News

Macro Wrap

The overnight selloff in Global equities came in on the backdrop of stronger than US business activity grew at its fastest pace in over five years, with the S&P Global flash Composite PMI rising to 58.4 in September, boosting expectations of further Fed rate hikes. US Manufacturing PMI rose to 57.0 in September 2026 from 53.9, far above expectations and the strongest since May 2022. All components improved, with production and new orders accelerating, employment at its highest since early 2021, inventories rising faster, and delivery times lengthening.

US Services PMI rose to 58.7 in September 2026, the strongest in over five years and above expectations, driven by strong domestic demand. Backlogs and employment climbed near record levels despite surging input costs from higher fuel and transport, weaker export orders, and below-trend business confidence.

US Treasury yields surged to near two-decade highs across the curve, with and the 30-year yield rising to 5.402%. The sell-off was driven by rebounding oil prices, stronger than-expected US PMI data, and weak demand at a US$70 billion 5-year Treasury auction which pushed 5-year yields above 5%.

The 2-year yield rose 18bp to 4.933%, the 5-year surged 15bp to 4.987%, the 10-year yield reaching 5.116% (a 19-year high)and the 30-year climbed 9bp to 5.391%. Approximately 80–85% of the selloff was driven by real rates rather than inflation breakevens, suggesting a real-rate repricing and higher-for-longer Fed pricing rather than an outright inflation panic.

The DXY rose approximately 0.6% to its highest level since July as robust activity data reinforced expectations of further Fed tightening. Brent crude rebounded above US$100/bbl, ending its longest losing streak of the year at six sessions. Meanwhile, spot gold retreated to US$4,287.65/oz, down approximately 1.25% on the week.

US Treasury Secretary Scott Bessent announced that the US-China trade truce has been extended to 10 January, ahead of discussions between Trump and Xi today

France has increased its fuel subsidy by additional 450 million euros, that would make the total subsidies over 1.5 million euros for 2026. Broadly negative for European bonds and Euro.

Germany’s flash Composite PMI rose to 53.8 in September 2026, 11 month high and above expectations, as services rebounded, manufacturing stayed solid, new orders and backlogs grew, and hiring increased despite rising fuel driven cost pressures.