prices (PPI) release in the US was firmer than expected, with core output prices rising by 0.5% on the month and by 5% year-on-year, the latter matching the 2026-to-date high reached in May-June. Separately, headline retail sales in September were a good bit stronger than expected, increasing by almost 1% from August, though excluding autos and gasoline sales, spending was more muted at +0.2% on the month.
The Day Ahead
It is a relatively quiet end to the week in terms of economic data, with industrial production and import prices (both for September) due in the US and a final reading of September CPI inflation scheduled in the Euro area. In relation to the latter, the flash reading showed headline inflation accelerated to 3.8% last month (from 3.2% in August), largely on the back of higher energy price inflation, while core inflation nudged up to 2.5% (from 2.4%).
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
15 Oct 2026
Todays Talking Points 15.10.26
Market Commentary
Yesterday’s CPI inflation data for September in the US came in ahead of the consensus forecast, initially triggering a marked firming of Fed rate hike expectations, a sharp rise in US bond yields, and a strengthening of the dollar, with EURUSD falling to a new 2026 to date low just shy of $1.11. These moves were substantially reversed subsequently however as bond yields and the dollar both fell back again amid a sell-off in US stocks (led by the Nasdaq and semi-conductor stocks in particular). This has continued overnight with US yields and the dollar lower again on the back of a decline in Asian equity markets. All of this sees EURUSD trading at about $1.1215 this morning (around a cent off yesterday’s lows), while sterling has also regained ground against the US currency to trade at around $1.3250, off lows yesterday of circa $1.3140. EURGBP is a little firmer versus yesterday morning’s levels at about £0.8465.
Yesterday’s Events US government bonds are leading a sharp move lower in yields generally this morning. The benchmark 10-year yield has fallen by almost 10bps overnight and at around 5.10% is now down some 25bps from its post-CPI data highs yesterday afternoon. Equivalent German and UK bonds are also rallying strongly, both around 8bps or so lower at the start of play today. In equity markets, the US Nasdaq shed almost 2% yesterday, while Asian stocks were sharply lower overnight with Japan’s Nikkei index off almost 5% and South Korea’s KOSPI index down around 8%. No surprisingly then, European stocks have opened lower this morning, off almost 1%.
US CPI inflation for September came in ahead of the consensus forecast. Headline consumer prices rose by 0.6% on the month, pushing the annual rate inflation up to 3.7% from 3.4% in August. Core consumer prices (i.e. excluding energy and food prices) rose by 0.3%, taking the annual rate of inflation on this measure up to 2.6% from 2.4% in August. The increase in core inflation was driven by a rise in services inflation to 3.2% (from 3%), while core goods inflation was unchanged at 0.7%. Markets initially raised the chances of a Fed rate hike this month to around 50/50 following the release of the inflation data, but have since scaled this back to just under 30%.
GDP data for the month of August in the UK, released a short while ago, were better than expected, with the economy expanding by 0.1% versus the consensus forecast for a contraction of 0.1%. Over the three months to August, GDP grew by a relatively robust 0.7% (versus the three months to May) and by 1.8% versus the same three months in 2025, with the services sector the main drive of growth over the two respective periods.
The Day Ahead
It’s a busy enough day ahead in terms of economic data releases, with industrial production due in the Euro area and retail sales, producer prices (PPI) and jobless claims all scheduled in the US. There are a number of Fed, ECB and BoE members due on the wires over the course of the day.
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
14 Oct 2026
Todays Talking Points 14.10.26
Market Commentary
The euro and sterling are both a touch firmer against the dollar with some ‘dovish’ Fed commentary weighting a little on the latter. The single currency is trading just north of $1.12 this morning versus a 2026 to date low of about $1.1150 earlier in the week, while sterling has firmed to around $1.3270 from under $1.3250 yesterday morning. EURGBP is little changed, hovering just below £0.8450. There was some respite for French government bonds yesterday amid a decline in yields generally. This is continuing this morning with spreads over Germany narrowing further. The key economic data release today is the CPI inflation report for September in the US.
Yesterday’s Events
Government bond yields in the main markets took their cue from the ebb and flow of oil prices yesterday (Brent crude fluctuated between $104 and $107 a barrel) but closed slightly lower overall. French bonds outperformed with 10-year yields falling by around 6bps and spreads over equivalent German yields narrowing by a bit less than 5bps. Yields generally are lower again this morning with French spreads coming in a bit further. In equity markets, with the Q3 US corporate earnings season up and running, the main US indices ended flat to marginally lower on the day, while European stocks shed around half a percent, erasing Monday’s gains.
Fed member Williams says he expects US inflation to slow “quite a bit” next year as the impacts from tariffs and the energy price shock fade. In terms of the implications for monetary policy, he says one more interest rate hike before the end of this year may be appropriate and doesn’t think “that we would need to do more.” The IMF in its latest forecasts also sees the Fed hiking once more by year-end with rates then expected to remain on hold through to the end of 2028. The market is much more ‘bearish’, currently expecting about 75bps of hikes in total over the next 12-15 months
The Day Ahead
For the day ahead, as mentioned, the key economic data release is the CPI inflation report for September in the US. According to the consensus forecast, both headline and core inflation are expected to have nudged up last month, to 3.6% and 2.5% respectively from 3.4% and 2.4% in August. The Fed publishes its lates Beige Book, while a number of Fed, ECB and Bank of England members are due to speak over the course of the day.
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
13 Oct 2026
Todays Talking Points 13.10.26
Market Commentary
French government bonds were under pressure, as was the euro, at the start of the week’s trading. The yield on 10-year French bonds ended higher on the day, in contrast to flat to lower yields in other Euro area markets, while the spread over benchmark German bonds widened out again having narrowed a touch last week. The euro lost ground against the dollar and sterling, falling to new 2026 lows of around $1.1150 and £0.8440 respectively in the process, though it is marginally firmer against both this morning at about $1.1195 and £0.8455. The pound is slightly firmer against the dollar, trading at around $1.3240.
Yesterday’s Events
The yield on French 10-year bond yields closed around 5bps higher, though at around 4.90% it remained below its high of just under 5% at the start of October, while German yields ended broadly flat. UK 10-year yields were also largely unchanged on the day, while the US bond market was closed for Columbus Day. Yields generally are lower at the start of play today amid weakness in Asian equity markets overnight.
The IMF has published its latest World Economic Outlook (WEO) overnight. It notes that “global economic activity has proven resilient once again” in the face of the energy price shock triggered by the war in Iran. It expects global growth to slow to 3.1% in 2026 (from 3.5% in 2025) but to rebound to 3.4% in 2027, while global headline inflation is projected to rise to 4.7% this year (from 4.1% last year) before easing to 4.1% in 2027. In the context of the recent rise in bond yields, it notes that “borrowing costs have risen sharply in major advanced economies, owing to both supply- and demand-driven price pressures, along with fiscal and credit risks,” and warns that “the interaction of higher financing costs with elevated debt levels exposes a key margin of vulnerability.”
Fed member Hammack says “inflation pressures (in the US economy) are relatively broad-based,” coming from both the supply- and demand-side. She adds that a “restrictive monetary policy stance is appropriate to ensure a timely return” to the 2% inflation target, and believes “it’s preferable to make smaller adjustments (to interest rates), and to do so relatively quickly, rather than to wait and risk needing a larger course correction”. The market is currently pricing in another 25bps increase in interest rates by the end of this year, following last month’s quarter-point hike.
The Day Ahead
As mentioned, it’s very quiet in terms of economic data today, with the small business optimism index (September) and existing home sales (September) in the US the only releases of note. There are a number of Fed and ECB members scheduled to speak over the course of the day.
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 12.10.26
Market Commentary
Last week was a volatile week, with the single currency getting brief respites but gaining little. The single currency at this time last week around $1.1175 and got up to around $1.1250 at times during the week but by this morning, was back at $1.12. The euro lost a little ground to sterling, edging down from around 85p last Monday to 84.6p now. The euro’s problems centre around increased conflict in the Middle East which again is pushing up energy prices and also the continued problems in French bond markets where French yields remain near multi-year highs amid concern about the public finances and little sign of any solution which might take some pressure off France’s bonds.
Yesterday’s Events
There was little relief for France last week with protests on the streets and no sign of any movement on budgetary matters which would placate markets with 10- and 30-year yields at 4.85% and 5.4%, both only a little off multi-year highs. German 10-year yields remain at just under 3.5%, little changed on the week. Similarly, US 10-year yields are 5.2%, little changed on the week. In equity markets, both European and US stocks rallied at the end of the week, with the Eurostoxx and the S&P gaining on Friday. However, the Eurostoxx made a weekly loss whereas the S&P finished up on the week and is near a record high.
University of Michigan consumer sentiment for October was weak. It fell to 46.3, down from 48.1 in September and the lowest reading since May. The current conditions index fell to an all-time low of 44.7 with consumers highly concerned about the cost of living. Cost of living remains the dominant worry with a sharp fall in lower-income households’ confidence, the group with the ‘fewest resources to weather’ increasing price pressures.
Kazaks from the ECB appears to be in a ‘wait and see’ mode. He said on Friday, the ECB is in a ‘fairly comfortable situation’ as he described rates as now at the upper end of the neutral range. He also said that the ECB could respond in either direction and that the Euro Area economy is ‘relatively resilient to shocks’. President Lagarde was also out, and while she did not comment directly on the outlook for monetary policy, she did reiterate, perhaps with an eye on the situation in France, that the ECB has instruments to counter unwarranted disorderly market dynamics that might threaten the smooth transmission of monetary policy.
The Day Ahead
Looking to the week ahead, the focus is likely to remain on the situation in Euro Area bond markets, particularly France, but also on the tense situation and potential for wider conflict in the Middle East. On the economic data front, releases of note include the UK monthly GDP estimate while in the Euro Area we get final CPI data for September. In the US, there is inflation data, the Fed’s Beige Book and retail sales
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
9 Oct 2026
Todays Talking Points 09.10.26
Market Commentary
With little data out, or much news to move markets, there was not a lot to move the dial substantially yesterday. The euro gained somewhat, with much of the move coming overnight having done relatively little during the day yesterday, and is back to above $1.1225 to the dollar and to 84.8p to sterling. Sterling also edged up against the dollar, back to above $1.3230. Equities lost ground, both in Europe and the US, while in European bond markets, French yields continued to tick up. There was upward pressure on oil prices yesterday, with Brent moving up to $104/barrel, but prices have eased overnight as President Trump stated the US would not attack Iran again in the coming weeks
Yesterday’s Events
There were opposing moves in the US and Euro Area bond markets. US 10-year yields fell, down 6bps to just over 5.2% while similar term UK yields were up 4bps to 5.48% and bunds were up 2bps to just under 3.5%. There was no respite for French yields, with little sign of any near-term solution to public finance issues, with the 10-year French yield edging up 3bps to just shy of its recent high of 3.9%. Equities lost ground for a second day. The S&P 500 fell 0.5% for the day while the tech-heavy Nasdaq was off 1.2%. In Europe, the continued negative sentiment surrounding France is not helping and the Eurostoxx was down 0.9%.
News of further escalation of the conflict in the Middle East saw oil tick up initially. A barrel of Brent traded up to over $104, up about 4%. Iran has stepped up attacks on oil tankers in the Strait of Hormuz, causing rumours yesterday that the US was weighing more military action against Iran in the coming weeks. President Trump earlier this month said further strikes were ‘possible’; however, as rumours were swirling yesterday, he issued a social media post saying the US ‘will not be attacking Iran prior to the midterm elections’ and that there were ‘productive discussions’ with Iran. It remains to be seen if this will calm markets long-term if Iran and its allies continue to escalate their attacks on shipping and energy infrastructure, but for now it has taken off some pressure, with oil prices easing slightly this morning.
The ECB account of the September meeting showed perhaps a slightly less hawkish view than expected. The decision to hike rates by 25bps had broad support and all members of the Governing Council saw inflation risks as skewed to the upside with inflation set to remain above target for an extended period. However, some members thought the energy shock could prove less persistent than assumed as it was ‘essentially politically driven…that could disappear as quickly as it had appeared’ and that indirect and second-round inflation effects were ‘contained’ or ‘not seen’. They also noted that with the deposit rate at 2.5%, it remained in the range of neutral interest rates. As for forward guidance, members felt that communication should remain neutral and this points to no move at the next meeting in October but that another hike could come in December. However, the situation in France is complicating things further, though French fiscal issues were not mentioned at all at the meeting, though that could change at the upcoming October meeting.
More hawkish rhetoric from members of the Fed. Governor Waller said that additional hikes are likely to be needed to return inflation to the 2% target but said there is flexibility and hikes do not need to be at consecutive meetings. St. Louis Fed President Musalem said rates should rise over the next three quarters and said inflation was elevated and ‘driven by persistent demand pressures and supply shocks’
The Day Ahead
On the agenda today, a quiet end to the week on the data front with just the University of Michigan confidence data due, and speakers include the ECB’s Cipollone and Schnabel.
Dealer Comments
Todays Talking Points 16.10.26
Market Commentary
The dollar more or less held its own during yesterday’s session, having fallen back quite sharply from its immediate post-US CPI inflation highs on Wednesday, amid the release of mixed economic data, lower bond yields, and a recovery in equity markets. In remarks overnight, Fed Chair Kevin Warsh said he doesn’t “believe in saying now what I might do at the (monetary policy) meetings that we have over the balance of this year,” though the market took his non-committal stance as an indication that the central bank is likely to keep interest rates on hold at its next meeting in just under a fortnight’s time. This is weighing on the US currency this morning, with the euro trading at around $1.1240 and sterling moving above the $1.33 level. EURGBP is a touch softer relative to yesterday morning’s levels at £0.8440, just shy of its intra-week (and year-to-date) low of circa £0.8425 reached on Wednesday.
Yesterday’s Events
US government bond yields fell by 6-12bps across the curve, while German and UK yields were around 2-5bps lower on the day. European equity markets finished off their lows but still shed just under half a per cent, while US stocks recovered from early losses to end the day in positive territory (with the Dow Jones leading the way, registering gains of just over 1%). Asian stocks were on a firmer footing overnight, partially reversing Wednesday’s heavy losses.
Like Wednesday’s CPI data, yesterday’s producer prices (PPI) release in the US was firmer than expected, with core output prices rising by 0.5% on the month and by 5% year-on-year, the latter matching the 2026-to-date high reached in May-June. Separately, headline retail sales in September were a good bit stronger than expected, increasing by almost 1% from August, though excluding autos and gasoline sales, spending was more muted at +0.2% on the month.
The Day Ahead
It is a relatively quiet end to the week in terms of economic data, with industrial production and import prices (both for September) due in the US and a final reading of September CPI inflation scheduled in the Euro area. In relation to the latter, the flash reading showed headline inflation accelerated to 3.8% last month (from 3.2% in August), largely on the back of higher energy price inflation, while core inflation nudged up to 2.5% (from 2.4%).
15 Oct 2026
Todays Talking Points 15.10.26
Market Commentary
Yesterday’s CPI inflation data for September in the US came in ahead of the consensus forecast, initially triggering a marked firming of Fed rate hike expectations, a sharp rise in US bond yields, and a strengthening of the dollar, with EURUSD falling to a new 2026 to date low just shy of $1.11. These moves were substantially reversed subsequently however as bond yields and the dollar both fell back again amid a sell-off in US stocks (led by the Nasdaq and semi-conductor stocks in particular). This has continued overnight with US yields and the dollar lower again on the back of a decline in Asian equity markets. All of this sees EURUSD trading at about $1.1215 this morning (around a cent off yesterday’s lows), while sterling has also regained ground against the US currency to trade at around $1.3250, off lows yesterday of circa $1.3140. EURGBP is a little firmer versus yesterday morning’s levels at about £0.8465.
Yesterday’s Events
US government bonds are leading a sharp move lower in yields generally this morning. The benchmark 10-year yield has fallen by almost 10bps overnight and at around 5.10% is now down some 25bps from its post-CPI data highs yesterday afternoon. Equivalent German and UK bonds are also rallying strongly, both around 8bps or so lower at the start of play today. In equity markets, the US Nasdaq shed almost 2% yesterday, while Asian stocks were sharply lower overnight with Japan’s Nikkei index off almost 5% and South Korea’s KOSPI index down around 8%. No surprisingly then, European stocks have opened lower this morning, off almost 1%.
US CPI inflation for September came in ahead of the consensus forecast. Headline consumer prices rose by 0.6% on the month, pushing the annual rate inflation up to 3.7% from 3.4% in August. Core consumer prices (i.e. excluding energy and food prices) rose by 0.3%, taking the annual rate of inflation on this measure up to 2.6% from 2.4% in August. The increase in core inflation was driven by a rise in services inflation to 3.2% (from 3%), while core goods inflation was unchanged at 0.7%. Markets initially raised the chances of a Fed rate hike this month to around 50/50 following the release of the inflation data, but have since scaled this back to just under 30%.
GDP data for the month of August in the UK, released a short while ago, were better than expected, with the economy expanding by 0.1% versus the consensus forecast for a contraction of 0.1%. Over the three months to August, GDP grew by a relatively robust 0.7% (versus the three months to May) and by 1.8% versus the same three months in 2025, with the services sector the main drive of growth over the two respective periods.
The Day Ahead
It’s a busy enough day ahead in terms of economic data releases, with industrial production due in the Euro area and retail sales, producer prices (PPI) and jobless claims all scheduled in the US. There are a number of Fed, ECB and BoE members due on the wires over the course of the day.
14 Oct 2026
Todays Talking Points 14.10.26
Market Commentary
The euro and sterling are both a touch firmer against the dollar with some ‘dovish’ Fed commentary weighting a little on the latter. The single currency is trading just north of $1.12 this morning versus a 2026 to date low of about $1.1150 earlier in the week, while sterling has firmed to around $1.3270 from under $1.3250 yesterday morning. EURGBP is little changed, hovering just below £0.8450. There was some respite for French government bonds yesterday amid a decline in yields generally. This is continuing this morning with spreads over Germany narrowing further. The key economic data release today is the CPI inflation report for September in the US.
Yesterday’s Events
Government bond yields in the main markets took their cue from the ebb and flow of oil prices yesterday (Brent crude fluctuated between $104 and $107 a barrel) but closed slightly lower overall. French bonds outperformed with 10-year yields falling by around 6bps and spreads over equivalent German yields narrowing by a bit less than 5bps. Yields generally are lower again this morning with French spreads coming in a bit further. In equity markets, with the Q3 US corporate earnings season up and running, the main US indices ended flat to marginally lower on the day, while European stocks shed around half a percent, erasing Monday’s gains.
Fed member Williams says he expects US inflation to slow “quite a bit” next year as the impacts from tariffs and the energy price shock fade. In terms of the implications for monetary policy, he says one more interest rate hike before the end of this year may be appropriate and doesn’t think “that we would need to do more.” The IMF in its latest forecasts also sees the Fed hiking once more by year-end with rates then expected to remain on hold through to the end of 2028. The market is much more ‘bearish’, currently expecting about 75bps of hikes in total over the next 12-15 months
The Day Ahead
For the day ahead, as mentioned, the key economic data release is the CPI inflation report for September in the US. According to the consensus forecast, both headline and core inflation are expected to have nudged up last month, to 3.6% and 2.5% respectively from 3.4% and 2.4% in August. The Fed publishes its lates Beige Book, while a number of Fed, ECB and Bank of England members are due to speak over the course of the day.
13 Oct 2026
Todays Talking Points 13.10.26
Market Commentary
French government bonds were under pressure, as was the euro, at the start of the week’s trading. The yield on 10-year French bonds ended higher on the day, in contrast to flat to lower yields in other Euro area markets, while the spread over benchmark German bonds widened out again having narrowed a touch last week. The euro lost ground against the dollar and sterling, falling to new 2026 lows of around $1.1150 and £0.8440 respectively in the process, though it is marginally firmer against both this morning at about $1.1195 and £0.8455. The pound is slightly firmer against the dollar, trading at around $1.3240.
Yesterday’s Events
The yield on French 10-year bond yields closed around 5bps higher, though at around 4.90% it remained below its high of just under 5% at the start of October, while German yields ended broadly flat. UK 10-year yields were also largely unchanged on the day, while the US bond market was closed for Columbus Day. Yields generally are lower at the start of play today amid weakness in Asian equity markets overnight.
The IMF has published its latest World Economic Outlook (WEO) overnight. It notes that “global economic activity has proven resilient once again” in the face of the energy price shock triggered by the war in Iran. It expects global growth to slow to 3.1% in 2026 (from 3.5% in 2025) but to rebound to 3.4% in 2027, while global headline inflation is projected to rise to 4.7% this year (from 4.1% last year) before easing to 4.1% in 2027. In the context of the recent rise in bond yields, it notes that “borrowing costs have risen sharply in major advanced economies, owing to both supply- and demand-driven price pressures, along with fiscal and credit risks,” and warns that “the interaction of higher financing costs with elevated debt levels exposes a key margin of vulnerability.”
Fed member Hammack says “inflation pressures (in the US economy) are relatively broad-based,” coming from both the supply- and demand-side. She adds that a “restrictive monetary policy stance is appropriate to ensure a timely return” to the 2% inflation target, and believes “it’s preferable to make smaller adjustments (to interest rates), and to do so relatively quickly, rather than to wait and risk needing a larger course correction”. The market is currently pricing in another 25bps increase in interest rates by the end of this year, following last month’s quarter-point hike.
The Day Ahead
As mentioned, it’s very quiet in terms of economic data today, with the small business optimism index (September) and existing home sales (September) in the US the only releases of note. There are a number of Fed and ECB members scheduled to speak over the course of the day.
Todays Talking Points 12.10.26
Market Commentary
Last week was a volatile week, with the single currency getting brief respites but gaining little. The single currency at this time last week around $1.1175 and got up to around $1.1250 at times during the week but by this morning, was back at $1.12. The euro lost a little ground to sterling, edging down from around 85p last Monday to 84.6p now. The euro’s problems centre around increased conflict in the Middle East which again is pushing up energy prices and also the continued problems in French bond markets where French yields remain near multi-year highs amid concern about the public finances and little sign of any solution which might take some pressure off France’s bonds.
Yesterday’s Events
There was little relief for France last week with protests on the streets and no sign of any movement on budgetary matters which would placate markets with 10- and 30-year yields at 4.85% and 5.4%, both only a little off multi-year highs. German 10-year yields remain at just under 3.5%, little changed on the week. Similarly, US 10-year yields are 5.2%, little changed on the week. In equity markets, both European and US stocks rallied at the end of the week, with the Eurostoxx and the S&P gaining on Friday. However, the Eurostoxx made a weekly loss whereas the S&P finished up on the week and is near a record high.
University of Michigan consumer sentiment for October was weak. It fell to 46.3, down from 48.1 in September and the lowest reading since May. The current conditions index fell to an all-time low of 44.7 with consumers highly concerned about the cost of living. Cost of living remains the dominant worry with a sharp fall in lower-income households’ confidence, the group with the ‘fewest resources to weather’ increasing price pressures.
Kazaks from the ECB appears to be in a ‘wait and see’ mode. He said on Friday, the ECB is in a ‘fairly comfortable situation’ as he described rates as now at the upper end of the neutral range. He also said that the ECB could respond in either direction and that the Euro Area economy is ‘relatively resilient to shocks’. President Lagarde was also out, and while she did not comment directly on the outlook for monetary policy, she did reiterate, perhaps with an eye on the situation in France, that the ECB has instruments to counter unwarranted disorderly market dynamics that might threaten the smooth transmission of monetary policy.
The Day Ahead
Looking to the week ahead, the focus is likely to remain on the situation in Euro Area bond markets, particularly France, but also on the tense situation and potential for wider conflict in the Middle East. On the economic data front, releases of note include the UK monthly GDP estimate while in the Euro Area we get final CPI data for September. In the US, there is inflation data, the Fed’s Beige Book and retail sales
9 Oct 2026
Todays Talking Points 09.10.26
Market Commentary
With little data out, or much news to move markets, there was not a lot to move the dial substantially yesterday. The euro gained somewhat, with much of the move coming overnight having done relatively little during the day yesterday, and is back to above $1.1225 to the dollar and to 84.8p to sterling. Sterling also edged up against the dollar, back to above $1.3230. Equities lost ground, both in Europe and the US, while in European bond markets, French yields continued to tick up. There was upward pressure on oil prices yesterday, with Brent moving up to $104/barrel, but prices have eased overnight as President Trump stated the US would not attack Iran again in the coming weeks
Yesterday’s Events
There were opposing moves in the US and Euro Area bond markets. US 10-year yields fell, down 6bps to just over 5.2% while similar term UK yields were up 4bps to 5.48% and bunds were up 2bps to just under 3.5%. There was no respite for French yields, with little sign of any near-term solution to public finance issues, with the 10-year French yield edging up 3bps to just shy of its recent high of 3.9%. Equities lost ground for a second day. The S&P 500 fell 0.5% for the day while the tech-heavy Nasdaq was off 1.2%. In Europe, the continued negative sentiment surrounding France is not helping and the Eurostoxx was down 0.9%.
News of further escalation of the conflict in the Middle East saw oil tick up initially. A barrel of Brent traded up to over $104, up about 4%. Iran has stepped up attacks on oil tankers in the Strait of Hormuz, causing rumours yesterday that the US was weighing more military action against Iran in the coming weeks. President Trump earlier this month said further strikes were ‘possible’; however, as rumours were swirling yesterday, he issued a social media post saying the US ‘will not be attacking Iran prior to the midterm elections’ and that there were ‘productive discussions’ with Iran. It remains to be seen if this will calm markets long-term if Iran and its allies continue to escalate their attacks on shipping and energy infrastructure, but for now it has taken off some pressure, with oil prices easing slightly this morning.
The ECB account of the September meeting showed perhaps a slightly less hawkish view than expected. The decision to hike rates by 25bps had broad support and all members of the Governing Council saw inflation risks as skewed to the upside with inflation set to remain above target for an extended period. However, some members thought the energy shock could prove less persistent than assumed as it was ‘essentially politically driven…that could disappear as quickly as it had appeared’ and that indirect and second-round inflation effects were ‘contained’ or ‘not seen’. They also noted that with the deposit rate at 2.5%, it remained in the range of neutral interest rates. As for forward guidance, members felt that communication should remain neutral and this points to no move at the next meeting in October but that another hike could come in December. However, the situation in France is complicating things further, though French fiscal issues were not mentioned at all at the meeting, though that could change at the upcoming October meeting.
More hawkish rhetoric from members of the Fed. Governor Waller said that additional hikes are likely to be needed to return inflation to the 2% target but said there is flexibility and hikes do not need to be at consecutive meetings. St. Louis Fed President Musalem said rates should rise over the next three quarters and said inflation was elevated and ‘driven by persistent demand pressures and supply shocks’
The Day Ahead
On the agenda today, a quiet end to the week on the data front with just the University of Michigan confidence data due, and speakers include the ECB’s Cipollone and Schnabel.