TMGM Daily Market Breakfast: 22 October 2026

Morning Snapshot

• WTI crude climbed above $99 and Brent traded above $110 a barrel following attacks on Saudi Arabia, while Iran warned of a wider response against U.S. bases.
• The RBI’s October minutes showed a shift to calibrated tightening and a 25-basis-point repo-rate increase, with policymakers citing inflation pressures and firm growth.
• RBA Deputy Governor Andrew Hauser warned that third-quarter underlying inflation could exceed expectations ahead of the bank’s 3 November policy meeting.
• UK inflation accelerated to 3.5%, driven by higher energy prices, while market pricing put the probability of a November Bank of England rate increase at 95%.
• France’s 10-year government bond yield exceeded 5% for the first time since 2002.
• A Bank of Japan deputy highlighted inflation risks after two rate increases this year brought the policy rate to 1.25% in September.
• Gold fell below $4,100 on Thursday after rebounding above $4,130 on Wednesday.
• The Mexican peso weakened for a second consecutive day on Wednesday, losing more than 1.49% against the U.S. dollar.

Market Developments

Gold

Gold slipped below $4,100 on Thursday despite a softer U.S. dollar and falling U.S. Treasury yields. The decline followed a rebound above $4,130 on Wednesday, when oil prices retreated after the United States authorised cargo offloading from some blocked vessels.

Mexican Peso

The Mexican peso lost more than 1.49% against the U.S. dollar on Wednesday, extending its decline to a second consecutive day amid the U.S.-Iran conflict.

Geopolitics & Energy

Oil Climbs After Saudi Attacks as Iran Warns U.S. of Wider Response

WTI crude rose above $99 a barrel on Thursday, extending an earlier recovery to around $97.70 that ended a three-day losing streak. Brent traded back above $110 a barrel following fresh attacks on Saudi Arabia. A drone attack on Saudi Aramco’s Shaybah oilfield resulted in two casualties; ING analysts Warren Patterson and Ewa Manthey also reported strikes on Dammam’s international airport and said an oil-processing plant was targeted.

Iran’s Islamic Revolutionary Guard Corps navy warned that its response could extend to U.S. bases in the region if Washington continued urging vessels to cross a mined waterway, Reuters reported. The IRGC also said seven vessels had been hit. Separately, Iranian Foreign Minister Abbas Araghchi said Washington must lift its naval blockade and demonstrate that it was serious about ending the war diplomatically, Bloomberg reported on Wednesday.

Physical crude flows from Kuwait remained substantial despite the conflict. The chief executive of Kuwait Petroleum Corp said the country was exporting as much crude as before the war and producing more than 2 million barrels a day, according to ING. Shipping refined products was more difficult, the executive said.

U.S. Energy Information Administration data cited by ING showed commercial crude inventories fell by 3.06 million barrels over the latest week, alongside a 300,000-barrel decline in Strategic Petroleum Reserves. Estimated U.S. oil production dropped by 410,000 barrels a day from the previous week, with the figures still reflecting hurricane activity in the U.S. Gulf of Mexico.

Macroeconomics & Central Banks

RBI Minutes Detail 25-Basis-Point Increase and Shift to Calibrated Tightening

The Reserve Bank of India’s October meeting minutes showed that policymakers raised the repo rate by 25 basis points and changed their stance to “calibrated tightening”, citing rising inflation pressures and firm growth, DBS economist Radhika Rao said. Governor Malhotra highlighted emerging signs that inflation was becoming more generalised.

The discussion revealed differences over the extent of tightening. Rao characterised two external members as the most hawkish, emphasising broader inflation risks and pre-emptive action. Two other members supported incremental increases but explicitly rejected signalling a prolonged tightening cycle.

Indian government bond yields remained elevated, while the rupee strengthened by around 1.5% against the U.S. dollar this month. Rao linked the currency’s appreciation to foreign-exchange regulatory measures, IPO inflows and tighter scrutiny of overseas investments; foreign-exchange forward premiums also remained elevated.

RBA’s Hauser Warns Underlying Inflation Could Exceed Expectations

RBA Deputy Governor Andrew Hauser said on Wednesday that underlying inflation, measured by the trimmed mean, could exceed expectations in the third quarter. His remarks followed comments on Monday from Assistant Governor Christopher Kent that several factors suggested neutral interest rates were rising in Australia and globally.

The Australian dollar reached a one-month high on Wednesday during its fourth consecutive day of gains. AUD/USD was quoted around 0.7025, up 0.42%, in an afternoon update and at 0.7027, up 0.44%, in a later update. It subsequently eased to around 0.7015 in early Asian trading on Thursday.

UK Inflation Reaches 3.5% as November BoE Hike Pricing Hits 95%

UK inflation accelerated to 3.5%, driven by higher energy prices, while the market-implied probability of a November Bank of England rate increase reached 95%. Sterling struggled to extend its gains on Wednesday, with GBP/USD trading below 1.3400 as geopolitical tensions supported the U.S. dollar.

ING economist James Smith said there was little evidence so far that the energy shock was spreading into other parts of the inflation basket. He also described economic growth as more resilient than feared and the jobs market as stabilising, distinguishing the rise in energy-led headline inflation from broader second-round effects.

French 10-Year Government Bond Yield Exceeds 5% for First Time Since 2002

France’s 10-year government bond yield rose above 5% on Wednesday for the first time since 2002. The euro showed little reaction to the move, with EUR/USD trading just below 1.1250.

BoJ Deputy Highlights Inflation Risks After Policy Rate Reaches 1.25%

A Bank of Japan deputy highlighted inflation risks, while the yen showed little movement near 158.00 per U.S. dollar. The central bank has increased its policy rate twice this year, bringing it to 1.25% in September, even as core inflation remained below its 2% target in each of the seven months through August.

Upcoming Key Events

• Reserve Bank of Australia Monetary Policy Meeting — 3 November 2026: Australia’s central bank is scheduled to hold its next monetary policy meeting.