Newsquawk European Market Wrap - 24th September 2026

European bourses were mostly lower; US equity futures opened in the red amidst punchy IRGC commentary and elevated yields. DXY gained throughout the session; CHF underperformed as SNB adjusts intervention language, SEK and NOK digest hawkish meetings. Iran's Major General Safavi said the Strait of Hormuz will never re-open in its prior form, Irib reported. EQUITIES European bourses (STOXX 600 -0.2%) were mostly lower, with pressure facilitated by punchy IRGC rhetoric (see commodities) and global yields residing at multi-decade highs. European sectors were mixed. Food Beverage and Tobacco topped the pile, joined closely by Optimised Personal Care and Media. To the downside were Tech and Industrial Goods. As for key movers: H&M (-0.6%) slipped amidst supply chain woes, though profit beat. US equities opened entirely in the red, and slipped further thereafter. There is mild underperformance in the tech-heavy NQ (-0.5%), amidst elevated yields and after Oracle (-4%) sent a force majeure notice over New Mexico data centre; peers such Blue Owl (-4.7%) and Bloom Energy (-5%) also slipped. FX G10s were broadly lower against the USD throughout the London session, with the Dollar once again propped up by higher energy prices, elevated yields and hawkish Fed commentary. Williams was the latest who endorsed market pricing for another hike this year. DXY traded within a 101.00 to 101.32 range, and now looks to test the 29 July high at 101.49. The Swiss Franc was the underperformer today. Traders have digested the latest SNB announcement, which saw rates remain unchanged at 0.00%, inflation projections lifted and, perhaps most importantly, an adjustment to the intervention language. The Bank softened its tone on FX intervention by stating that it remains willing to intervene, down from the prior “increased willingness”. Elsewhere, the Scandinavian central banks were hawkish. Norges Bank opted to lift rates by 25bps (widely seen as a close call between a hold and a hike); and whilst the tightening bias remains, the projections suggest rates may be raised early next year, which perhaps explains why EUR/NOK is net-unchanged on the session. Over in Sweden, EUR/SEK was choppy following the Riksbank’s decision to hold rates, though accompanying commentary and rate projections were hawkish. The SEK is net-stronger following the announcement, albeit only modestly so. JPY joins the CHF towards the foot of the G10 pile, with the currency dragged by widening yield differentials. USD/JPY now resides around 158.80, and eyes 160.00 to the upside, hence increasing the chance of another round of rate checks/intervention. However, any action now will likely be to no avail given the hawkish shift at the Fed, dovishly perceived BoJ, and global yields at multi-decade highs. Month & Quarter End Rebalancing: Barclays see weak USD selling. Barclays: Our passive month-end and quarter-end rebalancing model shows weak USD selling against most majors, and no directional bias against the JPY. Bank of America: "Estimates suggest JPY GBP outflows vs EUR inflows. Renewed US curve flattening likely to leave global investors over hedged USD; flows seem consistent with current price action. CHF under pressure vs USD & EUR; case for higher USD/CHF beyond rebal window seems clear; fade EUR/CHF as skew favors CHF". FIXED A bearish session for fixed income amidst a combination of factors, namely: energy upside on Iranian commentary, hawkish central banks, strong German Ifo & trade/tariff concern ahead of the US-China meeting, and also from Germany via the VDA. Unsurprisingly, the bulk of the move was on the Iranian adviser Safavi intimating that the “scope of the war may expand…”, to include the Indian Ocean and other regions. An update that, over the course of around one hour, lifted Brent by over USD 2.00/bbl and pushed the US 30yr yield to its highest in over 20 years. Since, USTs have stabilised from that 104-28 contract low, up to an 105-08+ peak with gains of around eight ticks on the day. No specific driver behind that turnaround, perhaps more so a pause for breadth given the extent of recent moves and some anticipation/positioning into supply this evening and the Trump-Xi meeting. No real move to the US data or Fed speak thus far. Claims saw only modest movement from the prior, with both initial and continued below expectations, but potentially influenced by some seasonal factors. Bunds hit a 119.77 trough this morning, notching an incremental new contract low. No reaction to reports that ECB’s Schnabel could step down early; though, given her role at the ECB, who her potential successor could be will be of particular interest, especially as Lagarde is touted to be departing early-2027. Italy sold EUR 2.5bln vs Exp. 2.5-3bln 3.00% 2028 BTP: b/c 1.64x (prev. 1.58x), average yield 3.64% (prev. 3.02%). COMMODITIES Crude benchmarks have been climbing across the day, as while US commentary has been light, the Iranian tone has been notably aggressive, particularly adviser/General Safavi suggesting that the scope of the war could expand to include the Indian Ocean, among other areas, if the US takes action again. WTI and Brent hit highs of USD 94.69/bbl and USD 100.94/bbl respectively, and while they are around USD 0.50/bbl and USD 1.00/bbl off that at the time of writing, they still post notable strength. We now await any update from the US on the Safavi commentary, and also on the diesel suggestion by Trump that has been heavily influencing the complex this week. Spot gold came under renewed pressure this morning, in a slightly delayed reaction, as the yield space lifted and steepened, with XAU hitting a USD 4244/oz base. No real move to the data, but as USTs have come off worse and yields eased, so has the yellow metal; though, the action is marginal with the curve mixed and choppy across the session. Base peers followed the tone across the day, with modest pressure seen in 3M LME Copper as European, and now US, sentiment soured. Albeit, action is relatively limited in nature thus far, awaiting an afternoon/evening to potentially be dominated by trade updates between the US and China. Indian Oil Minister said crude supplies are adequate; no plans to cut fuel product exports. Adds that the UAE and Saudi are keen to invest in India's refining sector. International Copper Study Group (ICSG) said the global refined copper market posted a supply deficit of 51k tonnes in July 2026. Head of Iraq's Basra Oil Company is reportedly producing more than 3mln bpd from its southern oilfields. European Commission spokesperson said the EU is concerned about US plans to ban diesel exports. World Steel Association August 2026 Steel Production: China 74.61mln tons, -3.7% Y/Y; India 14.77mln tons, +4.6% Y/Y; US 7.30mln tons. Saudi Aramco CEO said that it is studying a "a fourth and a fifth route" for crude oil exports; noted that the Co. can restore disrupted operations within days. China’s NDRC raises retail fuel prices in the current bi-monthly cycle, effective September 25th, with gasoline prices up CNY 395/tonne and diesel prices up CNY 385/tonne. EUROPEAN DATA UK CBI Distributive Trades (Sep) -55 vs. Exp. -50 (Prev. -48). German Ifo Expectations (Sep) 90.4 vs. Exp. 89.3 (Prev. 89.1). German Ifo Current Conditions (Sep) 89.5 vs. Exp. 89 (Prev. 88.5). German Ifo Business Climate (Sep) 89.9 vs. Exp. 89 (Prev. 88.8). Spanish PPI (Aug YY) 13.2% (Prev. 9.2%). French Business Climate Indicator (Sep) 96 vs. Exp. 98 (Prev. 98). French Consumer Confidence (Sep) 86 vs. Exp. 85 (Prev. 86). French Business Confidence (Sep) 101 vs. Exp. 102 (Prev. 101). NOTABLE HEADLINES Germany's Ifo said the recovery in the domestic economy is broad-based. TRADE/TARIFFS US President Trump posted "I met President Xi at the plane (Airport!) yesterday and he looks strong, vibrant, and fit - Better than ever. Madam Xi, of course, BEAUTIFUL! President DJT". Germany's VDA is reportedly endorsing new tariffs against China for the first time, Handelsblatt reported. India cuts import duties on crude palm oil and soybean oil to 5% (prev. 10%). China's MOFCOM said they discussed AI with the US under the bilateral economic and trade consultation mechanism. Will continue to expand digital consumption demand, implement digital consumption enhancement initiatives and further promote AI in consumption and further relax market access and optimise cross-border e-commerce retail import policies and share market opportunities with other countries. CENTRAL BANKS Fed's Barkin (2027 Voter) said capacity utilization good, but not overheated. Inflation's persistence is clearer this summer. The labor market is stable, but new job growth remains slow. Fed's Hammack (22026 voter) said price stability is responsibility of central banks; inflation remains elevated amid solid output demand; inflation risk tilted towards the upside; supply shocks a notable challenge for Fed policy right now. The longer inflation remains high, the harder it is to bring it back to target. Inflation outlook remains highly uncertain. Labour market remains close to full unemployment. Fed's Williams (voter, Neutral) said the big challenge is on inflation and need to get it back to target in a timely manner, reasonable to see another rate hike by year-end. Seeing pretty strong demand from AI. Economy has been remarkably resilient and downside risk to achieving maximum employment have receded. Time for explicit or very direct forward guidance is over. No one knows if higher yields will last. Sees a tug of war between higher trend growth pushing R-Star up and demographics pulling it down. Real rate expectations are a large part of higher yields. Short-run inflation expectations have been more encouraging, though longer term they have not. ECB's Radev said the ECB is not on a pre-determined path. Reiterates ECB risk language around growth and inflation. ECB's Schnabel is reportedly set to leave the ECB board earlier for a senior job at the IMF, sources say. ECB's Lane, slide release, on "The Outlook for the Euro Area Economy". ECB Economic Bulletin Issue 6, 2026. ECB's Schnabel said the energy shock is much more persistent than thought. ECB’s Kocher said the ECB must prevent excessively high inflation from becoming entrenched; Eurozone economy remains fragile. Signs of somewhat more Eurozone momentum since summer. BoE's Dhingra said most of the financial conditions have done a lot of tightening work already in the UK. Encouraged on what pricing is doing. Labour market looks pretty weak. Winter energy prices will be critical for second-round effects. UK medium-term inflation expectations are similar to the EZ, which is not a cause for concern. Would not be surprised if AI leads to lower services inflation. BoE's Lombardelli said policy is increasingly likely to need to tighten if elevated energy prices persist. PBoC to comprehensively use and timely adjust monetary policy tools to keep liquidity ample; to step up counter cyclical adjustments. Swiss SNB Interest Rate Decision 0.00% vs. Exp. 0% (Prev. 0.00%); Willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions (prev. "increased willingness"). SNB's Tschudin said they are not seeing a large increase in the CHF carry trade. SNB's Tschudin (post-policy statement) said Swiss GDP growth was exceptionally strong in the second quarter, with unusually robust performance in the chemicals/pharmaceuticals industry. SNB's Martin (post-policy statement) said global economic growth was stronger than expected in the second quarter, remained resilient overall. SNB Chairman Schlegel (post-policy statement) said the SNB is also willing to be active in the FX market as necessary to ensure appropriate monetary conditions. Norges Bank raises interest rates by 25bps to 4.50% (prev. 4.25%); "Inflation has been above target for several years. By raising the policy rate, we are helping to reduce inflation. It will likely be necessary to keep the policy rate elevated for a time". Riksbank hold its policy rates at 1.75% as expected; Board therefore assesses that the policy rate should be raised more going forward than projected in the June forecast, for inflation to stabilise around 2%; hikes are expected to begin this year. GEOPOLITICS RUSSIA-UKRAINE Denmark's intelligence services have cautioned that Russia could attack NATO nations within months, FT reported citing sources; outlining a "low but growing" risk of troop movement. Russia's Kremlin said no decision yet on a December summit between US President Trump and Russian President Putin; discussing a possible agenda is premature. Reiterated that Russia seeks a peaceful settlement on the Ukraine issue rather than a temporary ceasefire. MIDDLE EAST Iran's Major General Safavi said the Strait of Hormuz will never re-open in its prior form, Irib reported; Iran and Oman had a mechanism for managing the Strait, this was sabotaged by the US. Iran will fully manage and control the Strait. Saudi led coalition in Yemen said it intercepted six ballistic missiles launched by Iran-backed Houthis. An Israeli source said "we do not see a real chance of reaching an agreement between the United States and Iran", Al Hadath reported. "Our assessment is that Washington wants to end the Iran war with a political agreement or a decisive attack that topples the regime.". Israeli source said they will strike Iranian nuclear facilities again if Iran crosses the red lines, Al Hadath reported; this would be with or without US involvement. Israeli source said an additional round of strikes against Iran seems to be a matter of time, Al Hadath reported. Adds that Iran is intensifying the transfer/fortification of the Natanz nuclear project. Iran is rebuilding its ballistic capabilities above and below ground. Iran's ballistic missile programme and missile stockpile is a red line. Senior adviser to Iran’s Supreme Leader Major General Safavi said linking the Persian Gulf and Red Sea, including the Strait of Hormuz and Bab al-Mandab, could change the battlefield; "The scope of the war may expand to the Indian Ocean and other regions". "I must state here that if the Americans start a new war, a new scene (front) centered on the Red Sea and the Bab al-Mandab Strait may open before their eyes". "The scope of the war may expand to the Indian Ocean and other regions.". Iranian President Pezeshkian said Iran’s presence at the UN General Assembly aims to promote dialogue and defend the rights of the Iranian people, Al Mayadeen reported. US President Trump will reportedly make a decision shortly on new Taiwan arms package, reported NBC. Saudi Civil Defence said that the danger has passed in Mecca, Taif, Jeddah, Yanbu and Tabuk. Saudi Civil Defence has issued an emergency alert for the Taif area; other reported suggest explosions have been reported in the area. Early warning alter issued in Mecca City to alert of a potential danger; and Jeddah, Yanbu and Tabuk. Iranian Security Council Secretary Rezaei said a new escalation from the US could open a 2nd front alongside the Strait of Hormuz, in Bab El-Mandeb. IRGC Adviser Sardar Fadavi said "We will give a much heavier response to any US and Israeli attack", Mizan reported. Iranian Defence Minister said they are rapidly developing new defense capabilities. Pakistan's PM said they, and other friendly nations, are working to improve Middle East relations and reduce tensions. Chinese Foreign Minister said the Strait of Hormuz conflict must be resolved through dialogue and called on all parties to seek a peaceful solution, Al Arabiya reported. Tasnim reported that "the sound heard in some urban areas of Abadan was due to a technical defect in one of the industrial units of the Abadan refinery"; no impact on gas production. Massive explosion reported on southern Lebanese town of Khiam, according to Al Jazeera. NOTABLE NORTH AMERICAN NEWS An industry group representing US tech companies is reportedly pushing the US administration to withdraw its proposal to charge for H-1B visas, WSJ reported. BofA Total Card Spending (w/e Sep 19th) +6.9% Y/Y (prev. +5.8% W/W); surging gas prices have opened up a gap in ex-gas spending between higher and lower income households. US judge issues order blocking Trump administration’s White House ban on CNN, MS NOW and Politico. NORTH AMERICAN DATA Chicago Fed Unemployment Rate Nowcast (Sept., Prelim): 4.13% (prev. 4.08% M/M). US Current Account (Q2) -246B vs. Exp. -255B (Prev. -212.6B). US Continuing Jobless Claims (Sep/12) 1719.0K vs. Exp. 1750K (Prev. 1717.0K). US Jobless Claims 4-week Average (Sep/19) 202.25K (Prev. 204.0K). US Initial Jobless Claims (Sep/19) 197.0K vs. Exp. 201K (Prev. 198.0K). US Building Permits Final (Aug MM) -2.1% vs. Exp. -2.7% (Prev. 4.3%). US Building Permits Final (Aug) 1.403M vs. Exp. 1.394M (Prev. 1.433M).