TMGM Daily Market Breakfast for 23 October 2026

Brent Advances as Supply Concerns Mount

• A 4% increase took Brent crude to $113.17 per barrel, with attacks on Saudi infrastructure and reports of tanker damage in the Strait of Hormuz adding to concerns over supply.
• At 175 basis points, the premium on France’s 10-year government bond yield relative to Germany was approaching the record of around 190 basis points set in 2011.
• Growth of 4.5% in China’s third-quarter GDP, against 4.3% in the second quarter, contrasted with continued weakness in domestic demand and investment.
• September brought a rise in UK annual inflation from 3.1% to 3.5%, accompanied by faster increases in core and services prices.
• An over one-month low near 156.00 followed Japan’s inflation release for USD/JPY, before the dollar reversed its losses against the yen.
• A fresh three-month low below $4,000 gave way to a slight recovery in gold during Asian trading on Friday.

Markets Register Fresh Moves

Dollar Recovers Against the Yen

Japan’s inflation report supported the yen, taking USD/JPY to around 156.25 in early Asian trading on Friday. After extending its decline to an over one-month low near 156.00, the pair turned higher.

Gold Edges Higher From Three-Month Low

Below $4,000, gold reached a fresh three-month low in Asian trading on Friday. A small recovery followed.

Energy Supplies Face Pressure & Geopolitical Tensions Increase

Brent Climbs 4% as Gulf Attacks and Shipping Costs Add to Supply Pressures

A 4% advance brought Brent crude to $113.17 per barrel after attacks on Saudi Arabian infrastructure raised fears of disrupted supplies. Thursday’s front-month Brent settlement was just above $113, the highest level since April. Having traded at around $98.80 early on Friday, near a five-week high, WTI moved above $100 later in the session.

The number of incidents involving vessels attempting to pass through the Strait of Hormuz grew during the week, as Iran-backed Houthis resumed attacks on Saudi oilfields. In its report, The Associated Press carried Iran’s claim that seven tankers had been damaged in the strait, without independently confirming it.

Among the reports highlighted by ING strategists Warren Patterson and Ewa Manthey were accounts of President Donald Trump considering further strikes on Iran. The reports also described the United States deploying a second aircraft carrier to the region and the evacuation of US troops from some Middle Eastern bases. Other reports, referenced by Commerzbank, raised the possibility of renewed US and Israeli strikes following the US midterm elections. Any such operation remained unconfirmed.

Delivery costs remained elevated even as shipping volumes increased. According to The Wall Street Journal, shipments from the Middle East averaged more than 24 million barrels a day over the week through 18 October, surpassing the prewar level of 23.3 million. Those flows were helped by transfers near Oman through the so-called Hormuz Shuttle.

With Persian Gulf–China freight rates reaching $1.4 million daily, delivery costs were rising by roughly $13.5 per barrel, Rabobank strategist Molly Schwartz said. She added that physical Brent and Shanghai oil commanded premiums of $10–25 over futures. Higher volumes had not restored normal shipping conditions, she reported, given insurance costs, tanker inefficiencies and attacks.

Sovereign Borrowing Costs Rise & Macroeconomic Pressures Persist

French-German Yield Gap Widens to 175 Basis Points as Financing Tightens

A premium of 175 basis points on France’s 10-year government bond yield over Germany represented a widening of more than 100 basis points since late February, Brown Brothers Harriman’s Elias Haddad said. France’s continuing fiscal and political crisis left the spread close to its 2011 record of around 190 basis points.

September’s reading of 2.4% on the Sentix euro-breakup index compared with around 13% during Italy’s 2018 budget crisis. Measures of concern about a euro breakup therefore remained below the levels of that period. Subject to fiscal checks, the ECB’s Transmission Protection Instrument allows purchases of sovereign bonds.

France is not the only economy where higher borrowing costs have tightened financing conditions. The effect on growth and inflation of rising German bond yields since the ECB’s September meeting was roughly equivalent to a further 25-basis-point rate increase, estimated ING’s Carsten Brzeski. He placed the corresponding effect for France at close to 50 basis points.

Against an ECB deposit rate of 2.50%, Brzeski highlighted September’s renewed increase in euro-area headline inflation and the continued resilience signalled by leading economic indicators. There was still no evidence that inflation was becoming broader-based and entrenched, according to Rabobank’s Bas van Geffen. On second-round inflation effects, Nomura economists regarded fourth-quarter wage negotiations to date as benign. The consequences of higher French yields and tighter financing conditions extend across the euro area, Nordea’s Jan von Gerich emphasised.

China’s Growth Picks Up to 4.5% While Domestic Investment Stays Subdued

GDP growth of 4.5% in China’s third quarter marked an increase from 4.3% in the second, helped by firmer activity in September. That improvement did not remove domestic headwinds, HSBC analysts noted, pointing to falling fixed-asset investment and soft domestic demand.

An uneven, K-shaped recovery in consumption stood alongside comparatively resilient exports and high-technology industries. In HSBC’s analysis, the reflation was cost-push rather than evidence of a broad strengthening in domestic demand.

Better public services, broader social-safety-net coverage and moves to integrate migrant workers into the urbanisation model are among the policy initiatives intended to support household incomes and consumer confidence. For HSBC, these measures reflect a shift in focus from short-term consumption fixes to the domestic economy’s structural constraints.

UK Inflation Rises to 3.5% and Overshoots Bank of England Forecasts

September’s UK headline consumer-price inflation rate of 3.5% year-on-year compared with 3.1% previously. Over the same period, the core measure rose from 2.6% to 2.8% and services inflation from 3.4% to 3.7%.

Both consensus and Bank of England projections were surpassed by the figures, although the excess over consensus was slight, Danske Bank’s research team said. Recent months had also seen economic activity hold up better and signs of a stabilising labour market, the team noted.

Following the inflation release, a small advance against the dollar left sterling trading around $1.3405 in early Asian trading on Friday.

Policy Calendar Comes Into Focus

• European Central Bank Governing Council Concludes Policy Meeting — Eurozone: On 29 October 2026, the Governing Council meeting draws to a close. The ECB’s policy decision is due that day, alongside a press conference by President Christine Lagarde.