EU Midday Digest - 24 Sep 2026

US 30-year yield surges to highest level since 2004 at 5.40%.

Overnight & European Session

Global markets experienced a significant shift overnight, with the US 30-year yield climbing to its highest level in over two decades, reaching 5.40%. This move was driven by inflation fears and concerns about government debt burdens. In the European session, the Euro Stoxx fell by 0.27% to 6,283, while the DAX declined by 0.34% to 25,324. The FTSE 100, however, managed to gain 0.16% to 10,722. The dollar index (DXY) rose by 0.21% to 101.31, with EUR/USD falling by 0.67% to 1.1371. Brent crude oil prices also increased, reaching $104.69, up 1.56% on the day.

Key Themes Today

• Rates and Inflation: The surge in US 30-year yields to 5.40% highlights the growing concern over inflation and government debt. According to Bloomberg, Federal Reserve Bank of New York President John Williams stated that there is still much work to be done on inflation, given high energy prices and demand driven by investment in artificial intelligence. This suggests that the Fed may continue to take a hawkish stance on interest rates. The yield on the US 10-year Treasury note also rose, reaching 5.11%, which could have significant implications for the broader economy and financial markets.
• Central Bank Decisions: The Swiss National Bank (SNB) decided to leave its policy rate unchanged at 0%, as expected. However, the SNB did adjust its language regarding foreign exchange market intervention, stating that it is "willing to be active" in the market as necessary, rather than having an "increased willingness" to intervene. This subtle change in wording may indicate that the SNB is less concerned about the strength of the Swiss franc. The Bank of Canada also made a notable decision, maintaining its policy rate at 2.25% and emphasizing its commitment to keeping inflation under control.
• Global Economic Outlook: The outlook for the global economy remains uncertain, with various factors contributing to the complexity. The conflict in the Middle East and its potential impact on oil prices and global trade are significant concerns. Additionally, the ongoing debate about the future of the euro and the stability of the European banking system continues to influence market sentiment. According to the BIS, global debt has topped $365 trillion, with economists sounding the alarm over a potential "vicious cycle" of debt and inflation.
• Market Sentiment and positioning: The current market sentiment is cautious, with investors closely watching the developments in the Middle East and the potential implications for global markets. The VIX, a measure of volatility, rose by 7.31% to 16.29%, indicating increased uncertainty. The Ashenden macro regime snapshot highlights stress points in several countries, including Turkey, Argentina, and the United States, where growth momentum, inflation trends, and central bank stances are being closely monitored.
• Geopolitical Risks: Geopolitical risks remain a significant concern, with the situation in the Middle East and the potential for further escalation being closely watched. The SNB's decision to leave its policy rate unchanged and its adjusted language on foreign exchange intervention may be seen as a response to these geopolitical uncertainties. Additionally, the Bank of Canada's emphasis on keeping inflation under control highlights the importance of monetary policy in navigating these complex global conditions.

What to Watch

Today, investors will be closely watching the release of key macro data, including the US services PMI and the European Commission's economic forecasts. The speeches by central bank officials, such as Federal Reserve Bank of New York President John Williams, will also be closely monitored for any hints about future monetary policy decisions. The US 10-year Treasury yield will be an important level to watch, with a break above 5.15% potentially confirming the reflation trade and putting pressure on emerging market currencies. The key question on everyone's mind is: will the surge in US 30-year yields to 5.40% mark a turning point in the rates market, and what implications will this have for the broader economy and financial markets?