TMGM Daily Market Breakfast: 15 October 2026

Morning Snapshot

• The U.S. military has prepared contingency plans for renewed strikes on Iran, CNN reported, while the IMF warned that a prolonged Middle East war poses the biggest risk to regional and global economies.
• U.S. September inflation accelerated to 3.7% annually from 3.4%, while core inflation rose to 2.6% from 2.4%.
• Washington has proposed releasing some frozen Russian sovereign assets into a U.S.-managed financial arrangement to revive Ukraine peace negotiations, the Financial Times reported.
• WTI crude recovered to around $94.00 per barrel during Thursday’s European session after trading near $93.10 in Asia, but remained lower on the day.
• European one-month TTF natural gas futures climbed to €86.81/MWh, their highest level since 2023.
• The Monetary Authority of Singapore left the slope and width of its exchange-rate policy band unchanged, against expectations for slight tightening.
• Bank of Japan board member Junko Koeda called for appropriate policy adjustments to contain upside inflation risks.
• A Reuters poll found that 54 of 63 economists anticipated a 25-basis-point Bank of England rate increase, while Chief Economist Huw Pill cautioned against interpreting a hike as the start of a series.
• Bank of Korea Governor Shin Hyun-song said inflation, the exchange rate and financial stability were pointing monetary policy in the same direction.
• ECB Governing Council member Primoz Dolenc said tighter financial conditions could reduce the need for central-bank policy action.

Market Developments

Foreign Exchange

The U.S. Dollar Index rose 0.69% to 102.90 on Wednesday following the inflation release. EUR/USD fell to just above 1.1100, its lowest since May 2025, before trading near 1.1215 in Thursday’s Asian session. GBP/USD dropped from just above 1.3250 to just below 1.3150, its lowest since late November 2025, before recovering toward 1.3200. AUD/USD ended Wednesday down 0.17% at 0.6971 after trading above 0.7000, while NZD/USD fell 0.77% to around 0.5570, its lowest since April 2025. USD/CAD rose 0.50% to around 1.4287, near 18-month highs, and the Mexican peso weakened about 0.65%, with USD/MXN at 18.51 after a daily low of 18.35. The Swiss franc fell to its weakest against the dollar since May 2025, while the yen also weakened.

Gold

Gold fell nearly 2% on Wednesday, trading at $4,078 after reaching a peak near $4,170 as stronger U.S. inflation lifted Federal Reserve rate-hike expectations. It subsequently traded near $4,100 in Thursday’s early Asian session.

Global Economy & Policy

U.S. Prepares Iran Strike Contingencies as IMF Warns About Prolonged War

The U.S. military has prepared new attack plans involving potential strikes on Iran’s energy infrastructure and nuclear facilities if President Donald Trump orders military operations to resume, CNN reported. The contingencies include possible use of the weapon known as the “mother of all bombs,” either before or after the midterm elections; the report described military planning rather than an order to launch attacks.

Yemen’s Houthis separately vowed on Wednesday to continue targeting Saudi airports and oil facilities, Reuters reported. The threat followed an attack that reportedly caused extensive damage to Saudi Aramco’s headquarters a day earlier. MUFG also cited reports of attacks on the headquarters in Dhahran and several other cities.

The International Monetary Fund said on Thursday that a prolonged Middle East war, together with further disruptions to energy production, shipping routes or critical infrastructure, represented the biggest risk to regional and global economies.

U.S. Inflation Accelerates to 3.7% as Fed Officials Voice Concern

U.S. consumer prices rose 3.7% in September from a year earlier, accelerating from 3.4% in August, the Bureau of Labor Statistics reported. Core inflation, excluding food and energy, increased to 2.6% from 2.4%. Monthly headline and core prices rose 0.6% and 0.3%, respectively.

TD Securities said inflation exceeded expectations for a second consecutive report, with strength across both goods and services. Gasoline prices jumped 9% month on month. Owners’ equivalent rent rose 0.35%, its strongest monthly increase in five months, while firmer hotel rates and transportation and recreation prices also contributed. TD put services inflation excluding housing, often called supercore, at 0.42% for the month.

The benchmark 10-year Treasury yield climbed to 5.33% from around 5.20% before the release. Rabobank said yields subsequently retraced: its account put the market-implied probability of an October rate increase at close to 50% immediately after the data, versus 23% a day earlier, before retreating to around 37%. Other intraday accounts placed the probability between 40% and 53% at different reporting points.

Chicago Fed President Austan Goolsbee called the CPI figures “discouraging” in an interview with Yahoo! Finance and identified services inflation as a concern. Fed President Mary Daly said further increases in short-term rates would probably be needed to restrain inflation, but signalled no need to act at the next meeting. Richmond Fed President Thomas Barkin said CPI had run too hot and kept the October decision open; he also said AI-related job losses were not occurring at scale and investment remained concentrated in AI.

The Fed’s Beige Book separately flagged intensifying price pressures. The qualitative assessment of regional and national economic conditions is used in the Federal Open Market Committee’s policy deliberations.

U.S. Proposes Releasing Some Frozen Russian Assets for Peace Initiative

The United States has proposed that European countries unfreeze some Russian sovereign assets and transfer them to a financial arrangement managed by Washington, the Financial Times reported. The proposal forms part of efforts to revive negotiations over the war in Ukraine.

The assets were immobilised following Moscow’s invasion of Ukraine. The reported initiative is a proposal, not an announced agreement or completed transfer.

Energy & Commodities

WTI Pares Losses as Persian Gulf Shipping Remains Strained

West Texas Intermediate crude traded around $94.00 per barrel during Thursday’s European session, recovering from roughly $93.10 in Asian trading but remaining lower on the day. The earlier decline followed five days of gains as the Trump administration considered easing sanctions on “shadow fleet” vessels.

ING’s Warren Patterson said Persian Gulf oil supplies were recovering toward pre-war levels, but tanker freight rates had surged to record highs. More inefficient regional shipping had absorbed a larger share of the global tanker fleet.

Patterson said uncertainty over the sustainability of those flows and the absence of a U.S.-Iran agreement were keeping a sizeable risk premium in Brent. He also identified tight diesel supplies, following disruptions involving the Persian Gulf and Russia, as a continuing strain on the oil market.

European Gas Futures Reach Highest Level Since 2023

European one-month TTF natural gas futures climbed to €86.81/MWh, exceeding their early-September highs and reaching their highest level since 2023, Rabobank said. Prices had risen by more than €60 from their 2025 lows.

LNG arrivals into Europe had already weakened in October, while geopolitical uncertainty continued to affect the outlook for flows through the Strait of Hormuz. Rabobank energy strategist Florence Schmit highlighted Europe’s growing reliance on LNG ahead of the planned full phase-out of Russian gas from the start of 2027, increasing competition with Asian buyers.

Central Banks

Singapore Leaves Exchange-Rate Policy Unchanged

The Monetary Authority of Singapore left the slope and width of its exchange-rate policy band unchanged at its October review, following slight tightening in July. MUFG economist Michael Wan said the decision surprised markets, which had anticipated another small tightening.

MAS said core inflation was expected to ease discernibly from the middle of 2027, with domestic costs remaining subdued and supply-driven imported inflation slowing. It also projected that the positive output gap would narrow through next year as the AI cycle eased.

The authority highlighted productivity gains that had contained unit labour cost increases in services. It said the existing appreciating policy band would lean against the anticipated near-term increase in imported inflation and that it remained well-positioned to respond to risks to medium-term price stability.

BoJ’s Koeda Calls for Policy Adjustments to Contain Inflation Risks

Bank of Japan board member Junko Koeda said monetary conditions remained accommodative and needed to be adjusted appropriately to contain upside inflation risks. She called for timely rate adjustments based on economic and price conditions.

Koeda identified yen depreciation, robust global demand linked to artificial intelligence and the impact of the Middle East situation as sources of upside price risk.

BoE Poll Points to Quarter-Point Hike as Pill Rejects Serial-Increase Signal

A Reuters poll found that 54 of 63 economists anticipated a 25-basis-point Bank of England rate increase to 4% at its November policy meeting. The result reflects economists’ expectations rather than a central-bank decision.

Chief Economist Huw Pill said a rate increase now should not give the impression that a series of increases was beginning. Pill has voted for a quarter-point increase in recent months.

BoK Governor Welcomes Stronger Won as Bond-Issuance Cuts Are Considered

Bank of Korea Governor Shin Hyun-song said inflation, the exchange rate and financial stability were pointing monetary policy in the same direction, Commerzbank reported. He described further won appreciation as desirable to shift the balance toward the domestic economy after uneven growth led by AI-related exports.

Shin said the electronics upcycle had more than offset the drag from the Middle East conflict, while stronger demand could add to cost pressures from higher crude prices. The central bank raised rates by 25 basis points in both July and August.

USD/KRW held around 1,342, with the won up 16% against the dollar from its early-July low. Commerzbank attributed the appreciation to a strong trade surplus, exporters’ repatriation flows and narrower interest-rate differentials.

Local media reported that the government was considering further reductions in Treasury bond issuance after a KRW5 trillion cut in October. Options under review were cuts of KRW5 trillion in each of November and December, or a total reduction of KRW5 trillion through December.

ECB’s Dolenc Says Market Tightening Can Reduce Need for Policy Action

ECB Governing Council member Primoz Dolenc said tighter financial conditions could limit the need for monetary-policy action by the central bank. His remarks distinguished tightening delivered through financial markets from measures taken directly by policymakers.

Upcoming Key Events

• U.S. Producer Price Index and Retail Sales — 15 October 2026: U.S. producer-price and retail-sales releases are scheduled, providing information on wholesale inflation and consumer spending.
• Bank of Korea Policy Meeting — 22 October 2026: South Korea’s central bank holds its next monetary-policy meeting.
• Federal Reserve Policy Meeting — 27–28 October 2026: The Federal Open Market Committee meets to consider U.S. monetary policy.
• Bank of England Policy Decision — 5 November 2026: The Bank of England holds its next scheduled interest-rate policy meeting.