01/10/2026 – Daily Reports
Fed Expectations Shift as Markets Turn to U.S. Jobs Data
- Fed expectations have shifted significantly. August PCE inflation rose 3.4% year-over-year, below the 3.7% expected by economists. Following the data, the probability of an October rate hike fell to 38%, while Goldman Sachs pushed its next rate-hike forecast from October to December. Markets are now turning their attention to Friday’s nonfarm payrolls report.
- U.S. Treasury yields remain elevated. The 10-year yield tested 5.30% at the end of September, its highest level since 2007, while the 30-year yield reached around 5.6%. Elevated long-term yields continue to weigh on global risk sentiment despite reduced expectations for an immediate Fed hike.
- U.S. equities ended September on a mixed note. The S&P 500 fell 0.25%, the Nasdaq gained 0.24% and the Dow declined 0.86%. The S&P 500 and Nasdaq posted their second consecutive quarterly gains, with technology stocks remaining relatively resilient.
- Oil is starting October relatively steady, with Brent around $98.15 and WTI near $90.35. Brent gained around 14% in September, while uncertainty over U.S.-Iran talks, the Strait of Hormuz and Middle Eastern crude exports remains central to the market.
- Gold and precious metals remain under pressure following September’s decline. Spot gold stood around $4,178, silver $61.16, platinum $1,735 and palladium $1,217 on Wednesday. Lower October rate-hike expectations provide some support, but elevated Treasury yields and energy-driven inflation concerns continue to weigh on metals.
- European inflation is also becoming increasingly important. Inflation accelerated to 3.4% in France, 4.1% in Italy and 3.3% in Germany, strengthening expectations for further ECB tightening as markets await Friday’s euro-zone inflation data.
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Market News Summary — 1 October 2026
- US stock futures firmed after the S&P 500 closed its weakest month since June, with the Nasdaq 100 up 0.2% as Micron Technology published a solid outlook while flagging narrowing profit margins. Nasdaq 100 futures subsequently rose around 1% and S&P 500 futures 0.6% following a late Wall Street selloff, with Alphabet higher as Google began rolling out its Gemini 4 Argon model. August core PCE rose 0.2% against a 0.3% forecast and headline PCE came in at 3.4% versus 3.7% expected, moving pricing for an October Fed hike to roughly 38% from 51%. The 10-year Treasury yield held near 5.28% after touching its highest since 2002, with the 30-year around 5.62%.
- Frankfurt closed Wednesday with the DAX down 0.74% at a one-month low, the MDAX off 0.09% and the TecDAX off 0.01%; Zalando led gainers at +3.80%, and the DAX volatility index rose 1.43% to 17.83. The STOXX 600 fell 0.5% after earlier gaining 0.7%, as preliminary September CPI data showed inflation accelerating faster than expected in Germany, France, Spain and Italy, driven by the energy-price shock; the aggregate euro zone print is due Friday.
- The Nikkei futures rose 2.4% to above 69100 on Thursday, a second consecutive advance and a six-week high, led by technology and AI names after Micron’s outlook and the Gemini 4 Argon rollout; gainers included Kioxia, Advantest, SoftBank Group, Taiyo Yuden and Murata. The index posted a small September gain but its first quarterly decline since Q1 2025. Japan’s 30-year yield rose about 5bp to 4.20%.
- Gold traded at $4,182/oz, up 0.59%, after reaching roughly $4,200 on Wednesday on the softer PCE data and comments from New York Fed President John Williams that the Fed need not rush another hike. The metal fell close to 6% over September.
- Brent eased 1.30% to about $96.76, paring Wednesday’s gains as signs of recovering Middle East flows offset the continuing impasse in US-Iran talks. Wednesday’s rise toward $98 followed reports that President Trump does not intend to ease Iran sanctions. Brent gained roughly 8% in September. API data showed US crude and gasoline inventories up last week and distillates lower.
