11 September 2026

Headline PPI 0.4% m/m with y/y accelerating to 5.4% (vs 5.3% expected, 4.8% July), core PPI softer at 0.2% m/m but 4.6% y/y. Claims 206K held firm; existing home sales fell a third month to 3.98M. The 30-year auction stopped at 5.31 with the 30-year yield at 5.366%, the highest since 2007, and the 10-year near 4.95%, highest since November 2023. The dollar firmed with yields and oil; USD/JPY broke 154.00.

ING sees upside risks for the dollar and argues that if front-end USD rates hold and sentiment stays fragile there is no fundamental reason for persistent underperformance — DXY back to 99.0 unless inflation delivers material downside. Danske Bank retains a moderately positive USD view at a +0.5 score on relative growth, rising corporate profitability and resilient labour, and expects the ECB to underdeliver relative to the Fed. SEB expects an unchanged Fed rate but calls it a very close call decided by one data point, with risks skewed to the upside and a December hike required if inflation does not improve. Crédit Agricole CIB forecasts headline 3.4% y/y and core 0.24% m/m taking core to 2.4%, noting a rounding to 0.3% is a matter of basis points. MUFG ties the summer dollar weakness to the 19 August buyback announcement and reads the tripling to US$6bn as a partial unwind of that risk premium. LSEG / Reuters reports a majority of economists still expect a hold through year-end, but with a rising number seeing at least one hike and a risk the consensus flips.

The ECB raised all three rates 25bp to a 2.50% deposit rate, unanimously and with no guidance. Italian IP beat at 0.7% versus 0.3%, German final CPI was in line. The euro nonetheless weakened as Brent, TTF gas, global yields and the dollar all rose. Euro-area commodity terms-of-trade are now at their weakest since early 2023, with TTF above EUR80/MWh and EU gas storage near 67% against a 5-year average of 84% heading into heating season.

ING argues the hawkish bar was set too high: markets price 50bp by year-end and 85bp by July, and the bank expects repricing lower in the EUR curve toward a retest of 1.160 with a one-month target of 1.150. MUFG notes the euro-zone rate market is already almost fully priced for another hike by December, leaving a high hurdle for a hawkish surprise. Danske Bank sees euro-area terms-of-trade deterioration as a relatively larger downside risk to EA growth than US growth and therefore a negative EUR/USD driver, and continues to see downside risks to current ECB pricing. SEB reads the projections as hawkish — core revised up for 2027-2028, the 2027 core forecast sitting between the June baseline and the June adverse scenario — and expects the ECB to keep hiking unless energy prices fall. Crédit Agricole CIB expects the ECB's own forecasts to be outdated on release because they use August energy inputs when gas was almost 20% cheaper.

RICS house price balance improved to a five-month high of −28 against −30 expected, with new buyer enquiries at their best since January and sales expectations up to 3 from −13. RICS still describes the recovery as fragile and flags higher rates or heavier property taxation after the October budget. Monthly GDP is due today at 13:00 WIB with consensus at 0.0% after 0.3%, alongside the full production and trade block.

Lloyds Bank expects the MPC to hold Bank Rate at 3.75% on 17 September with a repeat of July's 6-3 split, a more cautious statement, and the annual APF reduction target cut from £70bn to £50bn (roughly £31bn passive runoff plus £19bn active sales). Their core argument is the distinction between the direct effect of higher fuel and utility prices and their propagation: headline CPI rose from 2.6% to 2.9% broadly as expected, but private-sector regular pay growth slowed to 2.8% in Q2, payroll employment remains weak and the August Decision Maker Panel showed year-ahead CPI and own-price expectations easing with wage expectations unchanged. They expect Greene, Mann and Pill to repeat votes for 25bp on risk-management grounds, while Ramsden described domestic inflation pressures as relatively benign and Bailey pushed back on the idea a hike is inevitable. KBC adds that EUR/GBP found support near 0.845 with first resistance around 0.86 under test, and that the November budget is the real test for the new government.

BSI Manufacturing Index came in at 7.6 against 2.5 expected and −1.8 prior — a large beat and a swing back into positive territory. PPI y/y printed 7.6% versus 7.4% expected, easing only marginally from 7.7%. Against that, USD/JPY broke 154.00 as US 10-year and 30-year yields hit multi-year highs, so the policy stack and the rate-differential channel are pulling in opposite directions.

Danske Bank reports that expectations for another BoJ hike next week were reinforced after board member Masu warned that still-loose financial conditions could require rapid rate hikes if inflation accelerates, saying real rates should be moved out of negative territory as soon as possible and citing higher producer, fuel, chemical and food prices, a weaker yen and greater corporate cost pass-through as price risks. Markets have now almost fully priced a 25bp hike for the September meeting and a total of 3-4 hikes by next summer. SEB favours JPY against CAD, SEK and CHF as the most interesting relative value among the lower yielders, and flags that a JPY narrative shift is in the works with substantial potential — short CAD/JPY now, short USD/JPY in 2027. MUFG separately notes the negative JPY rates beta has been significantly higher over the recent month.

MI Inflation Expectations held at 4.9%, still elevated. Australian government yields rose strongly with 3Y and 10Y futures yields both up 6bps, and RBA September hike pricing repriced from roughly 70% during the session to 87.86% by the Asian open — the second-largest hawkish move in the G10 pack. AUD carries the strongest terms-of-trade position in G10 with the Bloomberg commodity index at its highest since 2012.

SEB is long AUD versus SEK and CAD for 2026, arguing the carry theme can persist for a few more months with no quick Iran deal and elevated energy prices through winter, played against funders with negative tail-risk beta. Yuan strength and pro-carry allocation remain AUD supports, with CNY acting as an FX anchor and Beijing's shift toward appreciation helping. Their explicit warning: AUD is a consensus long, for good reason, and positioning is the main risk — an uncomfortable long. Their factor work flags that AUD and NZD trade with high equity beta and that commodity FX shows positive momentum but stretched positioning. MUFG notes commodity-related currencies have outperformed over the last couple of months including the Australian dollar, and expects the favourable external backdrop to continue near-term so long as global growth remains resilient to the energy shock. Westpac reports market pricing for an RBA September hike had already inched toward 70% with a November move fully priced.

BusinessNZ Manufacturing Index slipped to 53.1 from 54.3 — still expansionary but decelerating. NZD/USD was the worst-performing G10 currency in the prior session, shedding 0.43% to 0.5853. RBNZ hike pricing for 27 October leapt from 22.52% to 54.81%, a 32-point swing and the largest single repricing in the G10 pack — which is precisely the overpricing institutional research had already flagged.

SEB is neutral NZD near term and explicitly argues that markets are overpricing the RBNZ hiking cycle given the economy is still only in the early stages of improving. Their case: the long NZD/SEK rotation trade from April has largely played out; house price inflation still hovers around zero and the labour market is only just recovering, so the RBNZ is justified in treading carefully; and the general election on 7 November is a downside event risk because the Labour party is running on reintroducing a dual mandate for the RBNZ, which markets would read as dovish. Their conclusion is that the Kiwi is stuck into 7 November with negative event risk, and that any bigger AUD/NZD convergence lower waits for 2027 and a Hormuz deal. Natixis confirms NZD was the session's worst G10 performer. SEB factor work adds that NZD, unlike AUD, has failed to strengthen with the yuan since 2025, diverging from its historical relationship.

The oil cushion strengthened materially with Brent at US$107.63, but the trade dispute escalated: the US banned a broad swath of Canadian alcoholic beverages, motorcycles and dairy products from import effective 29 September, following Canadian retaliatory tariffs and the 50% US tariffs on some US$20bn of Canadian goods last month. The TSX fell 0.60% in the prior session with energy shares up 0.99%, and USD/CAD rose 0.21% to C$1.3809.

BNY reads CAD as a matter of improvement and resilience rather than outright strength: flow interest has clearly shifted toward CAD and NOK on energy, and the Bank of Canada has shifted toward inflation vigilance amid supply pressures, providing an opportunity to close outstanding hedges — but on rates and revenue it is a less bad story rather than an outright positive, and they see tactical gains only absent a more aggressive policy approach. They also caution that the current energy price environment is so volatile that business investment into the sector, which tends to drive CAD performance more than oil receipts alone, may not be forthcoming, and that having a terms-of-trade boost in global stagflation rather than inflation is not optimal. SEB is on the other side, treating CAD as a carry funder short and a lower-yielding USD proxy, recommending short CAD/JPY and short CAD/CNY. LSEG / Reuters quotes First Avenue's Brian Madden: there is no good outcome for the non-energy parts of the market, with either margins or consumer prices absorbing the energy cost.

No tier-1 Swiss release before the US session. SECO Consumer Climate is due at 14:00 WIB with consensus −33 after −35, and SNB Chairman Schlegel speaks at 16:15 WIB — the only scheduled Swiss risk of the day and a live source of headline risk given the hike side of SNB pricing opened to 7.57% from zero.

SEB holds CHF as the cleanest short from a carry perspective and recommends overlaying it with EUR/CHF downside option structures. Their full argument is two-sided and worth stating honestly. On the short side: the SNB is de facto easing by sitting still while spot inflation has picked up, pushing the real policy rate more negative and departing from the policy it has followed since 2023 of keeping the implied real policy rate near zero, while the real effective exchange rate has started to depreciate. On the risk side: Swiss PMI is accelerating strongly after a subdued period, a rally in gold is a genuine risk to being short CHF because CHF has a negative beta to global real rates but is supported by higher gold prices and global break-evens, increased US Treasury interventionism has tended to push up break-even inflation and gold, and short positioning via carry strategies is already quite extended. Their framing is that carry can continue for a few more months but is in the final innings, which is why they favour low-delta EUR/CHF puts as a hedge rather than an unhedged short.

Spot gold rose 0.99% to US$4,397.40 with futures at US$4,444.50 before the yield surge. The 30-year at 5.366% and the 10-year near 4.95% are a direct real-yield headwind, and a firmer dollar compounds it. Against that, the Bab al-Mandeb escalation and the simultaneous Hormuz constraint keep a structural hedging bid in place.

MUFG frames it precisely: gold steadied near US$4,400/oz as investors waited for key US inflation data, with higher Treasury yields remaining a headwind after the planned US$6bn purchase of longer-dated debt failed to materially lower borrowing costs, while Brent above US$100 reinforced concerns that Middle East energy inflation could keep price pressures elevated. Their conclusion: persistent inflation and higher yields limit the upside, while geopolitical uncertainty, de-dollarisation concerns and demand for portfolio hedges continue to provide underlying support. LSEG / Reuters quotes StoneX's Rhona O'Connell making the key distinction — higher oil prices have an inflationary push, but because the cause is freight and supply-chain disruption it leads to higher bond rates, since policy is aimed more closely at containing inflation than it has sometimes been in the past. SEB adds the cross-asset angle: a gold rally is precisely what would break the short-CHF carry trade.

Brent surged 6.3%, briefly cleared US$108 and settled at US$107.63; WTI passed US$103. US commercial crude inventories fell only 391k barrels for the week ended 4 September against an expected 1.6M draw, confirming the move is about access and distribution, not demand. TTF gas broke EUR80/MWh with EU storage near 67% against a 5-year average of 84%.

ING notes current signals point to further escalation, keeping upside pressure firmly in place, and flags that Chinese physical buying — particularly in the North Sea, where Dated Brent has strengthened — will largely determine whether the rally has follow-through or fades. They also flag OPEC+ disagreement risk, with Iraq pushing for a 6mb/d quota baseline against an IEA sustainable-capacity estimate of 4.9mb/d. MUFG reports OPEC output fell 900kb/d to 19.9mb/d in August with Saudi output down 1.1mb/d to 7mb/d and observed exports down roughly a third to 3.03mn b/d, the kingdom squeezed on both export corridors simultaneously; with physical export capacity rather than quotas determining supply, continued disruption could keep Brent near US$100. LSEG / Reuters quotes Saxo's Ole Hansen that the market is having to change its view on how long the crisis will curb regional supply, and separately notes the Hormuz flow mystery has introduced a residual risk premium that could remain entrenched for months. The dissent is Danske Bank, which lowers its oil score from −0.5 to −1.0 on the explicit logic that when the oil price rises the conclusion should not be to increase exposure, and that over three to six months current prices raise the political incentive to ease the disruption ahead of the midterms.

The S&P 500 fell 0.58% to 7,592 — a fourth consecutive decline — while the Nasdaq 100 underperformed at −1.08% to 29,104, reversing the prior session's tech leadership. The Dow lost 0.61% to 52,069 and the Russell 2000 fell 1.04% to 2,891. On Wednesday, 405 of 500 S&P constituents closed lower, with defensives underperforming alongside cyclicals on yield sensitivity.

Danske Bank characterises the tape precisely: market breadth was weak, cyclicals such as industrials and consumer discretionary led declines at roughly −1.5%, but defensives like utilities, staples and real estate also underperformed heavily on yield sensitivity — a pattern more consistent with a stagflationary shift than outright growth concerns. Their Investment Navigator nonetheless retains a +1.0 equity score, arguing earnings remain the anchor: global analyst estimates point to about 35% y/y growth this year with consensus revisions still positive after Q2, the forward P/E has moved back toward its historical average, and the equity risk premium has improved because earnings have grown faster than prices. LSEG / Reuters flags the opposite risk — with two months to the midterms the options market shows a toxic mix of fragility and fearlessness, with volatility near 2026 lows and equity correlations flirting with record lows, leaving markets ill-prepared to absorb a shock. UniCredit offers the historical frame that when the Fed hikes, patience often pays.