TMGM Daily Market Breakfast: 11 September 2026

Morning Snapshot

• The European Central Bank raised its key rates by 25 basis points, lifting the deposit rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending facility to 2.90%, while warning that inflation risks remain tilted to the upside and growth risks to the downside.
• WTI crude surged above $100 a barrel for the first time since May, reaching $103.86 at one stage, as escalating Middle East tensions and risks around the Red Sea and Strait of Hormuz intensified supply concerns.
• Brent crude closed at $101.21 a barrel after rising 3.36%, its highest level since May, as the market priced in a more prolonged period of geopolitical disruption in the Persian Gulf.
• U.S. producer prices rose 5.4% year on year in August, above the 5.3% consensus and up from a revised 4.8% previously, reinforcing expectations of a firmer Federal Reserve stance ahead of U.S. CPI data.
• U.S. Treasury yields pushed to fresh long-term highs, with the 30-year yield above 5.3% and the 10-year touching 4.865%, as higher oil prices and details of the Treasury’s expanded buyback programme kept borrowing costs elevated.
• The U.S. Treasury said the first larger long-end bond buyback operation would be capped at $6 billion, up from the previous $2 billion maximum.
• Bank of Japan rate-hike expectations remained in focus after board member Kazuyuki Masu said the policy rate has been below the estimated neutral range for a very long time and needs to be fixed soon.
• Japan’s yen held firm near a more than six-month high against the U.S. dollar, with USD/JPY trading around 153.45 after touching 152.89 earlier in the week.
• Copper reached a fresh nominal record and a 15-year high in real terms as AI-related demand, grid expansion, tariff-driven stockpiling and supply disruptions tightened the market.
• Markets turned to upcoming U.S. CPI data and the Federal Reserve’s September 16 decision after hotter producer inflation and rising energy prices sharpened the inflation backdrop.

Market Developments

Energy

WTI rose above $100 a barrel and traded as high as $103.86 after bouncing from $95.37, while Brent gained 3.36% to close at $101.21 a barrel and the six-month Brent future rose 1.55% to $86.09.

Government Bonds

U.S. long-dated Treasury yields climbed, with the 30-year yield above 5.3% and the 10-year reaching 4.865%, extending a roughly 25 basis point rise in the 10-year in less than two weeks and about a half-point increase since late June.

Foreign Exchange

The Australian dollar fell 0.80% against the U.S. dollar to 0.7159 after touching 0.7223, GBP/USD traded at 1.3525 down 0.17%, EUR/USD held around 1.1610, and USD/JPY traded near 153.45 after the pair hit 152.89 earlier in the week.

Metals

Gold fell about 0.90% as hotter U.S. producer inflation and higher oil prices pushed yields higher, while copper climbed to a fresh nominal record and approached its 2011 peak in real terms.

Macroeconomics & Central Banks

ECB Raises Rates by 25 Basis Points and Keeps Tightening Bias in Place

The European Central Bank raised its three key policy rates by 25 basis points, taking the deposit facility rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending facility to 2.90%, with the changes taking effect on September 16. The move came with updated staff projections showing headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, while inflation excluding energy and food was projected at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028.

President Christine Lagarde said the euro-area economy had shown resilience, supported by consumption, public investment and a recovery in services, while manufacturing remained solid and consumer confidence had rebounded. At the same time, the ECB said the outlook remained highly uncertain, with risks tilted to the upside for inflation and to the downside for growth as higher energy prices threaten to feed through to core inflation and food costs.

Lagarde said the Governing Council would remain data-dependent and proceed meeting by meeting without pre-committing to a particular rate path. She also said she was surprised by the economy’s resilience and indicated inflation was seen returning to target toward the end of 2027, while stressing that the next policy move could not be anticipated in advance.

Market expectations for additional tightening stayed firm after the decision. Reuters reported that ECB sources still saw further tightening as likely in coming months and said an October move remained possible.

U.S. Producer Inflation Tops Forecasts Ahead of CPI Release

U.S. producer prices rose 5.4% in August from a year earlier, the Bureau of Labor Statistics reported, slightly above the 5.3% consensus and up from a revised 4.8% in July. The data added to evidence that pipeline price pressures remain elevated at a time when oil prices have also surged.

The hotter reading fed into expectations for the Federal Reserve’s September 16 decision and sharpened focus on the upcoming August CPI report. Several market reports during the session pointed to producer inflation as reinforcing the case for a firmer Fed stance, particularly with energy prices above $100 a barrel adding to the inflation backdrop.

The PPI release also reverberated across currency and metals markets. The Australian dollar fell 0.80% against the U.S. dollar to 0.7159 after touching 0.7223, sterling traded at 1.3525 down 0.17%, and gold fell about 0.90% as yields rose.

BoJ Tightening Expectations Stay Elevated as Masu Signals Rate Gap Needs Fixing

Bank of Japan board member Kazuyuki Masu said the policy rate remains below the bank’s estimated neutral range and has been below that level for a very long time, adding that this needs to be fixed soon. He also said underlying inflation is gradually approaching 2% but is not seen overshooting that level.

The comments kept attention on the BoJ’s September 18 meeting, where markets have been increasingly focused on the possibility of a 25 basis point increase. Broader reporting during the session described BoJ messaging as unequivocally hawkish, while an adviser to Prime Minister Sanae Takaichi was cited earlier in the week as saying the central bank is likely to raise rates in September and again by early next year.

The yen remained firm against the U.S. dollar, with USD/JPY trading near 153.45 and close to the more than six-month low of 152.89 reached on Wednesday. Japan’s producer-price data also reinforced the view that domestic inflation pressures remain consistent with a tightening bias.

Energy & Commodities

WTI Jumps Above $100 as Middle East Supply Risks Intensify

WTI crude surged through the $100-a-barrel mark for the first time since May as escalating attacks in the Middle East heightened fears of prolonged supply disruption. Prices rose more than 7% at one stage to $103.86 after rebounding from lows of $95.37.

The rally built through the reporting window as tensions linked to the U.S.-Iran conflict, the Red Sea and the Strait of Hormuz kept traders focused on the risk to already tight global supplies. Earlier in the session, WTI had traded around $97 and later near $99 before extending gains sharply; by Friday Asian trading it had eased back toward $99 after a four-day winning streak, but supply concerns remained central.

WTI was up about 10.50% for the week at one stage, underscoring how quickly the geopolitical premium has been rebuilt into oil markets.

Brent Closes Above $101 as Persian Gulf Tensions Deepen

Brent crude climbed above $100 a barrel for the first time since July, with the front-month contract rising 3.36% to settle at $101.21, its highest close since May. The six-month Brent future also rose 1.55% to $86.09, its highest level since early June, indicating that the market was pricing a more extended period of elevated oil prices.

The move was driven by the latest U.S.-Iran strikes and growing doubts that the Strait of Hormuz would reopen soon. Reports cited during the session also said White House advisers had privately raised with President Donald Trump the prospect that the war could continue for the remainder of his term.

ING said oil flows had held up better than expected in recent weeks but warned that any renewed disruption through Hormuz would tighten the market more sharply. The bank also highlighted China’s recent physical crude buying as an important factor in the strength of the rally.

Copper Hits Fresh Record as AI Demand and Supply Constraints Tighten Market

Copper reached a fresh nominal record and moved to a 15-year high in real terms, approaching its 2011 peak, as demand tied to AI-related data-centre construction and electricity-grid expansion met supply disruptions and tariff-driven stockpiling.

National Bank of Canada said the move was being amplified by constraints in processing inputs as well as mined supply. It highlighted sulphur as one less obvious bottleneck, noting that shipments through the Strait of Hormuz had been severely curtailed and sulphur prices had risen to more than twice their level at the start of the year.

The rise in copper prices adds to cost pressures for power grids, AI infrastructure and broader electrification projects at a time when geopolitical fragmentation is already making supply less reliable.

Rates & Policy

U.S. Treasury Yields Reach Fresh Long-Term Highs

U.S. Treasury yields climbed to fresh long-term highs during the session as surging oil prices and Treasury buyback details kept inflation and duration risk in focus. The 30-year Treasury yield traded above 5.3%, near its 2007 high, while the benchmark 10-year yield touched 4.865% earlier on Thursday.

The move extended a rapid repricing in the long end of the curve. The 10-year yield has risen about 25 basis points in less than two weeks and roughly half a percentage point since late June.

Long-dated yields initially rose after the Treasury unveiled details of its first larger long-end buyback operation, suggesting investors had hoped for a more aggressive intervention to absorb duration supply.

Treasury Sets First Expanded Long-End Buyback at $6 Billion

The U.S. Treasury set the maximum size of its first larger long-end bond buyback operation at $6 billion, tripling the previous $2 billion cap. The announcement followed August guidance that long-term bond buybacks would at least double, and it offered the first concrete detail on the expanded programme.

MUFG estimated that if the Treasury continues to conduct nine buybacks per quarter and purchases up to $6 billion at each operation, annual purchases could total just over $200 billion. The bank described the programme as a smaller version of the Federal Reserve’s Operation Twist, although it noted there is considerable uncertainty over how long larger purchases will be maintained.

Market reaction was mixed. Long-term Treasury yields initially moved higher rather than lower, and the U.S. dollar’s brief relief rally faded, suggesting some investors had expected an even larger first step.

Upcoming Key Events

• U.S. August CPI — null: The August consumer price report is the next major U.S. inflation release and remained the central focus for markets assessing the Federal Reserve’s September 16 policy decision.
• Federal Reserve Policy Decision — September 16: Markets were assessing incoming inflation data ahead of the Federal Reserve’s September 16 rate decision.
• Bank of Japan Policy Meeting — September 18: The Bank of Japan’s September 18 meeting remained in focus after hawkish policy signals and comments from board member Kazuyuki Masu kept attention on the possibility of a rate increase.