Financial Markets Daily Report25 September 2026
Markets were mixed on Thursday, after a combination of higher energy prices following Saudi Arabia's interception of Houthi ballistic missiles targeting its energy infrastructure and a raft of hawkish comments from ECB and Fed officials (with ECB's Schnabel pointing to spreading price pressures) pushed up inflation expectations and policy rate odds.
Investors moved to discount nearly four more hikes by the ECB and the Fed over the next 12 months. Sovereign bond yields rose on both sides of the Atlantic, albeit more markedly in the US, with curves steepening as the long end underperformed. The US 10-year Treasury yield reached 5.20%, its highest level since 2004.
In this context, the euro remained firm, while the yen slid, reviving intervention risk, even as reports pointed to Trump expressing concerns about an overly weak yen in talks with Japan's PM Takaichi. Equities were mixed, with European indices posting mild losses, while US benchmarks were little changed.