TMGM Daily Market Breakfast: What’s in Focus on 23 October 2026?

What Is Driving Markets This Morning?

• Supply worries pushed Brent crude 4% higher to $113.17 per barrel following attacks on Saudi infrastructure and reports of damaged tankers in the Strait of Hormuz.
• French government debt moved closer to a historic yield gap with Germany: the 10-year premium widened to 175 basis points, nearing the 2011 record of around 190 basis points.
• Weak domestic demand and investment persisted in China despite an acceleration in third-quarter GDP growth to 4.5%, compared with 4.3% in the second quarter.
• Inflation pressures strengthened in the UK in September, with the annual headline rate climbing from 3.1% to 3.5% alongside faster core and services inflation.
• The dollar regained ground against the yen, reversing course after Japan’s inflation figures sent USD/JPY to an over one-month low near 156.00.
• A limited rebound in gold followed a drop below $4,000 during Friday’s Asian session, which had taken the metal to a new three-month low.

Which Markets Are Moving?

How Are Currencies Trading?

Yen buying after Japan’s inflation data left USD/JPY near 156.25 in early Asian trading on Friday. Further losses brought the pair to an over one-month low near 156.00, after which it recovered.

Can Gold Regain Ground?

Friday’s Asian trading saw a slight recovery in gold after the metal slipped beneath $4,000 and registered a new three-month low.

What Is Shaping Energy & Geopolitics?

What Is Behind Brent’s 4% Rise as Gulf Attacks and Shipping Costs Fuel Supply Worries?

Concerns about disrupted supplies following attacks on Saudi Arabian infrastructure lifted Brent crude by 4% to $113.17 per barrel. Thursday’s settlement for front-month Brent was just above $113, a level last seen in April. Around $98.80 in early Friday trade, WTI was close to a five-week high and subsequently climbed past $100 during the session.

The week saw a rise in incidents affecting vessels trying to navigate the Strait of Hormuz, alongside renewed attacks by Iran-backed Houthis on Saudi oilfields. Iran said seven tankers had been damaged in the strait, The Associated Press reported, although its account offered no independent confirmation of that claim.

Reports cited by ING strategists Warren Patterson and Ewa Manthey covered three developments: President Donald Trump considering new strikes on Iran, the United States deploying a second aircraft carrier to the region, and the evacuation of US troops from some Middle Eastern bases. Commerzbank referred to separate reports suggesting that US and Israeli strikes could resume after the US midterm elections. There was no confirmation of any such operation.

Stronger shipment flows did not translate into lower delivery costs. For the week through 18 October, The Wall Street Journal put average Middle Eastern shipments at more than 24 million barrels a day, compared with prewar levels of 23.3 million. Those flows were supported by transfers near Oman using the so-called Hormuz Shuttle.

An additional roughly $13.5 per barrel was being added to delivery costs as Persian Gulf–China freight rates reached $1.4 million daily, according to Rabobank strategist Molly Schwartz. Her account also placed physical Brent and Shanghai oil at $10–25 premiums over futures. Even with increased volumes, she said, insurance costs, inefficient tanker operations and attacks left shipping conditions well short of normal.

What Is Driving Sovereign Debt & Macroeconomics?

What Does a 175-Basis-Point French-German Bond Spread Mean for Financing Conditions?

An unresolved fiscal and political crisis in France brought its 10-year government bond yield spread over Germany towards the 2011 record of around 190 basis points. The premium reached 175 basis points, an increase of more than 100 basis points from late February, according to Elias Haddad of Brown Brothers Harriman.

A breakup of the euro remained less of a concern on relevant measures than during Italy’s 2018 budget crisis. Against around 13% in that period, the Sentix euro-breakup index recorded 2.4% in September. Under the ECB’s Transmission Protection Instrument, sovereign bonds can be purchased subject to fiscal checks.

France is not alone in facing tighter financing conditions as borrowing becomes more expensive. Carsten Brzeski of ING assessed the rise in German bond yields since the ECB’s September meeting as having roughly the same effect on growth and inflation as an extra 25-basis-point rate increase. For France, his equivalent estimate was close to 50 basis points.

With the ECB deposit rate at 2.50%, Brzeski observed a further increase in euro-area headline inflation in September, even as leading indicators kept pointing to a resilient economy. Inflation had not yet shown evidence of becoming broader-based and entrenched, said Bas van Geffen of Rabobank. Economists at Nomura viewed fourth-quarter wage negotiations to date as benign in terms of second-round inflation effects. Jan von Gerich of Nordea drew attention to the implications for the wider euro area of rising French yields and tighter financing conditions.

Why Does Domestic Investment Remain Weak as China’s GDP Growth Reaches 4.5%?

Domestic weaknesses continued to cloud China’s outlook despite stronger activity in September helping GDP growth rise from 4.3% in the second quarter to 4.5% in the third. HSBC analysts pointed to ongoing challenges at home, particularly shrinking fixed-asset investment and subdued domestic demand.

The consumption recovery remained uneven and K-shaped, in contrast to the relative resilience of exports and high-technology industries. HSBC’s assessment was of cost-push reflation, not a broad-based improvement in domestic demand.

To bolster household incomes and consumer confidence, policy efforts encompass improved public services, an expanded social safety net and the integration of migrant workers into the urbanisation model. In HSBC’s view, this represents a change in emphasis from short-term measures to lift consumption towards tackling structural constraints within the domestic economy.

Why Has UK Inflation Reached 3.5% and Surpassed Bank of England Projections?

Price pressures in the UK intensified in September: annual headline consumer-price inflation advanced from 3.1% to 3.5%. The core rate moved from 2.6% to 2.8%, and services inflation increased from 3.4% to 3.7%.

Both consensus expectations and Bank of England projections were exceeded, with the overshoot against consensus only slight, according to the research team at Danske Bank. Its assessment also highlighted recent months’ more resilient economic activity and emerging signs of labour-market stabilisation.

The inflation data gave sterling a modest lift against the dollar, leaving it near $1.3405 in early Asian trading on Friday.

What Is Next on the Calendar?

• What Is Scheduled for the European Central Bank Governing Council Meeting? — Eurozone: On 29 October 2026, the Governing Council meeting ends. The same day’s schedule includes the ECB’s policy decision and a press conference by President Christine Lagarde.