23 October 2026: TMGM Daily Market Breakfast Briefing

Morning Markets at a Glance

• Brent crude gained 4% to $113.17 per barrel. Attacks on Saudi infrastructure, alongside reports of tanker damage in the Strait of Hormuz, heightened supply concerns.
• 175 basis points marked France’s 10-year government bond yield premium over Germany, bringing it close to the 2011 record of around 190 basis points.
• 4.5% was China’s third-quarter GDP growth rate, up from 4.3% in the second quarter despite continued weakness in domestic demand and investment.
• 3.5% was the UK’s September annual inflation rate, up from 3.1%. Core and services inflation accelerated as well.
• Near 156.00, USD/JPY hit its lowest level in over one month after Japan’s inflation release, before the dollar recovered against the yen.
• Below $4,000, gold set a new three-month low in Friday’s Asian session before staging a modest recovery.

Key Market Moves

Currency Markets

Following Japan’s inflation report, yen strength left USD/JPY trading near 156.25 early in Friday’s Asian session. A subsequent decline took the pair to an over one-month low near 156.00, followed by a rebound.

Precious Metals Trading

A modest recovery followed gold’s slide below $4,000 in Friday’s Asian session, when the metal set a new three-month low.

Energy Markets & Geopolitical Risks

4% Brent Gain: Gulf Attacks and Shipping Costs Heighten Supply Concerns

Brent crude gained 4% to $113.17 per barrel. Attacks on Saudi Arabian infrastructure intensified fears of supply disruption. On Thursday, front-month Brent settled just above $113, its highest close since April. Early Friday trading put WTI around $98.80, close to a five-week high; it later advanced above $100 during the session.

As Iran-backed Houthis resumed attacks on Saudi oilfields, the week also brought more incidents involving vessels seeking passage through the Strait of Hormuz. According to The Associated Press, Iran claimed that seven tankers had sustained damage in the strait. That account did not independently confirm the claim.

Reports cited by ING strategists Warren Patterson and Ewa Manthey suggested that President Donald Trump was weighing fresh strikes on Iran. They also pointed to reports of the United States deploying a second aircraft carrier to the region and US troops being evacuated from some Middle Eastern bases. Separately, Commerzbank cited reports of possible renewed US and Israeli strikes after the US midterm elections. Confirmation of any such operation remained absent.

Higher shipping volumes contrasted with elevated delivery costs. In the week through 18 October, Middle Eastern shipments averaged more than 24 million barrels a day, The Wall Street Journal reported, above prewar levels of 23.3 million. Transfers near Oman via the so-called Hormuz Shuttle helped maintain those flows.

At $1.4 million daily, Persian Gulf–China freight rates were adding roughly $13.5 per barrel to delivery costs, according to Rabobank strategist Molly Schwartz. She also put premiums for Brent and Shanghai physical oil over futures at $10–25. Despite higher volumes, insurance costs, tanker inefficiencies and attacks meant shipping conditions remained far from normal.

Government Bonds & Economic Conditions

175 Basis Points: French-German Bond Spread Signals Tighter Financing

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

Concerns over a euro breakup, as measured by relevant indicators, were still below those recorded during Italy’s 2018 budget crisis. September’s Sentix euro-breakup index reading was 2.4%, against around 13% during that episode. Sovereign-bond purchases are permitted under the ECB’s Transmission Protection Instrument, subject to fiscal checks.

Tighter financing conditions have extended beyond France as borrowing costs have risen. According to ING’s Carsten Brzeski, the increase in German bond yields since the ECB’s September meeting had an impact on growth and inflation roughly equivalent to an additional 25-basis-point rate increase. His estimate for France was close to 50 basis points.

At 2.50%, the ECB deposit rate provides the policy backdrop. Brzeski pointed to another increase in euro-area headline inflation in September, alongside leading indicators that continued to signal economic resilience. Evidence that inflation was becoming more broad-based and entrenched was not yet apparent, according to Rabobank’s Bas van Geffen. Nomura economists, meanwhile, characterised fourth-quarter wage negotiations so far as benign for second-round inflation effects. Nordea’s Jan von Gerich stressed that higher French yields and tighter financing conditions had implications across the euro area.

4.5% GDP Growth in China Despite Weak Domestic Investment

China’s third-quarter GDP growth reached 4.5%. That compared with 4.3% in the second quarter, as stronger September activity supported the increase. Even so, HSBC analysts highlighted persistent domestic challenges, notably contracting fixed-asset investment and weak domestic demand.

Relative resilience in exports and high-technology industries contrasted with an uneven, K-shaped consumption recovery. Rather than broadly improving domestic demand, HSBC identified cost-push reflation.

To support household incomes and consumer confidence, policy initiatives include better public services, broader social-safety-net coverage and efforts to incorporate migrant workers into the urbanisation model. In HSBC’s assessment, these measures form part of a move away from short-term consumption fixes towards addressing structural constraints in the domestic economy.

3.5% UK Inflation Tops Bank of England Projections

UK headline consumer-price inflation reached 3.5% year-on-year in September. The rate was up from 3.1%, alongside increases in core inflation to 2.8% from 2.6% and services inflation to 3.7% from 3.4%.

Slightly above consensus, the figures also surpassed Bank of England projections, according to Danske Bank’s research team. The team highlighted greater resilience in economic activity over recent months, together with signs that the labour market was stabilising.

After the inflation release, sterling made modest advances against the dollar. It traded near $1.3405 early in Friday’s Asian session.

Key Dates Ahead

• European Central Bank Governing Council Policy Decision — Eurozone: 29 October 2026 marks the conclusion of the Governing Council meeting. The ECB’s policy decision and President Christine Lagarde’s press conference are both scheduled for that day.