Global Economy & Markets, Weekly Roundup 29/09/26
Global government bond yields reach fresh multi-year highs, with the 10-Year US Treasury yield at 5.2%
Global bond yields increased further, due to higher oil prices, as well as better-than-expected business surveys (PMIs, IFO) on both sides of the Atlantic. Equity markets have traded sideways, as strong corporate earnings and a flat equity risk premium have offset higher risk-free rates, for now.
Oil prices rose further (Brent: $107/barrel) as renewed diplomatic efforts for a ceasefire in the Middle East did not bear fruit. Crack spreads (diesel, gasoline) have skyrocketed, as supplies are very tight due to disruptions to global refining activities.
The US Treasury 10-year yield was up by +19 bps wow to 5.18%, the highest since July 2009 and its 2-year peer rose by +12 bps wow to 4.86%, the highest since May 2024, with a further rise of c. +5 bps following on Monday 28th across the curve (10-Year: 5.24%). Real interest rates led the increase amid expectations for tighter monetary policy.
The S&P/Global US Composite PMI increased by +2.4 points mom to 58.4, the highest since July 2021, averaging 56.3 in Q3:2026 from 51.7 in Q2:2026. At the same time, initial jobless claims remained at particularly low levels, roughly stable wow at 197 thousand (“k”) for the week ending September 19th, compared with a 3-year average of 220k.
Note that the Federal Reserve Bank of Atlanta’s GDPNowcast model points to +5.0% quarterly annualized real GDP growth in Q3:2026 (+2.3% yoy), from +1.5% qoq saar (+2.1% yoy) in Q2:2026, in view of sharp growth in business investment and private consumption.
Attention now turns to September’s main labor market report on Friday, with analysts’ consensus non-farm payrolls expectations of +90k versus a 3-month average net gain of +71k.
According to US Federal Funds Rate futures, investors price-in another +40 bps of cumulative hikes by end-2026 (current FFR range: 3.75%-4.00%). Financial conditions are far from restrictive, although tend to tighten during stress episodes rather in advance of them.
The official visit by China’s President Mr. Xi Jinping to the US concluded with limited breakthroughs. The bilateral trade “truce”, a period in which the two countries refrain from tariff hikes and broader measures targeting their bilateral trade, was extended for 2 months to January 10th, 2027. In addition, US and China pledged to work on lowering tariffs on $30 bn worth of goods imports bilaterally.
In the euro area, the German Bund 10-year yield rose by +10 bps wow to 3.62%, the highest since June 2009. In a negative development, the 10-Year French sovereign bond yield spread over Bund has widened further in recent trading sessions by 7 basis points to 114 basis points. The euro exchange rate depreciated by 1% to 1.137 against the US dollar, as interest rate differentials in the two-year tenor widened by 15 basis points to 162 basis points.
The focus will now be on September’s EA CPI, due on Friday. A substantial acceleration is expected in the annual growth, by +0.5 pps mom to +3.7% both due to higher energy prices and some positive base effects for the core index.
According to Overnight Index Swaps (OIS), investors price-in another +38 bps of cumulative hikes by end-2026 for ECB policy interest rates (current DFR: 2.50%).
Global bond yields increased further, due to higher oil prices, as well as better-than-expected business surveys (PMIs, IFO) on both sides of the Atlantic. Equity markets have traded sideways, as strong corporate earnings and a flat equity risk premium have offset higher risk-free rates, for now.
Oil prices rose further (Brent: $107/barrel) as renewed diplomatic efforts for a ceasefire in the Middle East did not bear fruit. Crack spreads (diesel, gasoline) have skyrocketed, as supplies are very tight due to disruptions to global refining activities.
The US Treasury 10-year yield was up by +19 bps wow to 5.18%, the highest since July 2009 and its 2-year peer rose by +12 bps wow to 4.86%, the highest since May 2024, with a further rise of c. +5 bps following on Monday 28th across the curve (10-Year: 5.24%). Real interest rates led the increase amid expectations for tighter monetary policy.
The S&P/Global US Composite PMI increased by +2.4 points mom to 58.4, the highest since July 2021, averaging 56.3 in Q3:2026 from 51.7 in Q2:2026. At the same time, initial jobless claims remained at particularly low levels, roughly stable wow at 197 thousand (“k”) for the week ending September 19th, compared with a 3-year average of 220k.
Note that the Federal Reserve Bank of Atlanta’s GDPNowcast model points to +5.0% quarterly annualized real GDP growth in Q3:2026 (+2.3% yoy), from +1.5% qoq saar (+2.1% yoy) in Q2:2026, in view of sharp growth in business investment and private consumption.
Attention now turns to September’s main labor market report on Friday, with analysts’ consensus non-farm payrolls expectations of +90k versus a 3-month average net gain of +71k.
According to US Federal Funds Rate futures, investors price-in another +40 bps of cumulative hikes by end-2026 (current FFR range: 3.75%-4.00%). Financial conditions are far from restrictive, although tend to tighten during stress episodes rather in advance of them.
The official visit by China’s President Mr. Xi Jinping to the US concluded with limited breakthroughs. The bilateral trade “truce”, a period in which the two countries refrain from tariff hikes and broader measures targeting their bilateral trade, was extended for 2 months to January 10th, 2027. In addition, US and China pledged to work on lowering tariffs on $30 bn worth of goods imports bilaterally.
In the euro area, the German Bund 10-year yield rose by +10 bps wow to 3.62%, the highest since June 2009. In a negative development, the 10-Year French sovereign bond yield spread over Bund has widened further in recent trading sessions by 7 basis points to 114 basis points. The euro exchange rate depreciated by 1% to 1.137 against the US dollar, as interest rate differentials in the two-year tenor widened by 15 basis points to 162 basis points.
The focus will now be on September’s EA CPI, due on Friday. A substantial acceleration is expected in the annual growth, by +0.5 pps mom to +3.7% both due to higher energy prices and some positive base effects for the core index.
According to Overnight Index Swaps (OIS), investors price-in another +38 bps of cumulative hikes by end-2026 for ECB policy interest rates (current DFR: 2.50%).