TMGM Daily Market Breakfast: 23 October 2026

Morning Snapshot

• Brent crude rose 4% to $113.17 per barrel as attacks on Saudi infrastructure and reported tanker damage in the Strait of Hormuz intensified supply concerns.
• France’s 10-year government bond yield premium over Germany reached 175 basis points, approaching its 2011 record of around 190 basis points.
• China’s third-quarter GDP growth increased to 4.5% from 4.3% in the second quarter, although domestic demand and investment remained weak.
• UK September inflation rose to 3.5% year-on-year from 3.1%, with both core and services inflation also accelerating.
• The dollar rebounded against the yen after USD/JPY touched an over one-month low near 156.00 following Japan’s inflation release.
• Gold recovered slightly after falling below $4,000 to a fresh three-month low during Friday’s Asian session.

Market Developments

Foreign Exchange

USD/JPY traded near 156.25 early in Friday’s Asian session as the yen strengthened following Japan’s inflation report. The pair subsequently touched an over one-month low near 156.00 before rebounding.

Precious Metals

Gold fell below $4,000 during Friday’s Asian session, reaching a fresh three-month low before recovering slightly.

Energy & Geopolitics

Brent Rises 4% as Gulf Attacks and Shipping Costs Intensify Supply Concerns

Brent crude rose 4% to $113.17 per barrel as attacks on Saudi Arabian infrastructure heightened concerns about supply disruption. Front-month Brent settled just above $113 on Thursday, its highest level since April. WTI traded around $98.80 early on Friday, near a five-week high, before rising above $100 later in the session.

Iran-backed Houthis renewed attacks on Saudi oilfields, while incidents involving vessels attempting to cross the Strait of Hormuz increased during the week. The Associated Press reported Iran’s claim that seven tankers had been damaged in the strait; the claim was not independently confirmed in that account.

ING strategists Warren Patterson and Ewa Manthey cited reports that President Donald Trump was considering fresh strikes on Iran, that the United States was deploying a second aircraft carrier to the region and that US troops had been evacuated from some Middle Eastern bases. Separate reports cited by Commerzbank referred to possible renewed US and Israeli strikes after the US midterm elections. No such operation had been confirmed.

Shipping volumes and delivery costs presented contrasting pictures. The Wall Street Journal reported that Middle Eastern shipments averaged more than 24 million barrels a day in the week through 18 October, exceeding prewar levels of 23.3 million. Transfers near Oman through the so-called Hormuz Shuttle helped sustain those flows.

Rabobank strategist Molly Schwartz said Persian Gulf–China freight rates had reached $1.4 million daily, adding roughly $13.5 per barrel to delivery costs. She also reported that Brent and Shanghai physical oil traded at premiums of $10–25 over futures, with insurance costs, tanker inefficiencies and attacks keeping shipping conditions far from normal despite higher volumes.

Sovereign Debt & Macroeconomics

French-German Bond Spread Reaches 175 Basis Points as Financing Conditions Tighten

France’s 10-year government bond yield premium over Germany reached 175 basis points, more than 100 basis points wider than in late February, according to Brown Brothers Harriman’s Elias Haddad. The spread approached its 2011 record of around 190 basis points amid France’s unresolved fiscal and political crisis.

Measures of euro-breakup concern remained below levels seen during Italy’s 2018 budget crisis. The Sentix euro-breakup index stood at 2.4% in September, compared with around 13% during that episode. The ECB’s Transmission Protection Instrument permits sovereign-bond purchases subject to fiscal checks.

The rise in borrowing costs has also tightened financing conditions beyond France. ING’s Carsten Brzeski estimated that the increase in German bond yields since the ECB’s September meeting had an effect on growth and inflation roughly equivalent to an additional 25-basis-point rate increase; for France, he put the equivalent at close to 50 basis points.

The ECB deposit rate stands at 2.50%. Brzeski noted that euro-area headline inflation increased again in September while leading indicators continued to show economic resilience. Rabobank’s Bas van Geffen said there was not yet evidence of inflation becoming more broad-based and entrenched, while Nomura economists described fourth-quarter wage negotiations so far as benign for second-round inflation effects. Nordea’s Jan von Gerich highlighted the wider euro-area reach of higher French yields and tighter financing conditions.

China’s GDP Growth Increases to 4.5% as Domestic Investment Remains Weak

China’s GDP growth increased to 4.5% in the third quarter from 4.3% in the second, with stronger September activity supporting the improvement. HSBC analysts nevertheless identified continuing domestic headwinds, including a contraction in fixed-asset investment and weak domestic demand.

Exports and high-technology industries remained relatively resilient, while consumption showed an uneven, K-shaped recovery. HSBC also identified cost-push reflation rather than a broadly strengthening domestic-demand picture.

Policy initiatives aimed at household incomes and consumer confidence include improvements in public services, wider social-safety-net coverage and efforts to integrate migrant workers into the urbanisation model. HSBC described these measures as part of a shift away from short-term consumption fixes towards structural constraints in the domestic economy.

UK Inflation Accelerates to 3.5%, Exceeding Bank of England Projections

UK headline consumer-price inflation rose to 3.5% year-on-year in September from 3.1%. Core inflation increased to 2.8% from 2.6%, while services inflation climbed to 3.7% from 3.4%.

Danske Bank’s research team said the figures were slightly above consensus and exceeded Bank of England projections. It also noted that economic activity had proved more resilient in recent months and that the labour market was showing signs of stabilisation.

Sterling posted modest gains against the dollar following the inflation figures, trading near $1.3405 during Friday’s early Asian session.

Upcoming Key Events

• European Central Bank Governing Council Policy Meeting — Eurozone: The Governing Council meeting concludes on 29 October 2026, with the ECB’s policy decision and President Christine Lagarde’s press conference scheduled that day.