Surging Bond Yields and Inflation Fears Press Market Futures

Bond Yields and Monetary Policy

• Surge in US Yields: The US 10-year Treasury yield reached its highest level since 2002, propelled by resilient ISM manufacturing data, lower jobless claims, and rising energy prices.
• Divided Fed: Minneapolis Fed President Neel Kashkari warned that further rate hikes may be required through 2027. Conversely, Vice Chair Philip Jefferson sees no immediate urgency to raise rates, noting that higher bond yields are already tightening financial conditions.

Pressure on European Indices and Budgets

• European Slide: The CAC 40 fell below the 8,000 mark (toward 7,826 points), dragged down by French 10-year OAT yields rising to 4.96% and a spread over German Bunds exceeding 100 basis points.
• Rebound in Inflation: Preliminary September CPI in France rose to 3.0% YoY (up from 2.4% in August) due to energy costs, alongside accelerating inflation in Germany.
• French 2027 Budget: The government presented its budget plan containing €43 billion in new measures aimed at bringing the deficit to 5% of GDP next year.

What to Watch Today

• Bond Yields: Dynamics in US10Y, Bund, and OAT yields for directional cues on NQ, ES, and FDAX.
• Energy and Geopolitics: Fluctuations in crude oil prices and diplomatic developments between the US and Iran.
• Fed Speeches: Statements from central bank officials that could trigger intraday volatility on US equity indices.