Markets

The ECB guided markets to a prolonged pause by saying that rates will be kept at the current level ‘for a sufficiently long duration, which will make a substantial contribution to a timely return of inflation to target’. However, with (core) inflation still substantially above target, the ECB thesis has to be validated. In this respect, several ECB members on Friday (and over the weekend) didn’t exclude an additional hike, with the December meeting (new projections) the next important point of evaluation (ECB’s Vasle). The debate on a faster run-off of the balance sheet also intensifies. All this on Friday resulted in a ‘logical‘ underperformance at the long end of the EMU/German curve with Bund yields adding 4.9 bps (2-y) to 9.0 bps (30-y). The German 30-y yield even touched a minor cycle top at 2.82%. US yields gains were more modest (3-4.5 bps across the curve). US August industrial production (+0.4%) and a sharp rebound in the NY Fed Empire manufacturing survey (1.9 from -19, including strong orders and shipments and ongoing high price index) confirmed the resilience of the US economy. Michigan consumer confidence was slightly disappointing with an unexpected easing of inflation expectations (1-y from 3.5% to 3.1%). US equities fell prey to quite aggressive end of week profit taking (S&P -1.22%; Nasdaq -1.56%), eroding a positive sentiment in Europe (Eurostoxx close +0.36%, after opening 1% higher). At $94/b, Brent oil closed at the highest levels since November last year. The USD showed a mixed picture, but basically kept recent gains (DXY 105.32). USD/JPY continues to attack the recent top just below 148. Higher EMU yields bought the euro some time (EUR/USD close at 1.0657 from 1.0643).

Asian equities join the WS decline this morning, but losses are more contained. China outperforms. The eco calendar today and tomorrow is thin with markets counting down to Wednesday’s Fed policy decision and multiple other CB decisions on Thursday (Bank of England, Norges Bank, Riksbank, Swiss National bank) and on Friday (Bank of Japan). US and EMU PMI’s on Friday give an update on activity. For now, markets aren’t inclined to fight the higher-forlonger mantra, which also the Fed is expect to maintain despite a widely expected pause. Combined with an ongoing rise in oil prices, this might protect EMU and US yields with the long end of the curve nearing cycle peak levels (10-y US 4.34%/4.36%; 10-y Germany 2.74%/2.77% area). The dollar took a breather on Friday, but remains in pole position. EUR/USD breaking below 1.0633 would further hurt the technical picture.

News and views

The United Auto Workers on Friday started a walkout at the US’s three biggest, Detroit-based, car manufacturers, GM, Ford and Stellantis. It’s the first such triple action in the UAW’s 88-year-old history. They targeted three assembly plants in three different states with UAW’s top official Fain indicating that these guerilla tactics will keep the companies guessing. The union triggered the strike after two months of negotiations failed to yield new labour deals. Apart from wage raises, better pensions and rewinning some of the privileges lost after the 2008 financial crisis, the UAW also wants guarantees that union labour will still have jobs in the electric vehicle (EV) era where the south of the US is becoming center of gravity. Fain believes that his bottleneck approach can have a similar impact as an all-out strike while putting less members on the picket line. The National Association of Manufacturers already said that small and medium-sized manufacturers across the country will feel the brunt of this work stoppage, whether they are union shop or not.

UK property broker Hamptons’ letting index showed the largest annual rental growth (12%) since the start of the index in 2014. The average rent in Britain is now £1300/month. Rents are rising fastest in Greater London (17.1% Y/Y), catching up from a slump during the pandemic, followed by Scotland (13.4% Y/Y). In a separate report, property portal Rightmove indicated that selling prices rose by 0.4% in September; the first increase since May. On an annual basis however, asking prices slid by 0.4%. Price reductions (36.6% of properties for sale) hit a level not seen since January 2011. The shaky UK housing market complicates the picture for the Bank of England who walks an extremely fine line between taming inflation and not letting the economy go bust. The central bank meets on Thursday with money markets discounting a high probability of another 25 bps rate hike (>80%).

Download The Full Sunrise Market Commentary

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD bounces off lows, back near 1.1330

EUR/USD bounces off lows, back near 1.1330

EUR/USD meets daily support around the 1.1300 neighbourhood, managing to regain pace and revisit the 1.1330 region. Sentiment turned after President Trump proposed a “straight 50% tariff” on European imports, undermining the pair’s bullish momentum.

GBP/USD eases from tops, revisits the 1.3500 zone

GBP/USD eases from tops, revisits the 1.3500 zone

GBP/USD benefits from broad US Dollar weakness, climbing to its highest level since February 2022 past 1.3500 at the end of the week. UK retail sales data surprised to the upside in April, lending extra wings to the quid.

Gold keeps the bullish tone near $3,350

Gold keeps the bullish tone near $3,350

Gold extends its weekly advance, trading around $3,350 per troy ounce on Friday. The rally in XAU/USD is driven by broad-based weakness in the Greenback, particulalry after President Trump’s threat to impose 50% tariffs on European imports.

Apple stock sinks below $200 after Trump threatens more tariffs

Apple stock sinks below $200 after Trump threatens more tariffs Premium

Trump grows irate at Apple's move into India. President claims Apple must produce US-sold iPhone in US or face a 25% tariff. US equity futures slip more than 1% in Friday premarket after Trump threatens the EU with a 50% tariff.

Ripple Price Prediction: Whale accumulation sparks hope as rising exchange reserves signal caution

Ripple Price Prediction: Whale accumulation sparks hope as rising exchange reserves signal caution

XRP sustains mid-week recovery as XRP/BTC flashes golden cross for the first time since 2017. Large volume holders increase XRP exposure, indicating rising demand and investor confidence.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025