TMGM Daily Market Breakfast: 08 October 2026

Morning Snapshot

• The Pentagon ordered U.S. Central Command to complete preparations for potentially resuming major combat operations in Iran as Washington weighed the timing of possible strikes.
• U.S. Treasury yields climbed to multi-decade highs, with the 10-year reaching 5.35% and the 30-year 5.724%, as inflation and fiscal concerns kept pressure on long-dated debt.
• Federal Reserve minutes showed most policymakers judged another rate increase by year-end would likely be appropriate, while Fed Governor Christopher Waller said further hikes are still needed even if they do not come at consecutive meetings.
• WTI crude traded above $88.50 and at times above $90, while other reports put oil above $102, as tanker attacks, reduced Strait of Hormuz traffic and fresh Middle East attacks intensified supply concerns.
• IEA member governments backed a faster release of the remaining 100 million barrels from oil stocks already announced in March, prioritising diesel where possible without increasing the total 400 million-barrel commitment.
• The ECB’s September meeting accounts showed all Governing Council members saw inflation risks as tilted to the upside, reinforcing a tightening bias despite softer rhetoric from some policymakers.
• France’s fiscal strains continued to unsettle European markets, pushing French bonds back under pressure, lifting broader sovereign yields and weighing on the euro.
• The Reserve Bank of India raised its repo rate by 25 basis points to 5.50%, its first increase in nearly four years, and shifted its stance to calibrated tightening.
• China’s central bank said it has neither the need nor the intention to weaken the yuan for trade advantage, while separate reporting said targeted property and monetary easing is aimed at keeping growth on track.
• The Swiss National Bank signalled no change in policy despite heightened geopolitical risks, while its vice chairman indicated rates could stay lower for longer.

Market Developments

Government Bonds

U.S. Treasury yields surged to multi-decade highs, with the 10-year at 5.35% and the 30-year at 5.724%, while UK 30-year gilt yields climbed above 6% and French, Italian and Greek sovereign yields also came under renewed pressure.

Equities

U.S. stock-index futures moved lower in European trading, with Dow Jones futures down 0.56% near 51,160, S&P 500 futures off 0.28% around 7,830 and Nasdaq 100 futures down 0.44% near 31,270.

Foreign Exchange

The euro remained under pressure from French fiscal concerns, with EUR/USD reported near 1.1185 and around 1.1200 in later Asian trade, while GBP/USD fell 0.48% to 1.3210, AUD/USD traded around 0.6963-0.6965, USD/CAD rose toward 1.4270 and USD/INR was reported around 96.78 after the RBI decision.

Commodities

Oil prices stayed elevated, with WTI around $88.55 in early Asian trade and later above $90, while separate reporting said oil was above $102 as Middle East supply risks and disrupted shipping through the Strait of Hormuz remained in focus; gold briefly slid below $4,100 before reclaiming that level.

Geopolitics & Energy

Pentagon Orders Iran Strike Readiness as Oil Supply Risks Intensify

The Pentagon instructed U.S. Central Command several days earlier to complete preparations for potentially resuming major combat operations in Iran, with Axios reporting that the timing of any strike remained under consideration by President Donald Trump. The development added to already elevated geopolitical risk across the Middle East.

Energy markets remained tightly focused on the fallout from the Iran conflict and related shipping disruptions. Kpler data cited in market reporting showed just seven commodity vessels transited the Strait of Hormuz on Tuesday, the lowest level in more than two months, after tanker attacks last week reached their highest level since the war began. Crude flows through the strait were reported down 27% from the wartime high reached the previous week, although higher exports from the Gulf of Oman and Red Sea partly offset the decline and helped keep overall regional crude exports up.

Fresh attacks also kept supply concerns elevated. Reports said Iran-backed Houthi militias launched new attacks on Saudi Arabian airports, while broader market coverage showed WTI crude trading around $88.55 in early Asian dealing, later above $90, and other reports placed oil above $102 as U.S. strike options against Iran were considered.

IEA Accelerates Existing Oil Stock Release as Diesel Markets Tighten

Governments in the International Energy Agency agreed to accelerate the release of oil stocks already approved under the collective action announced in March. The move covers the remaining 100 million barrels still due to reach the market and does not increase the overall 400 million-barrel commitment.

Member countries said they would prioritise diesel where possible as tight product markets and Iran-related disruptions pushed European diesel prices sharply higher. Market participants were disappointed that the decision mainly brought forward already pledged volumes rather than adding fresh supply.

Macroeconomics & Central Banks

U.S. Treasury Yields Hit 24-Year Highs as Fed Tightening Bias Holds

U.S. Treasury yields surged on Wednesday, with the 10-year yield testing 5.35% and the 30-year yield reaching 5.724%, both described as 24-year highs. The move reflected persistent concern over inflation and fiscal policy as investors demanded a higher premium to hold long-dated U.S. debt.

Federal Reserve minutes from the September meeting showed all participants supported the 25 basis-point rate increase delivered at that meeting, while most judged another increase in the target range would likely be appropriate by year-end. The minutes also said almost all participants saw inflation risks as tilted to the upside, while many judged financial conditions still supportive of growth despite the rise in longer-dated Treasury yields, higher equity prices this year and narrow corporate-bond spreads.

Fed Governor Christopher Waller reinforced the hawkish tone, saying more rate increases are needed because inflation remains too high, while adding that further hikes do not need to come at consecutive meetings. Separate market reporting said futures were fully pricing a 25 basis-point increase to 4.00%-4.25% on December 9.

The rate backdrop weighed on risk assets, with Dow Jones futures down 0.56%, S&P 500 futures off 0.28% and Nasdaq 100 futures down 0.44% in European trading.

ECB Minutes Show Unanimous Concern Over Upside Inflation Risks

The accounts of the European Central Bank's September policy meeting showed all Governing Council members viewed the risks surrounding the inflation outlook as being to the upside. The release reinforced the message that inflation concerns remained central to the ECB's policy debate.

The minutes came as broader market commentary pointed to a continued tightening bias at the ECB despite softer rhetoric from some policymakers after President Christine Lagarde's earlier emphasis on energy prices triggered a strongly hawkish market reaction.

RBI Raises Repo Rate to 5.50% and Shifts to Calibrated Tightening

The Reserve Bank of India raised the policy repo rate by 25 basis points to 5.50%, its first increase in nearly four years, and changed its stance from neutral to calibrated tightening. The decision to shift stance was reported as a 4-2 vote, while the rate increase itself was unanimous.

The RBI said the move was pre-emptive, citing signs of rising inflation expectations and broader price pressures linked to higher food and energy costs even though demand-side inflation pressure remained limited. The central bank also made clear that calibrated tightening does not imply a predetermined sequence of hikes, but that future choices are now limited to either a further increase or a pause depending on incoming data and the inflation outlook.

The RBI raised its FY2026-27 CPI forecast to 5.2% from 5.0% and projected inflation at 6.0% in the fourth quarter of 2026, the upper end of its 2%-6% target range. Market reporting said USD/INR rose around 0.4% to 96.78 after the decision, suggesting the quarter-point move had been largely priced in.

PBoC Rejects Competitive Yuan Devaluation as China Relies on Targeted Easing

The People's Bank of China said China has neither the need nor the intention to depreciate the yuan to gain a competitive advantage in international trade, according to a statement reported by Reuters. The comment addressed exchange-rate concerns at a time of heightened trade friction and diverging global policy settings.

Separate reporting on Chinese policy said authorities rolled out a fresh round of targeted property and monetary easing measures last week to stabilise growth after an activity slowdown. Those measures were described as sufficient to help China meet this year's GDP target at the lower end of the range, at 4.5%, while falling short of addressing deeper structural weakness in household demand.

The same reporting said weakness in fixed-asset investment highlighted the limits of infrastructure-led support because of increasingly binding budget constraints at the local-government level, while growth has been driven more by technology investment and manufacturing upgrades than by consumer demand.

SNB Signals Steady Policy Despite Rising Geopolitical Risks

The Swiss National Bank's vice chairman signalled no change in monetary policy despite growing risks from the war in Iran, indicating that the central bank remains comfortable with its current stance. Market reporting characterised the message as pointing to lower-for-longer rates.

The comments came as the Swiss franc weakened for a fourth straight day against the U.S. dollar, underscoring how global rate differentials and geopolitical developments were shaping currency markets.

Europe: Sovereign Stress & Trade

French Fiscal Strains Deepen Pressure on Eurozone Bonds and the Euro

French bond-market stress remained a central European market theme, with French 10-year yields rising again after a brief relief move and the euro staying under pressure. Banque de France Governor Moulin said the strain in French bonds was serious but did not meet the conditions for European Central Bank support.

Broader reporting described renewed pressure across European sovereign markets, with French, Italian and Greek yields moving sharply higher. The selloff was associated with concerns over debt-financed government spending and contagion risks across the euro area.

The currency impact was visible across major crosses. EUR/USD was reported around 1.1185, near a 17-month low, before later recovering toward 1.1200 in Asian trade, while EUR/CAD extended a four-day losing streak to around 1.5940 as euro weakness combined with support from higher oil prices for the Canadian dollar.

China Rejects European Call to Limit Hybrid Vehicle Exports

China rejected European calls to voluntarily limit exports of hybrid electric vehicles into the European market, removing the prospect of a soft quota arrangement that had been seen as a way to reduce China's market share from 30% to 15% without triggering more overt trade restrictions.

The setback added to already rising political and economic tension between Europe and China and raised the prospect of a more assertive European industrial-policy response aimed at countering what has been described as mercantilist overcapacity.

Technology & Digital Assets

Ethereum Researcher Warns of Potential ECDSA Security Break

Ethereum researcher Justin Drake urged the crypto industry to prepare for a potential breakthrough that could undermine the cryptographic systems securing digital assets. In a post on X, he called for a controlled migration of assets to fresh addresses whose public keys have not yet been exposed.

Drake warned that ECDSA could break before major quantum-computing milestones and said private keys could then be decrypted quickly using available hardware. Ethereum co-founder Vitalik Buterin also warned about the risk of losing funds through botched transfers during any migration process.