GGMA Markets Briefing: Tech Lifts Stocks Towards Records as Treasury Yields Hold at 24-Year Highs

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Here is a brief summary of today’s Markets Briefing: Tech Lifts Stocks Towards Records as Treasury Yields Hold at 24-Year Highs

·       A tech-led rally pushed the Nasdaq 100 to a record close and left the S&P 500 just short of its peak, while Treasury yields held near their highest since 2002 after the ISM services survey showed the hottest input prices in four years.

·       The Bank of Japan may declare this month that underlying inflation has reached its target, a signal for a December rise, while Japan's ten-year auction drew its strongest demand in a year as higher yields pulled in buyers.

·       The euro steadied at its weakest since May 2025 as Spain's snap election joined France's budget stress, and ECB chief economist Lane said higher yields and energy costs could limit how much more the bank needs to tighten.

·       Saudi Aramco's chief said rebuilding global oil inventories could take two years even after Hormuz reopens, as Yemen's forces retook a Red Sea port from the Houthis and crude recouped part of Monday's losses.

·       Brazilian assets surged after Flávio Bolsonaro's first-round lead made him the favourite for the runoff, and Quebec elected a separatist government that promises an independence referendum.

·       Australian consumer confidence slumped after the RBA's rate rise and Treasurer Chalmers warned that higher yields will pressure the budget, while New Zealand business confidence jumped.

Today's Macro Roadmap: German factory orders, euro-area retail sales and the US trade balance, with Bank of Japan Governor Ueda, the BoE's Mann and a run of ECB and Fed speakers, ahead of Wednesday's Fed minutes and Japanese wage data.

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GGMA Markets Briefing: Tech Lifts Stocks Towards Records as Treasury Yields Hold at 24-Year Highs

The tech-led rally on Wall Street remains the dominant theme in markets, and bond yields near multi-decade highs have not dented it. The Nasdaq 100 closed at a record on Monday as gains in Nvidia and Microsoft left the S&P 500 just short of its peak, and European and US equity futures point to further gains (BBG). "There's plenty for investors to worry about, but earnings continue to be the counterweight," said Mark Hackett at Nationwide (BBG). Hitoshi Asaoka, chief strategist at Asset Management One, said the rally also has an element of defensive investing, with money flowing to companies with strong earnings and little dependence on borrowing (BBG). Equity strategist Savita Subramanian wrote in a Monday note that the trade of buying AI capital-spending beneficiaries and selling white-collar consumption themes is largely priced in, with positioning in the sectors most exposed to AI disruption near record lows, and that it is time to selectively pivot (BBG).

In stocks, the Hang Seng rose 0.7% to 24,197 and the ASX 0.5% to 8,764, while MSCI's emerging-markets index fell 0.4% to 1,751.4. MSCI's Asia Pacific gauge edged higher and sits about 2% below its record, and mainland Chinese markets remain closed for the holiday (BBG). FTSE futures rose 0.3% to 10,573. In Brazil, assets soared on Monday after Flávio Bolsonaro took 47% of the first-round vote against President Luiz Inácio Lula da Silva's 45%, with the Ibovespa posting its biggest gain since 2020 and more than $8bn of the EWZ exchange-traded fund changing hands, a record for the fund, as investors bet that a Bolsonaro government would cut spending and open the way to lower rates (BBG).

Regarding the Fed, Monday's ISM services survey showed activity slowing to 54.9 in September from 55.4, against 55 expected, while the prices paid index rose to 74.0 from 72.6, its highest since July 2022, and employment returned to expansion at 50.1 from 47.8 (ISM) (Reuters). Economists quoted say the price pressures are building and the economy can withstand further tightening, though the weak September payrolls report has cut the chance of a move this month (Reuters). The New York Fed has been reviewing big banks' lending to private-credit firms since the spring, after JPMorgan marked down loans to AI-threatened software borrowers in March (Semafor). Treasury Secretary Scott Bessent said on Monday night that growth and spending restraint would "very quickly" start bending the debt curve (BBG). In Japan, the Bank of Japan may signal this month that underlying inflation has roughly reached its 2% target, according to three people familiar with its thinking, a symbolic step that would reinforce expectations of a December rise, while many on the board prefer to hold at the 29-30 October meeting after September's increase (Reuters). In the euro area, ECB chief economist Philip Lane said surging energy costs, higher yields and shrinking budget support could limit how much tightening is needed, calling the bank's measured response appropriate, and Bundesbank President Joachim Nagel said there are no clear signs that inflation has fed into price and wage setting (Reuters). Bank of France Governor Emmanuel Moulin warned about rising borrowing costs (BBG).

Currently, STIR traders price 6 basis points of tightening for the Fed's October meeting, a 24% probability of a rate rise, and 27 basis points cumulatively by December. For the ECB, markets price 3 basis points for the October meeting, a 13% probability, and 24 basis points by December. For the Bank of Japan, markets price 3 basis points for the October meeting, an 11% probability, and 23 basis points by December. For the Bank of England, markets price 22 basis points for the November meeting, an 87% probability of a rate rise, and 35 basis points by December.

In currencies, the euro was little changed at 1.1217 per dollar after falling 0.3% on Monday to its weakest since May 2025, with the French-German yield gap near its widest since the euro-area debt crisis (Reuters). Options positioning on the euro is the most bearish since 2024, several strategists see further losses, and Andreas König at Amundi said European headlines are moving the currency for the first time in a long while (Reuters). The dollar index was little changed at 102.2 after a 0.2% rise on Monday, when a Bloomberg gauge of the currency climbed to its highest since June (BBG). The yen eased 0.2% to 158.18 per dollar and the franc 0.1% to 0.8315, while sterling was little changed at 1.3215 and the Australian dollar at 0.6967. The Canadian dollar was little changed at 1.4268 per US dollar after the separatist Parti Québécois won Quebec's election without a majority, with Quebec's 30-year bond spread over Ontario widening to more than 9 basis points from about 7 two weeks ago (BBG).

In bonds, the ten-year Treasury yield rose 0.9 basis points to 5.31% and the two-year 1.3 basis points to 4.82%, extending Monday's selloff, which took the ten- and thirty-year yields to their highest since 2002, with the ten-year up 3.4 basis points on the day and the thirty-year 4.3 (BBG). Ray Dalio said in Singapore that Treasuries are vulnerable to a pullback in demand from China and Japan, which supply much of the foreign capital that funds about a third of US debt, and that France has reached its borrowing limit (BBG). Bessent's record of forecasts on gasoline, housing and growth has mostly missed, and Douglas Holtz-Eakin of the American Action Forum said it has hurt his credibility (BBG). In Japan, the ten-year yield rose 1.0 basis point to 3.11%, matching its highest since 1996, after the Ministry of Finance's ten-year auction drew a bid-to-cover ratio of 3.76 against 3.29 at the previous sale, with the tail at its narrowest since June 2025 (BBG). The thirty-year JGB yield rose to a record (LS). The Government Pension Investment Fund did not discuss its portfolio allocation at its September meeting, damping speculation that it would lift domestic bond purchases at Prime Minister Sanae Takaichi's urging (BBG). Australia's ten-year yield rose 6.0 basis points to 5.40%, and Treasurer Jim Chalmers said in Tokyo that higher yields will pressure the budget as cheaper debt rolls off, with an update due by year-end (BBG). In credit, KKR's retail private-credit fund will slightly exceed its 5% quarterly redemption cap to meet all requests, after demand to exit rose from the prior quarter (BBG). A Move proxy was little changed.

In commodities, Saudi Aramco chief executive Amin Nasser said replenishing global oil inventories while meeting demand could take up to two years even once Hormuz fully reopens, with nearly 3 billion barrels of supply lost since the war began, 1 billion barrels released from stocks and the remaining 6 billion or so in storage "not practically available" (CNBC). Yemen's government forces retook the Red Sea port of Mocha from the Houthis on Monday, moving closer to the Bab el-Mandeb strait that Saudi Arabia uses to export around Hormuz, and Saudi Arabia, Turkey and Pakistan agreed to implement their collective-defence pact (BBG). The UK Maritime Trade Operations centre reported an inbound LPG tanker struck by a projectile in the Strait of Hormuz, and Bessent said Iran loaded no crude onto tankers last month as the rial fell to record lows (LS). Gold fell 0.4% to 4,121 dollars. Copper was little changed after a third day of gains in Asian trading attributed to the tech rally and AI-related demand (BBG). Bitcoin fell 0.2% to 85,645 dollars and Ethereum 0.4% to 2,702 dollars.

In geopolitics, Spanish Prime Minister Pedro Sánchez called an early election for 29 November after parliament rejected his housing decrees, a vote that polls suggest the People's Party could win with Vox's support, and Spanish stocks and bonds were broadly steady after the announcement (Reuters). Germany and France are proposing an EU trade instrument modelled on the US Section 301 tool that could cut off market access within days, ahead of next week's EU summit and Trade Commissioner Maroš Šefčovič's trip to Beijing (WSJ).

In corporate news, OpenAI is in talks with United Arab Emirates funds including MGX to anchor a $30bn financing round, Moonshot AI closed its final private round at a valuation of about $50bn ahead of a Hong Kong listing, and Alphabet is close to an agreement to buy nuclear energy from Constellation Energy (BBG). Intel fell on Monday after a report of talks between Taiwan Semiconductor and Elon Musk's Terafab project, Cerebras rallied after OpenAI's Sam Altman called it a close partner, and Hon Hai reported better-than-expected revenue (BBG).

In other news, this article caught my eye: Asia's Buffers Too Thin to Keep Absorbing Oil Shock, World Bank Says (BBG). The bank does not expect Middle East oil exports to return to pre-conflict levels until mid-2027 and says fuel subsidies in Indonesia, Thailand and Vietnam have drained their dollar reserves by between 15% and 40% this year, even as AI-led exports keep regional growth intact.

Data and the day ahead: Australia's Westpac consumer sentiment index fell 4.7% to 80.4 in October from 84.4, after a 5.2% fall in September, among the forty weakest readings since the survey began, and Westpac expects another RBA rise in November (BBG). ANZ job advertisements rose 2.2% in September after a 2.6% gain in August. New Zealand's NZIER survey showed a net 40% of firms expecting better conditions, up from a net 14%, while a net 1% reported lower activity and cost and pricing indicators eased (NZIER). India's final services PMI rose to 55.2 in September from 54.1, below the 56.2 flash estimate, and Hong Kong's PMI slipped to 49.2 from 49.5 (LS). Still to come: Bank of Japan Governor Kazuo Ueda's address to the National Securities Convention at 08:35 CET, Swiss unemployment at 09:00 CET, expected unchanged at 3.0%, the UK construction PMI at 10:30 CET, seen at 45.2 from 44.3, as the Bank of England's Catherine Mann speaks in London, and euro-area retail sales at 11:00 CET, where consensus looks for a 0.2% m/m rise from a 0.6% fall. The US balance of trade at 14:30 CET is expected to show the deficit widening to $102.0bn from $88.6bn, Canada's balance of trade is seen at a C$1.7bn surplus from C$0.77bn, Canada's Ivey PMI at 16:00 CET is expected at 65.2 from 64.3, and the Treasury sells $58bn of three-year notes at 19:00 CET. Marine Le Pen's party presents its alternative budget proposals today as the French government submits its 2027 budget bill (BBG). Speakers include the ECB's Rehn at 10:00, Donnery at 11:10, Buch at 13:40 and Elderson and Cipollone at 15:00 CET, and the Fed's Williams at 15:05, Bowman and Musalem at 16:45 and Schmid at 19:15 CET, and the South African Reserve Bank publishes its Monetary Policy Review at 17:30 CET. Later in the week, Japan's August wage data are due on Wednesday, where consensus looks for a 3.7% y/y rise from 4.3%, the Reserve Bank of India is expected to raise its repo rate to 5.50% from 5.25% the same day, the Fed releases the minutes of its September meeting on Wednesday and the ECB publishes its September account on Thursday.

Time Stamp: 6 October 2026, 07:32 CET