For professional clients only. The information contained within this post is not intended for retail clients.
05 October 2026
With limited key data releases, market focus will turn to rhetoric from the ECB’s Conference on Monetary Policy (Mon-Tue), and central bank chatter throughout the week. Speakers include: the ECB’s Lane, Schnabel, Kocher, Buch and Donnery on Monday; the Fed’s Bowman, Williams, Schmid and Logan, the ECB’s Cipollone and Rehn, and the BoE’s Mann on Tuesday; the ECB’s Vujcic on Wednesday; the Fed’s Waller, Musalem and Kashkari, the BoE’s Bailey, Lombardelli, Pill and Greene and ECB’s Lane on Thursday; and the ECB’s Wunsch and Fed’s Collins on Friday.
Today we have eurozone PPI and US ISM services prints. Eurozone retail sales, Germany factory orders, and US trade data feature on Tuesday. US mortgage applications, consumer credit, and the FOMC minutes are due on Wednesday. The ECB minutes and US wholesale inventories and initial jobless claims will garner market attention on Thursday. The University of Michigan sentiment prints end the week on Friday.
Last week, markets grappled with elevated benchmark bond yields, mixed US data, and geopolitical tensions. Despite the rally on Friday following the weaker-than-expected US employment report, the S&P Index closed the week down 0.27%. Meanwhile, the US 10-year Treasury yield reached a high of 5.34% during the week before closing at 5.27%, up 11bps. The US Dollar Index (DXY) remained firm, closing 0.95% higher, while oil prices remained volatile amid tensions surrounding the Strait of Hormuz; Brent fell ~2% to $102.25pb.
In the US, a dense slate of macro data and central bank commentary painted a split picture of sticky inflation alongside a cooling labour market. August PCE inflation prints came in below expectations. The headline figure eased to 3.4%yoy, from 3.70% in July, while core PCE cooled to 3.0%, from 3.3%. Meanwhile, August JOLTS job openings fell to 7.08 million, their lowest level since March, although hiring edged higher and layoffs remained subdued. Weekly initial jobless claims also remained historically low at 197k, reinforcing the picture of a “low-hire, low-fire” labour market. The September ISM Manufacturing index remained in expansion at 54.5, with its employment component rising to 52.7, although prices paid accelerated sharply to 77.9.
The picture weakened following Friday’s employment report. Non farm payrolls increased by just 29k in September (exp. 90k), while revisions reduced the combined July and August figure by 60k. Unemployment edged up to 4.2%, and average hourly earnings rose just 3.0%yoy, their slowest pace in more than five years. With wage growth now running below headline PCE inflation, real purchasing power remains under pressure, adding to concerns about the consumer’s ability to absorb further monetary tightening.
On the policy front, key Fed officials leaned away from immediate hawkishness. New York Fed President Williams said there was “no need for urgency” following September’s rate increase, while Vice Chair Jefferson indicated that policymakers needed more time and data before deciding on further moves. Market expectations for an October hike consequently eased, with the next hike priced in for December, after the US midterms.
In China, the macroeconomic backdrop showed some tentative improvement ahead of the Golden Week holiday, although the recovery remains uneven. The official manufacturing PMI returned to expansionary territory in September, rising to 50.1 from 49.8 in August. Beijing also announced targeted measures to support infrastructure, technology, small businesses and the property market, including additional funding facilities and mortgage support. The renminbi remained stable and closely managed ahead of the holiday.