GGMA Markets Briefing: The Ten-Year Eases Back Below Five Per Cent Hours Before the Fed Decides
Main News
I will be travelling for the rest of the week, and therefore there will be no Markets Briefing, I am afraid.
Good morning,
I hope all is well.
Here is a brief summary of today’s Markets Briefing: The Ten-Year Eases Back Below Five Per Cent Hours Before the Fed Decides
· The Federal Reserve decides at 20:00 CET with a quarter-point increase all but priced, and the ten-year Treasury yield eased back below five per cent after reaching its highest level in almost two decades.
· British services inflation came in below expectations a day before a Bank of England decision, even as the headline rate accelerated.
· Oil retreated after a two-day rally as industry data showed an unexpected build in US crude, gasoline and distillate stocks, with the Saudi East-West pipeline still shut.
· Japan's exports rose for a twelfth straight month in August, led by semiconductors, with the Bank of Japan expected to raise rates to a three-decade high on Friday.
· JPMorgan told an investor conference that investment-banking fees and markets revenue would be up in the mid-to-high teens in percentage terms, steadying bank shares after Monday's selloff.
· Washington and Beijing are discussing lower tariffs on some goods before next week's leaders' summit, lifting Chinese equities and industrial metals.
Today's Macro Roadmap: Euro-area industrial production at 11:00 CET, Canadian housing starts at 14:15, US retail sales and import prices at 14:30, the NAHB housing index at 16:00 and US crude inventories at 16:30. ECB speakers run through the day, with Vujcic at 14:15 and Nagel in Paris at 18:00. The Federal Reserve decides at 20:00 CET, the Bank of England on Thursday and the Bank of Japan on Friday.
Feel free to subscribe to our free newsletter here.
Full Article:
GGMA Markets Briefing: The Ten-Year Eases Back Below Five Per Cent Hours Before the Fed Decides
The US ten-year Treasury yield slipped back below five per cent and equity futures edged higher on the morning of a Federal Reserve decision the market treats as all but settled (BBG). The ten-year fell 1.43 basis points to 4.9876% and the two-year 1.21 basis points to 4.6507%, a day after both reached their highest levels in almost two decades (CNBC). Traders enter the meeting positioned for more weakness rather than less: cash-market short bets rose last week at the fastest pace since early 2025, and Citi strategist David Bieber said the short base has built rapidly as the market chases the move higher in yields, describing positioning as tactically extreme (BBG). Bank of America strategists Meghan Swiber and Eleanor Xiao wrote that shorts have built across the curve, that asset managers have cut longs or added shorts, and that there is still little evidence of dip-buying in duration (BBG).
In stocks, US index futures pointed higher, with the Nasdaq up 0.3246% to 29,049, the S&P 500 0.2141% to 7,605.5 and the Dow Jones 0.1842% to 52,211 (BBG). Asian markets firmed: the MSCI emerging-market index rose 0.7151% to 1,690.2, the CSI 300 0.6919% to 4,482.2, the ASX 0.4042% to 8,695, the Nikkei 0.3948% to 63,570 and the Hang Seng 0.2269% to 24,732 (BBG) (BBG). Banks steadied after JPMorgan co-President Doug Petno told an investor conference that investment-banking fees and markets revenue would be up in the mid-to-high teens in percentage terms in the third quarter, with deal activity robust and a pipeline as strong as the bank has seen in some time; the shares erased earlier losses to close higher, calming nerves after a rival's weak guidance hit the sector on Monday (Reuters). Bank of America's global fund manager survey found cash allocations rising and named a disorderly rise in bond yields the biggest tail risk, displacing the artificial-intelligence bubble, while a record share of investors said companies are over-investing (Ndtvprofit). In Europe, Euro Stoxx 50 futures rose 0.2883% to 6,261, the DAX 0.2359% to 25,490 and the FTSE 0.2111% to 10,683 (BBG).
The Federal Reserve announces at 20:00 CET, and the press conference follows at 20:30 (LS). Economists expect a quarter-point increase in the target range from 3.75%, the first rise in three years (LS) (Yahoo). The Associated Press notes that Chair Kevin Warsh is caught between markets that anticipate a move and a president who wants cuts or no change, and that he largely boxed himself in with a speech last month warning that inflation remains too far above the 2% target (Yahoo). Diane Swonk of KPMG put the paradox plainly: a hike now could lower long-term rates later by restoring faith in the target, while failure would see markets tighten instead through mortgage rates, business borrowing costs and interest on the debt (Yahoo). Michael Feroli of JPMorgan called it a closer call than the market is pricing but said the chair's repeated stern warnings on inflation risk institutional credibility without action to back them up, and looks for one further increase in December (LS). Philip Marey of Rabobank retains doubts, noting last week's core overshoot leaned heavily on an outsized monthly rise in the price of wireless telephone services, and predicts a one-and-done outcome (LS). Barclays expects the new projections to carry a slight upward revision to headline inflation alongside downward revisions to growth and unemployment (LS). Elsewhere, the gap between traders and policymakers has widened: swaps imply four more quarter-point increases from the European Central Bank over the next year and five from the Bank of England, against officials who have signalled far less, a divergence Bloomberg attributes to the energy shock (BBG). This morning's UK inflation report gave the doves something to hold on to: services inflation, the committee's preferred gauge of domestic price pressure, held at 3.40% and came in below the 3.50% expected, even as the headline rate accelerated to 3.10% (LS). A CNBC survey of economists found close to nine in ten expect the Bank of Japan to lift its policy rate to a three-decade high on Friday, which would be the shortest interval between increases since it left negative rates in 2024 (CNBC). The Bank of France trimmed its growth forecast for this year, citing consumer and business caution in the euro area's second-largest economy (Reuters). The Reserve Bank of New Zealand said Assistant Governor Karen Silk, who sits on its Monetary Policy Committee, will leave in December after the final decision of the year (BBG). Regarding the new ECB chair, "France Would Back Dutch Veteran Knot to Lead the ECB, Sources Say" (Reuters). People familiar with the matter told Reuters that Paris would support Klaas Knot to succeed Christine Lagarde provided the post of chief economist went to a French candidate, an informal proposal carrying President Macron's backing that would face resistance from Berlin (Reuters). For the Fed, markets price a 94% probability of a 25 basis point rate hike today, and 52 basis points cumulatively by December. For the Bank of Japan, markets price a 98% probability of a 25 basis point rate hike on Friday, and 47 basis points cumulatively by December. For the Bank of England, markets price a 13% probability of a rate hike on Thursday, and 46 basis points cumulatively by December. For the ECB, markets price a 54% probability of a rate hike in October, and 34 basis points cumulatively by December. For the RBA, markets price a 79% probability of a rate hike on 29 September, and 37 basis points cumulatively by December. For the Bank of Canada, markets price a 67% probability of a rate hike in October, and 37 basis points cumulatively by December. For the RBNZ, markets price a 63% probability of a rate hike in October, and 36 basis points cumulatively by December. For the SNB, markets price a 5% probability of a rate hike on 24 September, and 12 basis points cumulatively by December.
In currencies, the dollar index was little changed at 99.567, holding the ground it gained over the previous two sessions (BBG). The yen eased 0.0645% to 155.20 per dollar before Friday's Bank of Japan decision, while the euro firmed 0.0347% to 1.1548 and sterling was steady at 1.3479 (BBG). The won was the weakest currency in Asia, with the dollar up 0.2933% against it at 1,367.88, and the New Zealand dollar slipped 0.1042% to 0.5753 (BBG).
In government bonds, the selloff paused across Asia. The Japanese ten-year yield fell 3.9 basis points to 3.002% and the Australian ten-year 5.77 basis points to 5.3588% (BBG). At the long end of the US curve the thirty-year eased 1.08 basis points to 5.3554% and the twenty-year 1.19 basis points to 5.3915%. Tuesday's twenty-year auction had already shown the strain, drawing a bid-to-cover ratio below the average of the previous ten sales (RTTNews). Treasury Secretary Scott Bessent told a House committee that rising yields were due to global issues and acknowledged the move reflects the need to address the deficit, arguing that the doubled buyback programme kept yields from rising further (Reuters).
In commodities, gold rose 0.7462% to $4,324.18 and the precious metals index 0.9003% to 445.2661 (BBG). Crude retreated after a two-day rally: WTI fell 1.03% to $104.74 and Brent 0.5517% to $108.15, having settled on Tuesday at their highest levels since May (Reuters). Industry data showed an unexpected build in US crude, gasoline and distillate stocks, though physical disruption still dominates, with loadings suspended at Saudi Arabia's Yanbu port and the East-West pipeline shut since Friday's attack (Reuters). US Energy Secretary Chris Wright said the line should be flowing again within days, while sources told Reuters that repairs could take as long as five to six weeks (Reuters). Copper rose 0.4346% to 493.9299 and industrial metals 0.4178% to 176.5213, helped by talks between Washington and Beijing on lowering tariffs before next week's leaders' summit (BBG). Bitcoin steadied at 75,943.75, up 0.0925%, having fallen in US trading after the Senate failed to advance a crypto market-structure bill; implied volatility on the largest cryptocurrency fell 4.66% to 36.12, the biggest move on the board (BBG).
Data and the day ahead: Japan's exports rose 19.30% from a year earlier in August against 18.40% expected, slowing from 23.20%, while imports rose 28.00% against 26.30% and the trade deficit widened to ¥1105.6 billion from a revised ¥638.3 billion (BBG). Core machine orders fell 3.70% on the month against a 1.20% decline expected, though the annual rate held at 11.20% (LS). The United Kingdom's August inflation report landed in line on the headline: consumer prices rose 0.50% on the month and 3.10% from a year earlier, up from 2.90%, with core steady at 2.60%. Services inflation held at 3.40% against the 3.50% expected, while the broader CPIH measure rose to 3.30% (LS). New Zealand's current account deficit narrowed to 1.670 billion against 2.600 billion expected, the year-to-date shortfall to 3.20% of output, and Westpac consumer confidence lifted to 89.5 from 80.4 (LS). Australia's Westpac leading index was little changed, at minus 0.04% on the month (LS). Still to come: euro-area industrial production at 11:00 CET, Canadian housing starts at 14:15, US retail sales and import prices at 14:30, the NAHB housing index at 16:00 and US crude inventories at 16:30 (LS). European Central Bank speakers run through the day, with Vujcic at 14:15 and Nagel in Paris at 18:00 CET, and the Bank of Canada publishes its summary of deliberations at 19:30 (LS). The Federal Reserve decides at 20:00 CET, with the Bank of England on Thursday and the Bank of Japan on Friday (LS) (CNBC).
Time Stamp: 16 September 2026, 08:08 CET