TMGM Daily Market Breakfast: What’s in Focus on 22 October 2026?

What Is Driving Markets This Morning?

• Oil markets moved higher following attacks on Saudi Arabia, taking WTI crude above $99 and Brent above $110 a barrel, as Iran warned that its response could broaden to include U.S. bases.
• Inflation pressures and firm growth underpinned the RBI’s move to calibrated tightening and a 25-basis-point repo-rate increase, as recorded in its October minutes.
• With the RBA’s 3 November policy meeting approaching, Deputy Governor Andrew Hauser cautioned that underlying inflation in the third quarter could overshoot expectations.
• Markets assigned a 95% probability to a November Bank of England rate increase as rising energy costs lifted UK inflation to 3.5%.
• For the first time since 2002, France’s 10-year government bond yield breached 5%.
• Following two rate increases this year that took the policy rate to 1.25% in September, a Bank of Japan deputy flagged inflation risks.
• Thursday saw gold retreat below $4,100, reversing Wednesday’s recovery above $4,130.
• Losses in the Mexican peso extended into a second consecutive day on Wednesday, with the currency falling more than 1.49% against the U.S. dollar.

How Are Markets Moving?

Why Did Gold Retreat Below $4,100?

A weaker U.S. dollar and declining U.S. Treasury yields failed to prevent gold from falling below $4,100 on Thursday. A day earlier, the metal had recovered above $4,130 as oil prices eased following U.S. authorisation to offload cargo from some blocked vessels.

What Weighed on the Mexican Peso?

Amid the U.S.-Iran conflict, the Mexican peso’s losses continued for a second consecutive day on Wednesday, when it fell more than 1.49% against the U.S. dollar.

Geopolitical Developments & Energy Markets

What Is Lifting Oil as Saudi Attacks and Iran’s Warning Raise Risks?

Fresh attacks on Saudi Arabia pushed Brent back above $110 a barrel, while WTI crude extended its recovery beyond $99 a barrel on Thursday. WTI had earlier recovered to around $97.70, ending three days of losses. Two casualties were reported after a drone attack on Saudi Aramco’s Shaybah oilfield. In addition, ING analysts Warren Patterson and Ewa Manthey reported attacks on Dammam’s international airport and said an oil-processing plant had been targeted.

U.S. bases in the region could be included in Iran’s response if Washington continued to encourage vessels to cross a mined waterway, Reuters reported, citing a warning from Iran’s Islamic Revolutionary Guard Corps navy. The IRGC said seven vessels had also been hit. In separate comments reported by Bloomberg on Wednesday, Iranian Foreign Minister Abbas Araghchi called on Washington to lift its naval blockade and demonstrate a serious commitment to ending the war through diplomacy.

The conflict had not substantially curtailed physical crude flows from Kuwait. According to ING, Kuwait Petroleum Corp’s chief executive said the country’s crude exports were at pre-war levels and production was above 2 million barrels a day. The executive noted, however, that refined products were more difficult to ship.

Commercial crude inventories in the U.S. declined by 3.06 million barrels in the latest week, and Strategic Petroleum Reserves were down by 300,000 barrels, ING said, citing U.S. Energy Information Administration data. The figures continued to reflect hurricane activity in the U.S. Gulf of Mexico, with estimated U.S. oil production falling by 410,000 barrels a day compared with the previous week.

The Economic Backdrop & Monetary Policy

What Do RBI Minutes Reveal About the 25-Basis-Point Increase and Calibrated Tightening?

Rising inflation pressures alongside firm growth prompted a 25 basis point repo-rate increase and a move to “calibrated tightening”, according to DBS economist Radhika Rao’s account of the Reserve Bank of India’s October meeting minutes. Governor Malhotra pointed to early indications of inflation becoming more generalised.

How much further policy should tighten remained a point of disagreement. In Rao’s reading, two external members took the most hawkish position, focusing on broader inflation risks and the case for pre-emptive action. Two others favoured incremental increases but were explicitly against signalling an extended tightening cycle.

The rupee has gained around 1.5% against the U.S. dollar this month, even as Indian government bond yields stayed elevated. Foreign-exchange regulatory measures, IPO inflows and tighter scrutiny of overseas investments contributed to the currency’s rise, Rao said. Foreign-exchange forward premiums remained high as well.

Could RBA Underlying Inflation Overshoot Expectations?

Third-quarter underlying inflation on the trimmed-mean measure could be higher than expected, according to remarks made on Wednesday by RBA Deputy Governor Andrew Hauser. On Monday, Assistant Governor Christopher Kent had said several factors pointed to rising neutral interest rates in Australia and internationally.

Extending its gains for a fourth consecutive day, the Australian dollar touched a one-month high on Wednesday. The afternoon update showed AUD/USD around 0.7025, higher by 0.42%, before a later update placed it at 0.7027, up 0.44%. By early Asian trading on Thursday, the pair had slipped back to around 0.7015.

Why Are Markets Pricing a 95% Chance of a November BoE Hike as UK Inflation Hits 3.5%?

The probability of a November Bank of England rate increase reached 95% in market pricing as higher energy costs drove UK inflation up to 3.5%. On Wednesday, support for the U.S. dollar from geopolitical tensions left sterling unable to make much headway, with GBP/USD below 1.3400.

The energy-led rise in headline inflation should be distinguished from wider second-round effects, according to ING economist James Smith, who said evidence of the energy shock spreading across the inflation basket remained limited so far. Growth had also held up better than feared, he said, while the labour market was showing signs of stabilisation.

How Did the Euro Respond as France’s 10-Year Government Bond Yield Crossed 5% for the First Time Since 2002?

A muted response in the euro accompanied Wednesday’s rise in France’s 10-year government bond yield above 5%, the first such move since 2002. EUR/USD was trading marginally below 1.1250.

Why Is a BoJ Deputy Flagging Inflation Risks With the Policy Rate at 1.25%?

With the yen largely unchanged near 158.00 per U.S. dollar, a Bank of Japan deputy flagged risks to inflation. Two increases in the policy rate this year had taken it to 1.25% by September, despite core inflation running below the bank’s 2% target for all seven months through August.

Which Key Event Comes Next?

• When Is the Reserve Bank of Australia’s Next Monetary Policy Meeting? — 3 November 2026: This is the scheduled date for the Australian central bank’s next monetary policy meeting.