MORNING BID EUROPE-Spain to France: hold my cerveza
Reuters2026/10/06 04:30A look at the day ahead in European and global markets from Stella Qiu Just when markets thought Europe's political theatre could not get more crowded with the French fiscal drama, Spanish Prime Minister Pedro Sanchez called a snap election for November. Sanchez is trailing in polls and a defeat would leave markets facing political uncertainty in two of the euro zone's four biggest economies at once. The French bond rout has at least caught its breath. The premium investors demand to hold French 10-year bonds over safer German debt narrowed to 137 basis points on Monday, but still far wider than the 85 bps a month earlier. The euro, which got clobbered down to $1.1161 overnight, has clawed back above $1.12, but whether that holds is anyone's guess. Some are betting the bond market turmoil could trigger a dovish shift from the European Central Bank, which has already raised interest rates twice this year, with every move adding to France's swelling interest bill. Yet, with inflation running at 3.8% and Europe bearing the brunt of the latest energy shock, policymakers may have little room to pivot. Euro zone retail sales and construction PMIs land later and could nudge the debate on a year-end rate rise, which is now 83% priced. Across the Atlantic, US Treasuries did not get much relief, with the 10-year yield hitting a new 24-year high of 5.3493%. Bonds have traded poorly for weeks now and every bounce seems to attract a fresh wave of sellers. It's the kind of sell-off that would, or should, normally rattle every asset class, but bizarrely everything else seems blasé. The breach of the psychologically dreaded 5% level proved to be a non-event, and now 5.25% to 5.35% is the new pain threshold on the 10-year. Still, Nasdaq closed at a record, Nvidia NVDA.O market cap approached $7 trillion and Asian shares gained modestly. European stock futures are up 0.4%. Earnings season offers stock bulls something to cling onto. Samsung 005930.KS is due to release its preliminary third-quarter results on Thursday, and its opera
A look at the day ahead in European and global markets from Stella Qiu
Just when markets thought Europe's political theatre could not get more crowded with the French fiscal drama, Spanish Prime Minister Pedro Sanchez called a snap election for November. Sanchez is trailing in polls and a defeat would leave markets facing political uncertainty in two of the euro zone's four biggest economies at once.
The French bond rout has at least caught its breath. The premium investors demand to hold French 10-year bonds over safer German debt narrowed to 137 basis points on Monday, but still far wider than the 85 bps a month earlier. The euro, which got clobbered down to $1.1161 overnight, has clawed back above $1.12, but whether that holds is anyone's guess.
Some are betting the bond market turmoil could trigger a dovish shift from the European Central Bank, which has already raised interest rates twice this year, with every move adding to France's swelling interest bill. Yet, with inflation running at 3.8% and Europe bearing the brunt of the latest energy shock, policymakers may have little room to pivot.
Euro zone retail sales and construction PMIs land later and could nudge the debate on a year-end rate rise, which is now 83% priced.
Across the Atlantic, US Treasuries did not get much relief, with the 10-year yield hitting a new 24-year high of 5.3493%.
Bonds have traded poorly for weeks now and every bounce seems to attract a fresh wave of sellers. It's the kind of sell-off that would, or should, normally rattle every asset class, but bizarrely everything else seems blasé.
The breach of the psychologically dreaded 5% level proved to be a non-event, and now 5.25% to 5.35% is the new pain threshold on the 10-year. Still, Nasdaq closed at a record, Nvidia NVDA.O market cap approached $7 trillion and Asian shares gained modestly. European stock futures are up 0.4%.
Earnings season offers stock bulls something to cling onto. Samsung 005930.KS is due to release its preliminary third-quarter results on Thursday, and its operating profit could top 100 trillion won ($74.5 billion) for the first time ever.
The drop in oil prices, with Brent now near $100 a barrel, may have helped too. Exports from the Middle East have risen as ships run the Strait of Hormuz at night to shuttle oil out. It's a risky business, but with VLCCs able to earn more than $1 million a day, it is clearly worth it for some owners.
Key developments that could influence markets on Tuesday:
-- Euro zone retail sales for August
-- Euro zone, Germany and France S&P Construction PMIs
-- The UK S&P Global PMI
-- Fed officials John Williams, Michelle Bowman, Jeffrey Schmid, Lorie Logan speaks
($1 = 1,342.7000 won)
(Editing by Jacqueline Wong)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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