The Bank of England MPC raised interest rates by 25bps to 4%, as expected, with one member favouring a 50bps increase. The MPC also indicated that another increase is likely soon, probably either next month or at the following meeting in early February. Meanwhile, the dollar is benefiting from a ‘flight to safety’ amid a plunge in US stocks, the latter more than reversing the post-midterm election gains chalked up on Wednesday. The euro and sterling are trading at around $1.1190 and $1.3390 against the US currency respectively this morning, both down around a cent from yesterday morning’s highs, leaving EURGBP a touch firmer at around £0.8350. The focus for markets today will be on the October jobs (non-farm payrolls) report in the US.
Yesterday’s Events
US government bonds also benefited from a ‘flight to safety’ as stocks sold off. Yields ended 6-12bps lower on the day, with the largest declines seen at the short-end of the curve. German yields were a few basis points lower yesterday, while UK yields were largely unchanged post the BoE meeting. In equity markets, a sharp fall in semiconductor stocks left the Nasdaq down 5.5%, while the S&P 500 was off almost 4.5%. Asian equity markets were a good deal lower overnight, with Japan’s Nikkei shedding 6%, while European stocks are in the red at the open this morning, off more than 1%.
The Bank of England MPC voted 8-1 to raise interest rates by 25bps to 4%, with the lone dissenter preferring a 50bps hike. Following the renewed spike in energy prices, the MPC now expects inflation to rise to around 5% by the middle of next year, from 3.5% currently, and while it acknowledges that indirect/second-round effects from the energy price shock have been largely absent to date, it says “the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase” in interest rates, noting that “activity data in recent months have generally been stronger than expected, adding to the case for modestly tighter monetary policy.” Looking ahead, BoE Governor Andrew Bailey said the increase in rates “shouldn’t be seen as the first in an inevitable long sequence of hikes (but) neither does it seem likely to be the last increase.” The market is pricing in around a 50% chance of another 25bps increase next month and more than pricing in a full 25bps hike by February next year, with just over 60bps of hikes in total expected by September next year.
The Day Ahead
As mentioned, the key economic data release today is the US employment report for October. The consensus expects the economy to have added almost 80k jobs last month, following an increase of 29k in September, while the unemployment rate is expected to remain unchanged at 4.2%. Other US data due include the University of Michigan consumer confidence index for November, while retail sales for September are scheduled in the Euro area. A number of Fed members are due to speak over the course of the day.
Author: Tom Hennebry
Tel: 1800 30 30 03 / +353 (0)1 790 0000
5 Nov 2026
Todays Talking Points 05.11.26
Market Commentary
A continuing fall in oil prices contributed to a decline in government bond yields, a rally in equity markets, and a modest weakening of the dollar. The euro is trading at around $1.1250 against the US currency this morning, while sterling is trading at about $1.3475 and £0.8350 against the dollar and euro respectively ahead of the Bank of England’s (Boe) interest rate decision at noon today. With the UK economy proving more resilient than expected and inflation heading higher following the recent spike in wholesale energy prices, the BoE looks certain to raise rates by 25bps to 4.0%, though there may be one or two dissents in favouring of keeping policy on hold, while some increase in rates is probably likely beyond today too. Market expectations for further hikes have been pared back lately, though there’s still about 90bps in total (including today’s 25bps increase) priced in by September next year. We might have a better idea whether this is reasonable following today’s meeting.
Yesterday’s Events
The decline in oil prices triggered by Trump’s comments earlier in the week – that he was inclined to hold off from attacking Iran for now – continued yesterday. Brent crude fell by another $10 or so to around $95 per barrel, its lowest level in a couple of months. Lower oil prices spurred a fall in bond yields and a rally in stocks. US and German 10-year government bond yields both fell by around 6bps on the day, while there were larger declines in equivalent UK and French yields, of the order of 13bps and 18bps respectively. In equity markets, the Dow Jones led the rally in US indices, gaining around 3%, with the S&P 500 and Nasdaq both adding circa 1.5%, while European stocks were around 2% higher on the day. The positive sentiment is continuing this morning with European stocks up 0.5% at the open.
Headline CPI inflation in the Euro area nudged up to 4% in October, from 3.8% in September, according to yesterday’s flash reading, due to rising energy prices and a pick-up in food price inflation last month, while core inflation – which excludes energy and food prices – was unchanged at 2.5%. Since February this year, which was just before the start of the Iran war, headline inflation has risen by just over 2 percentage points, from 1.9%, but core inflation is essentially unchanged over this period, having been running at around 2.4% back in February, indicating that to date at least, indirect effects from the energy price shock have been limited.
The Day Ahead
For the day ahead, the focus will be on the Bank of England meeting, and particularly what it might signal about interest rate hikes beyond today, while on the economic data front, producer prices for September are due in the Euro area and unit labour costs (Q3) and weekly jobless claims are scheduled in the US. There are a number of ECB and Fed members due to speak over the course of the day.
Author: Tom Hennebry
Tel: 1800 30 30 03 / +353 (0)1 790 0000
4 Nov 2026
Todays Talking Points 04.11.26
Market Commentary
There were only modest moves across FX, equities and oil prices for much of yesterday as markets awaited the outcome of the US elections. For much of the day, the dollar was relatively steady at a little below $1.12 to the euro and a little above $1.34 to sterling. With the election results coming in overnight and the Democrats taking both the House and Senate comfortably in a rebuff of the Trump administration, the dollar has weakened, with the euro now trading at $1.1240 and sterling at $1.3480. The scene looks set for stalemate now, as President Trump retains veto power to stifle any Democratic-led legislation he does not agree with while at the same time he will not be able to get more of his agenda through a Democratic House and Senate. His Cabinet will also face much more intense scrutiny with the potential for impeachments and Congressional investigations. EURGBP is relatively unchanged at around 83.4p. In equity markets, tech stocks staged a modest rebound yesterday, but that was enough for the S&P to snap a three-day losing streak and end the day up 0.4%, while in Europe the Eurostoxx reversed some of Monday’s gains and ended down 0.5%. Oil edged down a little again, with a barrel of Brent crude down 1% to $103; however, it’s edging back up today as, with the midterms over, the result may embolden President Trump to strike again at Iran, especially before the new Congress sits in January.
Yesterday’s Events
There were several hawkish ECB speakers out yesterday, which supported euro yields backing up. Curves steepened, with German 2-year yields up 2bps and 10-year yields up 4bps to 3.33%, while French 2-year yields were up 3bps and 10-year yields up 5bps to 4.95%. There was a little less movement in US yields, with 10-year yields more or less unchanged at around 4.95%. However, bond yields on both sides of the Atlantic are dipping on the open this morning.
There were a number of ECB speakers out, with most pushing the message that a rate hike is coming. Bundesbank President Nagel said that rates will ‘probably’ have to be raised at the December meeting, adding that the inflation picture had worsened since September and that higher energy prices were raising the risk of second-round effects. Bulgaria’s Radev said that the pause at the last meeting does not mean that tightening is over and the ECB should not wait for evidence of second-round effects before acting again. Klass from the Netherlands said tightening is slowing the economy and second-round effects are not yet visible, but short-term inflation expectations are rising. Kocher from Austria was also out to say the ECB must ensure inflation does not become entrenched.
US factory and durable goods orders for September were broadly strong yesterday. The final data showed durable goods orders were up 1.9% on the month and factory orders up 1.8%, while in year-on-year terms both are up over 10%. While AI-associated demand is still the driver, transportation orders were also strong in September, pointing to continued underlying manufacturing momentum heading into Q4.
The Day Ahead
Today, there will be the fallout from the US elections for markets to digest, while on the data front we get final October PMIs in major economies, the flash October inflation print in the Euro Area and ISM services in the US. Speakers include ECB chief economist Philip Lane.
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
3 Nov 2026
Todays Talking Points 03.11.26
Market Commentary
Oil moves lower on reports of renewed US/Iran diplomatic efforts.
There was a divergence in equity markets yesterday, with some stocks rebounding following a sell-off last week, but tech stocks continued to slide. The Nasdaq lost another 1% and is now off 10% from its recent peak, while the S&P 500 fell 0.5%, held back by under-pressure tech stocks. In contrast, the news that President Trump apparently wants to continue diplomatic overtures to Iran and hold off on further strikes sent oil prices lower and buoyed stocks in energy-consuming sectors, with the DOW up 0.4% yesterday, while, in Europe, the Eurostoxx was up 0.7% and the FTSE was up 0.3%. The euro got up towards $1.1220 yesterday for a time, the highest it has been in about a week, but dipped back down to just under $1.12 currently, while sterling is trading at just above $1.34 to the dollar this morning. EURGBP has edged up from Friday’s 2026 low (of about £0.8320) to trade just shy of £0.8350 at the moment. The currency pairs are in a bit of a holding pattern right now, awaiting the results of the US midterms today and then the Bank of England’s likely rate hike on Thursday.
Yesterday’s Events The taming of the rhetoric around further strikes on Iran and rumours that diplomacy would be given another chance saw a sharp sell-off in oil. A barrel of Brent crude fell nearly 8% to around $104, the lowest price in about two weeks, with natural gas prices also falling. That took some of the pressure off European government bonds, with markets hopeful that a sustained fall in energy prices will ease inflation. UK 10-year yields were down 9bps to 5.2%, while 10-year German Bund yields were down 3bps to under 3.3%. While French yields remain under a microscope, they too fell yesterday, with 10-year yields down 7bps to 4.9%. There was a little less movement in US yields, with 10-year yields down 2bps.
ISM manufacturing in the US in October was positive rising 1 point to 55.5, the second highest reading in more than four years. The production index was up to 59, the strongest level in almost five years while new orders rose just slightly but remained very solid at 55.5. The employment index did, however, edge down very slightly. The AI investment boom continues to be the key driver here, with manufacturers in key sectors like computing and electrical equipment struggling to keep up with demand.
A number of ECB speakers were out, with a few pushing France to solve its budgetary situation. Makhlouf from Ireland said that France needs to ‘get on and fix’ the public finances, as he said fiscal issues have ‘pretty well understood’ solutions. He ruled out any immediate ECB intervention to help the French position. Moulin from the Bank of France acknowledged that there were concerns about the sustainability of the French public finances and said France’s budget position was ‘not good’. ECB hawk Kazimir from Slovakia said that the ECB’s recent pause in rate hikes was ‘not a finish line’ and that markets may be underestimating how much tightening will be required, saying at this point it’s a question of how much ‘more action’ will be needed.
The Day Ahead
Today, on the data front, we get US factory and durable goods orders, and there will be a number of central bank speakers, but all eyes will be on the results of the US midterms, which should start to come in overnight, with most polls at this point predicting Democratic Party gains.
Author: Mark Cullen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
2 Nov 2026
Todays Talking Points 02.11.26
Market Commentary
Equity markets sold off quite sharply on Friday, led by the Nasdaq in the US, while French government bonds came under pressure, with yields rising and spreads over Germany widening out again. The euro and sterling are managing to hold onto most of the gains they made against the dollar over the latter part of last week, trading at around $1.12 and $1.3425 respectively this morning, while EURGBP has edged up from fresh 2026 lows (of about £0.8320) to trade just shy of £0.8350. Sterling had a good October, gaining around 2.5% and 1% against the euro and dollar respectively, supported by expectations for an aggressive series of rate hikes from the Bank of England (BoE), with the market fairly consistently pricing in at least 100bps of tightening over the next year or so. The BoE meets this Thursday and is expected to raise rates by 25bps to 4%, though what it signals about further hikes beyond this will be of more interest. The US midterm elections take place tomorrow (Tuesday), with markets apprehensive that Trump might relaunch attacks on Iran shortly afterwards, while economic data of note due this week include a flash inflation reading for October in the Euro area on Wednesday and the October jobs (non-farm payrolls) report in the US on Friday.
Yesterday’s Events
There was fairly limited movement in the main government bond markets on Friday, despite the weakness in stocks, with US, German and UK yields all finishing just a few basis points lower on the day. In equity markets, the Nasdaq shed almost 3% and the S&P 500 almost 2%, while European indices lost around1%. The future markets are currently pointing to some respite for stocks today though.
The Euro area economy grew by 0.4% quarter-on-quarter and by 1.3% year-on-year in Q3 2026 according to Friday’s flash GDP release, slightly ahead of the consensus forecast, though the data continue to be impacted by large swings in Ireland’s GDP. Smoothing over the first three quarters of this year, growth in the zone has averaged about 0.3% a quarter, much the same as in 2025, and better than expected given the global energy shock (although obviously the latter has intensified recently).
Fed member Logan says “it (is) clear to me, given the current outlook, that the (Fed) needs to implement at least two more 25-basis-point rate increases,” adding that “adjusting policy gradually can help households, businesses and market participants adapt to higher rates and reduce the risk that economic activity deteriorates more sharply than necessary.” The market is currently pricing in about a 75% chance of a 25bps rate increase next month and about 55bps of hikes in total by June next year.
The Day Ahead
As indicated, it is a busy week ahead, with the US midterms on Tuesday, Euro area inflation data on Wednesday, the Bank of England rate announcement on Thursday, and US payrolls on Friday. In addition, other economic data of note are the ISM manufacturing and services reports in the US today and Wednesday respectively.
Dealer Comments
Todays Talking Points 06.11.26
Market Commentary
The Bank of England MPC raised interest rates by 25bps to 4%, as expected, with one member favouring a 50bps increase. The MPC also indicated that another increase is likely soon, probably either next month or at the following meeting in early February. Meanwhile, the dollar is benefiting from a ‘flight to safety’ amid a plunge in US stocks, the latter more than reversing the post-midterm election gains chalked up on Wednesday. The euro and sterling are trading at around $1.1190 and $1.3390 against the US currency respectively this morning, both down around a cent from yesterday morning’s highs, leaving EURGBP a touch firmer at around £0.8350. The focus for markets today will be on the October jobs (non-farm payrolls) report in the US.
Yesterday’s Events
US government bonds also benefited from a ‘flight to safety’ as stocks sold off. Yields ended 6-12bps lower on the day, with the largest declines seen at the short-end of the curve. German yields were a few basis points lower yesterday, while UK yields were largely unchanged post the BoE meeting. In equity markets, a sharp fall in semiconductor stocks left the Nasdaq down 5.5%, while the S&P 500 was off almost 4.5%. Asian equity markets were a good deal lower overnight, with Japan’s Nikkei shedding 6%, while European stocks are in the red at the open this morning, off more than 1%.
The Bank of England MPC voted 8-1 to raise interest rates by 25bps to 4%, with the lone dissenter preferring a 50bps hike. Following the renewed spike in energy prices, the MPC now expects inflation to rise to around 5% by the middle of next year, from 3.5% currently, and while it acknowledges that indirect/second-round effects from the energy price shock have been largely absent to date, it says “the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase” in interest rates, noting that “activity data in recent months have generally been stronger than expected, adding to the case for modestly tighter monetary policy.” Looking ahead, BoE Governor Andrew Bailey said the increase in rates “shouldn’t be seen as the first in an inevitable long sequence of hikes (but) neither does it seem likely to be the last increase.” The market is pricing in around a 50% chance of another 25bps increase next month and more than pricing in a full 25bps hike by February next year, with just over 60bps of hikes in total expected by September next year.
The Day Ahead
As mentioned, the key economic data release today is the US employment report for October. The consensus expects the economy to have added almost 80k jobs last month, following an increase of 29k in September, while the unemployment rate is expected to remain unchanged at 4.2%. Other US data due include the University of Michigan consumer confidence index for November, while retail sales for September are scheduled in the Euro area. A number of Fed members are due to speak over the course of the day.
5 Nov 2026
Todays Talking Points 05.11.26
Market Commentary
A continuing fall in oil prices contributed to a decline in government bond yields, a rally in equity markets, and a modest weakening of the dollar. The euro is trading at around $1.1250 against the US currency this morning, while sterling is trading at about $1.3475 and £0.8350 against the dollar and euro respectively ahead of the Bank of England’s (Boe) interest rate decision at noon today. With the UK economy proving more resilient than expected and inflation heading higher following the recent spike in wholesale energy prices, the BoE looks certain to raise rates by 25bps to 4.0%, though there may be one or two dissents in favouring of keeping policy on hold, while some increase in rates is probably likely beyond today too. Market expectations for further hikes have been pared back lately, though there’s still about 90bps in total (including today’s 25bps increase) priced in by September next year. We might have a better idea whether this is reasonable following today’s meeting.
Yesterday’s Events
The decline in oil prices triggered by Trump’s comments earlier in the week – that he was inclined to hold off from attacking Iran for now – continued yesterday. Brent crude fell by another $10 or so to around $95 per barrel, its lowest level in a couple of months. Lower oil prices spurred a fall in bond yields and a rally in stocks. US and German 10-year government bond yields both fell by around 6bps on the day, while there were larger declines in equivalent UK and French yields, of the order of 13bps and 18bps respectively. In equity markets, the Dow Jones led the rally in US indices, gaining around 3%, with the S&P 500 and Nasdaq both adding circa 1.5%, while European stocks were around 2% higher on the day. The positive sentiment is continuing this morning with European stocks up 0.5% at the open.
Headline CPI inflation in the Euro area nudged up to 4% in October, from 3.8% in September, according to yesterday’s flash reading, due to rising energy prices and a pick-up in food price inflation last month, while core inflation – which excludes energy and food prices – was unchanged at 2.5%. Since February this year, which was just before the start of the Iran war, headline inflation has risen by just over 2 percentage points, from 1.9%, but core inflation is essentially unchanged over this period, having been running at around 2.4% back in February, indicating that to date at least, indirect effects from the energy price shock have been limited.
The Day Ahead
For the day ahead, the focus will be on the Bank of England meeting, and particularly what it might signal about interest rate hikes beyond today, while on the economic data front, producer prices for September are due in the Euro area and unit labour costs (Q3) and weekly jobless claims are scheduled in the US. There are a number of ECB and Fed members due to speak over the course of the day.
4 Nov 2026
Todays Talking Points 04.11.26
Market Commentary
There were only modest moves across FX, equities and oil prices for much of yesterday as markets awaited the outcome of the US elections. For much of the day, the dollar was relatively steady at a little below $1.12 to the euro and a little above $1.34 to sterling. With the election results coming in overnight and the Democrats taking both the House and Senate comfortably in a rebuff of the Trump administration, the dollar has weakened, with the euro now trading at $1.1240 and sterling at $1.3480. The scene looks set for stalemate now, as President Trump retains veto power to stifle any Democratic-led legislation he does not agree with while at the same time he will not be able to get more of his agenda through a Democratic House and Senate. His Cabinet will also face much more intense scrutiny with the potential for impeachments and Congressional investigations. EURGBP is relatively unchanged at around 83.4p. In equity markets, tech stocks staged a modest rebound yesterday, but that was enough for the S&P to snap a three-day losing streak and end the day up 0.4%, while in Europe the Eurostoxx reversed some of Monday’s gains and ended down 0.5%. Oil edged down a little again, with a barrel of Brent crude down 1% to $103; however, it’s edging back up today as, with the midterms over, the result may embolden President Trump to strike again at Iran, especially before the new Congress sits in January.
Yesterday’s Events
There were several hawkish ECB speakers out yesterday, which supported euro yields backing up. Curves steepened, with German 2-year yields up 2bps and 10-year yields up 4bps to 3.33%, while French 2-year yields were up 3bps and 10-year yields up 5bps to 4.95%. There was a little less movement in US yields, with 10-year yields more or less unchanged at around 4.95%. However, bond yields on both sides of the Atlantic are dipping on the open this morning.
There were a number of ECB speakers out, with most pushing the message that a rate hike is coming. Bundesbank President Nagel said that rates will ‘probably’ have to be raised at the December meeting, adding that the inflation picture had worsened since September and that higher energy prices were raising the risk of second-round effects. Bulgaria’s Radev said that the pause at the last meeting does not mean that tightening is over and the ECB should not wait for evidence of second-round effects before acting again. Klass from the Netherlands said tightening is slowing the economy and second-round effects are not yet visible, but short-term inflation expectations are rising. Kocher from Austria was also out to say the ECB must ensure inflation does not become entrenched.
US factory and durable goods orders for September were broadly strong yesterday. The final data showed durable goods orders were up 1.9% on the month and factory orders up 1.8%, while in year-on-year terms both are up over 10%. While AI-associated demand is still the driver, transportation orders were also strong in September, pointing to continued underlying manufacturing momentum heading into Q4.
The Day Ahead
Today, there will be the fallout from the US elections for markets to digest, while on the data front we get final October PMIs in major economies, the flash October inflation print in the Euro Area and ISM services in the US. Speakers include ECB chief economist Philip Lane.
3 Nov 2026
Todays Talking Points 03.11.26
Market Commentary
Oil moves lower on reports of renewed US/Iran diplomatic efforts.
There was a divergence in equity markets yesterday, with some stocks rebounding following a sell-off last week, but tech stocks continued to slide. The Nasdaq lost another 1% and is now off 10% from its recent peak, while the S&P 500 fell 0.5%, held back by under-pressure tech stocks. In contrast, the news that President Trump apparently wants to continue diplomatic overtures to Iran and hold off on further strikes sent oil prices lower and buoyed stocks in energy-consuming sectors, with the DOW up 0.4% yesterday, while, in Europe, the Eurostoxx was up 0.7% and the FTSE was up 0.3%. The euro got up towards $1.1220 yesterday for a time, the highest it has been in about a week, but dipped back down to just under $1.12 currently, while sterling is trading at just above $1.34 to the dollar this morning. EURGBP has edged up from Friday’s 2026 low (of about £0.8320) to trade just shy of £0.8350 at the moment. The currency pairs are in a bit of a holding pattern right now, awaiting the results of the US midterms today and then the Bank of England’s likely rate hike on Thursday.
Yesterday’s Events
The taming of the rhetoric around further strikes on Iran and rumours that diplomacy would be given another chance saw a sharp sell-off in oil. A barrel of Brent crude fell nearly 8% to around $104, the lowest price in about two weeks, with natural gas prices also falling. That took some of the pressure off European government bonds, with markets hopeful that a sustained fall in energy prices will ease inflation. UK 10-year yields were down 9bps to 5.2%, while 10-year German Bund yields were down 3bps to under 3.3%. While French yields remain under a microscope, they too fell yesterday, with 10-year yields down 7bps to 4.9%. There was a little less movement in US yields, with 10-year yields down 2bps.
ISM manufacturing in the US in October was positive rising 1 point to 55.5, the second highest reading in more than four years. The production index was up to 59, the strongest level in almost five years while new orders rose just slightly but remained very solid at 55.5. The employment index did, however, edge down very slightly. The AI investment boom continues to be the key driver here, with manufacturers in key sectors like computing and electrical equipment struggling to keep up with demand.
A number of ECB speakers were out, with a few pushing France to solve its budgetary situation. Makhlouf from Ireland said that France needs to ‘get on and fix’ the public finances, as he said fiscal issues have ‘pretty well understood’ solutions. He ruled out any immediate ECB intervention to help the French position. Moulin from the Bank of France acknowledged that there were concerns about the sustainability of the French public finances and said France’s budget position was ‘not good’. ECB hawk Kazimir from Slovakia said that the ECB’s recent pause in rate hikes was ‘not a finish line’ and that markets may be underestimating how much tightening will be required, saying at this point it’s a question of how much ‘more action’ will be needed.
The Day Ahead
Today, on the data front, we get US factory and durable goods orders, and there will be a number of central bank speakers, but all eyes will be on the results of the US midterms, which should start to come in overnight, with most polls at this point predicting Democratic Party gains.
2 Nov 2026
Todays Talking Points 02.11.26
Market Commentary
Equity markets sold off quite sharply on Friday, led by the Nasdaq in the US, while French government bonds came under pressure, with yields rising and spreads over Germany widening out again. The euro and sterling are managing to hold onto most of the gains they made against the dollar over the latter part of last week, trading at around $1.12 and $1.3425 respectively this morning, while EURGBP has edged up from fresh 2026 lows (of about £0.8320) to trade just shy of £0.8350. Sterling had a good October, gaining around 2.5% and 1% against the euro and dollar respectively, supported by expectations for an aggressive series of rate hikes from the Bank of England (BoE), with the market fairly consistently pricing in at least 100bps of tightening over the next year or so. The BoE meets this Thursday and is expected to raise rates by 25bps to 4%, though what it signals about further hikes beyond this will be of more interest. The US midterm elections take place tomorrow (Tuesday), with markets apprehensive that Trump might relaunch attacks on Iran shortly afterwards, while economic data of note due this week include a flash inflation reading for October in the Euro area on Wednesday and the October jobs (non-farm payrolls) report in the US on Friday.
Yesterday’s Events
There was fairly limited movement in the main government bond markets on Friday, despite the weakness in stocks, with US, German and UK yields all finishing just a few basis points lower on the day. In equity markets, the Nasdaq shed almost 3% and the S&P 500 almost 2%, while European indices lost around1%. The future markets are currently pointing to some respite for stocks today though.
The Euro area economy grew by 0.4% quarter-on-quarter and by 1.3% year-on-year in Q3 2026 according to Friday’s flash GDP release, slightly ahead of the consensus forecast, though the data continue to be impacted by large swings in Ireland’s GDP. Smoothing over the first three quarters of this year, growth in the zone has averaged about 0.3% a quarter, much the same as in 2025, and better than expected given the global energy shock (although obviously the latter has intensified recently).
Fed member Logan says “it (is) clear to me, given the current outlook, that the (Fed) needs to implement at least two more 25-basis-point rate increases,” adding that “adjusting policy gradually can help households, businesses and market participants adapt to higher rates and reduce the risk that economic activity deteriorates more sharply than necessary.” The market is currently pricing in about a 75% chance of a 25bps rate increase next month and about 55bps of hikes in total by June next year.
The Day Ahead
As indicated, it is a busy week ahead, with the US midterms on Tuesday, Euro area inflation data on Wednesday, the Bank of England rate announcement on Thursday, and US payrolls on Friday. In addition, other economic data of note are the ISM manufacturing and services reports in the US today and Wednesday respectively.