Morning Brew October 6 2026

Good morning.

A short update after returning from Greece, where near-constant rain and storms served as an unusual reminder of the exceptional weather this year… . As is often the case when I take time off, markets delivered their own share of volatility.

Bond yields remain elevated, even as expectations for further near-term rate hikes fade on cooling inflation and softer U.S. labour-market data.

U.S. equities advanced on Monday. The S&P 500 rose 0.7% to 7,773.95, closing near its all-time high, while the Nasdaq Composite gained 1.05% to a record 27,477.31. Nvidia rose 2.1%, lifting its market value to USD 5.76 trillion, while Microsoft gained 1.6%, Meta 2.1% and Tesla 2.5%. PTC surged 33.5% after Schneider Electric agreed to acquire the company for approximately USD 22.6 billion. In Europe, the Stoxx 600 gained 0.4% to 633.62, led by banks and commodity stocks. The FTSE 100 rose 0.3% to 10,497.94, while the DAX was little changed at 25,254.21 and the CAC 40 fell 0.8%.

Asian equities followed Wall Street higher on Tuesday, supported by the technology-led rally and lower oil prices, although longer-dated Treasury yields remained near multi-decade highs.

The euro remains under pressure near 17-month lows after briefly touching USD 1.116 overnight. Fiscal concerns in France weighed on government bonds, while European political uncertainty increased after Spanish Prime Minister Pedro Sánchez called a snap election.

IEUR/USD is now trading at 1.1220 and EUR/CHF at a two-month low of 0.9325. GBP/USD is at 1.3215, USD/JPY at 158.15 and the USD Index at 102.

Government bond yields remain elevated. The U.S. 10-year yield is at 5.31%, the UK at 5.42%, Germany at 3.49%, Japan at 3.10% and Switzerland at 0.55%. France’s 10-year yield is trading at 4.86%, well above the German (EU)  benchmark.

Gold is trading at 4,125 and silver at 60.50, with both under pressure from high yields.

WTI crude is at USD 89.90, while Brent trades at USD 100.9, off the recent highs.

Today’s agenda is light, leaving bond yields as the most likely market driver. Europe remains a source of concern and is worth watching closely.

Trade safely.

Here are key articles by my colleagues:

Q4 Outlook for Investors: Raise the bar

Growth is holding up, but inflation risks have returned and the possibility of a renewed rate-hiking cycle is raising the bar for every asset. For Q4, investors do not need to retreat from risk, but they should demand more from it: stronger AI economics in a world of expensive money, broader protection against inflation, a fresh look at bonds and greater diversification beyond US tech stocks and the dollar.

Q4 Outlook for Traders: Three tests for the wall of worry.

There is a perfectly plausible bullish outcome for Q4. A Middle East breakthrough could send oil and gas sharply lower, easing the inflation outlook and allowing long yields to retreat, while hyperscalers could reaffirm spending plans and show stronger evidence that AI investment is generating revenues and productivity. That combination would remove all three immediate constraints and could see markets climb the wall of worry yet again.

The more negative outcome does not require disaster in any single area. It is the three pressures reinforcing one another: energy staying expensive enough to damage real growth, long yields refusing to decline much even as risk sentiment weakens (or worse still rising further) and concrete evidence emerging that AI capex growth is being revised lower. That would hit household purchasing power, equity valuations and one of the most important investment engines of the US economy at the same time.

Why higher yields are hurting everything except AI

• The S&P 500 is hiding the damage. Technology and communication services are keeping the index afloat, while most other sectors are falling.
• Higher yields are hitting rate-sensitive sectors first. Utilities and real estate face higher refinancing costs and stronger competition from bonds, while financials are starting to feel tighter credit conditions.
• AI remains the market’s shelter — for now. Strong earnings and balance sheets are helping mega-cap tech withstand higher yields, but that leaves the broader market increasingly dependent on a narrow group of winners.

Tuesday, 6 October 2026
Macro: Germany factory orders; euro-area money-market and competitiveness statistics; U.S. trade balance and New York Fed Survey of Consumer Expectations.
Corporate earnings: Constellation Brands.