For professional clients only. The information contained within this post is not intended for retail clients.
12 October 2026
This week’s focus will be the IMF and World Bank Annual Meetings, the start of US quarterly earnings season and key inflation releases from China and the US (Wed). With energy prices elevated and fiscal concerns continuing to weigh on sovereign debt markets, investors will scrutinise incoming data for clues on inflation persistence and the interest rate outlook.
Monday’s US Columbus Day holiday leaves Treasury markets closed, with limited data releases placing greater emphasis on central bank commentary from the Fed’s Hammack and the BoE’s Mann and Breeden. Tuesday brings German CPI, US existing home sales, NFIB small business optimism, and the federal budget balance. The IMF’s World Economic Outlook and Global Financial Stability Report will also be in focus, alongside speeches from policymakers at the Fed, BoE and ECB.
Wednesday’s key releases include China’s trade, CPI and PPI data, followed by US CPI and mortgage applications. The Fed’s Beige Book and further central bank commentary, including from the ECB’s Lagarde, will also attract attention. Thursday brings UK GDP and industrial production, eurozone industrial production, French CPI, and US retail sales, PPI, initial jobless claims and the Empire State manufacturing survey. Friday’s focus turns to eurozone CPI, US industrial production and cross-border investment data, alongside remarks from BoE Governor Bailey, and Fed Chair Warsh at the IMF meetings.
Global fixed income markets faced renewed pressure last week as concerns over France’s fiscal outlook and political gridlock widened the French German yield spread to 2011-2012 Eurozone Debt Crisis levels. Geopolitical tensions in the Middle East and elevated US Treasury issuance added to uncertainty, keeping long-term yields volatile. The US dollar remained supported, while Brent crude rose 2.42% to $104.72 a barrel amid supply concerns. Meanwhile, US equities proved resilient, with the S&P 500 gaining approximately 1.15%, supported by mega-cap technology and artificial intelligence stocks. The US 10-year Treasury yield ended the week at 5.24%, around 3bps lower, despite having risen sharply earlier in the period.
US economic data reinforced concerns about persistent inflation. The ISM Services PMI eased slightly but remained in expansion territory, while its Prices Paid sub-index climbed to 74.0, its highest level since mid-2022, reflecting rising fuel and shipping costs. The employment component edged back into expansion at 50.1. Consumer confidence weakened further, with preliminary University of Michigan sentiment falling to a five-month low of 46.3. The current conditions index dropped to 44.7, as high energy prices, borrowing costs and persistent inflation continued to weigh on households. Inflation expectations also edged higher, with one-year expectations rising to 4.7% and five-year expectations to 3.5%.
Against this backdrop, Fed officials, including Waller and Bowman, maintained a cautious stance on inflation, leaving the possibility of further tightening open while emphasising that policy decisions remain data dependent. This week’s US CPI release will therefore be particularly important in assessing whether renewed energy price pressures are feeding into broader inflation and influencing the path of interest rates.