TMGM Daily Market Breakfast: 25 September 2026

Morning Snapshot

• Federal Reserve officials continued to signal that inflation remains difficult to bring back to target, with New York Fed President John Williams saying repeated supply shocks cannot be ignored and other policymakers indicating further tightening may still be needed.
• U.S. Treasury yields remained elevated as the dollar strengthened broadly, with the 10-year yield cited at 5.14% and the Dollar Index reaching 101.40, its highest since late July.
• Bank of Mexico held its benchmark rate unchanged at 6.50% in a unanimous decision and softened its forward guidance, saying policy would not need to react mechanically to anticipated Federal Reserve adjustments.
• Japanese officials defended Bank of Japan independence and said the latest rate hike was aimed at achieving the inflation target, while the yen steadied and JGB yields climbed to 30-year highs.
• Bank of England officials warned that persistent high energy prices could complicate the policy outlook, with Governor Andrew Bailey saying pass-through has so far been subdued but it remains early days.
• WTI crude held above $91 a barrel after swinging lower from near $96, as Middle East supply risks and reports of possible U.S.-Iran diplomatic progress pulled oil prices in opposite directions.
• Reuters reported that U.S. and Iranian negotiators are discussing a phased agreement linked to the Strait of Hormuz, although leverage issues were still slowing progress.
• Chinese President Xi Jinping said Beijing and Washington should find new ways for major countries to coexist and act as partners rather than rivals during his Washington visit.
• The Federal Reserve opened a public comment process on two stablecoin proposals that would set reserve, capital, risk-management and approval requirements for supervised payment stablecoin issuers.
• Crypto exchange Bitget said hackers stole about $351.6 million from several hot wallets, prompting a temporary suspension of withdrawals while the platform conducts security checks.

Market Developments

Rates, FX and Commodities

The U.S. dollar strengthened broadly during the reporting window, with the Dollar Index reaching 101.40, its highest since late July. U.S. 10-year Treasury yields were cited at 5.14%, the highest level since July 2007. USD/JPY touched 159.00 on Thursday before easing to around 158.10 on Friday, EUR/USD traded near 1.1375 and GBP/USD hovered just above 1.3200, its lowest in nearly three months. In commodities, WTI crude traded above $91 after pulling back from highs near $96, while gold slipped below $4,300 and traded near $4,275.

Macroeconomics & Central Banks

Fed Officials Keep Inflation Fight in Focus as Supply Shocks and Price Pressures Persist

Federal Reserve officials continued to stress that inflation remains the central policy challenge. New York Fed President John Williams said at Oxford University that tariffs and higher energy prices do not by themselves create sustainable inflation, but repeated supply shocks are keeping price pressures higher and cannot be ignored.

Other Fed officials also kept the possibility of further tightening on the table. Cleveland Fed President Beth Hammack said inflation remains elevated and warned that persistent price pressures could make the return to target harder. Philadelphia Fed President Anna Paulson said further rate increases may be needed and said September’s hike helped move policy into a better inflation-fighting posture. Broader commentary during the session also pointed to Governor Michael Barr’s view that further policy adjustments are likely to be needed.

The policy messaging came alongside evidence of continued U.S. economic resilience. U.S. September composite PMI was cited at 58.4, a 62-month high, up from 56.0 in August and above a 55.3 consensus, with services at a 59-month high, manufacturing at a 53-month high and price pressures intensifying.

Banxico Holds Rate at 6.50% and Softens Guidance on Fed Linkage

Bank of Mexico held its overnight policy rate at 6.50% for a fourth straight meeting in a unanimous decision, matching expectations. The central bank said future decisions would be based on the ongoing disinflation process, exchange-rate pass-through, slack conditions and inflation expectations.

The statement marked a notable shift in guidance by explicitly saying Mexican monetary policy would not have to react mechanically to anticipated changes in the federal funds rate because macroeconomic conditions in Mexico differ from those in the United States. Banxico also reaffirmed its commitment to its primary mandate and to consolidating an environment of low and stable inflation.

Market reporting during the session said the peso weakened after the decision, with the currency sliding to its weakest levels since April as investors absorbed the softer guidance and the unchanged 6.50% rate.

Japanese Officials Defend BoJ Independence as Yen Stabilises and Yields Rise

Japanese Finance Minister Satsuki Katayama said the Bank of Japan’s latest rate hike was carried out to achieve the inflation target and said she expects the central bank to conduct appropriate monetary policy while coordinating with the government. She also defended the BoJ’s independence as markets remained sensitive to yen weakness and the risk of official intervention.

The yen recovered some ground on Friday after a sharp slide earlier in the week. USD/JPY had touched 159.00 on Thursday, its highest level since early September, before easing to around 158.10 during Asian trading on Friday. Market participants remained alert to the possibility of intervention by Japanese authorities.

Japanese government bond yields also moved higher, with JGB yields reported at 30-year highs. The rise in domestic yields helped narrow the gap with U.S. Treasury yields and offered some support to the yen.

BoE Officials Say Energy Shock Could Complicate Policy Path

Bank of England Governor Andrew Bailey said the pass-through from higher energy prices has so far been quite subdued, but added that it is still early days. His comments kept attention on whether a sustained rise in energy costs could alter the monetary-policy backdrop.

Deputy Governor Sarah Breeden struck a firmer note, saying it is not at all obvious that there is a path toward lower energy prices and warning that policymakers cannot wait too long to respond. Separate market reporting also said Deputy Governors Breeden and Clare Lombardelli were moving closer to voting for a rate increase.

Sterling remained under pressure during the session, with GBP/USD trading just above 1.3200 after four straight daily declines.

Geopolitics, Energy & Commodities

WTI Holds Above $91 as Middle East Risks Offset Hopes for U.S.-Iran Progress

Oil prices remained volatile as geopolitical risk and diplomatic headlines pulled the market in opposite directions. WTI traded around $92.60 in Asian hours and later stabilised above $91, after reversing from Thursday highs near $96.

Support for crude came from continued concern over Middle East supply risks, while pressure came from reports that Washington and Tehran are discussing a phased agreement linked to the Strait of Hormuz. Reuters reported that negotiators are exploring a phased deal to end the conflict, although leverage issues were still slowing progress.

The broader regional backdrop remained tense. Saudi Civil Defence issued a warning over a possible threat in Jazan after Yemen’s Houthis claimed they had launched dozens of ballistic missiles and drones at Saudi military installations. The Saudi-led coalition said the attacks were aimed at Taif in western Saudi Arabia and the Yanbu area on the Red Sea.

Gold Stays Under Pressure as Higher Yields and Stronger Dollar Limit Demand

Gold remained on the back foot during the reporting window, slipping below $4,300 and trading near $4,275 in Asian hours. Separate market reporting said bullion was lingering near a weekly low after failing to build on a modest early-session rise.

The move came as higher U.S. bond yields and a firmer dollar reduced support for the metal. The same backdrop was reinforced by Fed officials’ hawkish messaging and by elevated geopolitical tension tied to Iran and the wider Middle East.

Xi Calls for U.S.-China Coexistence as Trade Truce Holds

Chinese President Xi Jinping said during his Washington visit that Beijing and Washington should find a proper way for major countries to coexist peacefully and act as partners rather than rivals. Remarks carried on the wires also highlighted cooperation, friendship, artificial intelligence, counter-narcotics work and fair treatment for Chinese firms.

The comments came against the backdrop of an extended trade-war truce. Treasury Secretary Scott Bessent was cited as saying the two countries agreed to extend the truce, previously due to expire on November 10, until January 10.

Regulation & Digital Assets

Federal Reserve Seeks Comment on Stablecoin Rules Under GENIUS Act

The Federal Reserve Board opened a public comment period on two proposals that would create a regulatory framework for payment stablecoin issuers supervised by the central bank under the GENIUS Act. The comment period will close 60 days after publication in the Federal Register.

The proposals would set requirements for reserves, capital, risk management and approval procedures for banks seeking to issue payment stablecoins. One proposal would require Board-supervised issuers to fully back their tokens with permitted reserve assets, including short-term Treasury bills and other high-quality liquid assets.

Governor Michael Barr said stablecoins must support reliable, prompt redemptions at par across a range of market conditions.

SEC’s Peirce Calls for Privacy-Preserving Alternatives to Traditional KYC and AML Collection

SEC Commissioner Hester Peirce urged regulators to rethink traditional know-your-customer, anti-money-laundering and financial-surveillance requirements for decentralized systems. Speaking at SIFMA’s Digital Assets Conference in New York, she said regulators should explore decentralized identity systems, attribute-based credentials and zero-knowledge proofs.

Peirce argued that the traditional approach to combating financial crime has not kept pace with technological change and said public ledgers can provide transparent and difficult-to-alter records that regulators can monitor without requiring institutions to continuously collect and store large volumes of sensitive customer data.

Bitget Says Hack Cost About $351.6 Million and Suspends Withdrawals

Crypto exchange Bitget said attackers stole about $351.6 million after compromising several of its hot wallets. The stolen assets included ETH, USDC, USDT, BNB and AVAX, and the attackers were reported to be swapping the tokens at steep discounts and bridging them across chains.

The exchange said the loss would not affect users because it falls within the coverage of its User Protection Fund, which it said holds more than $464 million. Bitget suspended withdrawals after the incident and said services would resume after security checks are completed.

Chief executive Gracy Chen said IP addresses linked to the hack are likely connected to a DPRK group.