European Market Wrap - 19th August 2026

European bourses set to end the session mixed; US equity futures opened in the green. US yields slip from highs as the US Treasury announced it is to double buybacks of long-term government bonds. Crude benchmarks were firmer as geopolitical concerns remain theme. EQUITIES European bourses look set to end Wednesday's trade mixed around the unchanged mark. Not much has changed for equities but we did see some support following the US Treasury announcement (see more below). However, the majority of the move was pared. Sectors held its lack of a bias. Basic Resources topped the sector pile, followed by Construction and Chemicals. Insurance was the sector laggard, with Media and Banks rounding out the sector laggards. Key stories include: Carlsberg (-4.6%), H1 EBIT missed estimates but narrows its FY26 guidance higher; Geberit (+7.8%), H1 and Q2 revenue metrics beat consensus; FLSmidth (+6.4%), Q2 revenue beat and narrows its FY26 guidance higher; Banco BPM (+0.2%), as BMPS CEO is reportedly working on share-swap offers with the bank. US cash equities opened entirely in the green, with outperformance in the DJI. Key movers include: Moderna/Merck (+93%/+8.3%), primary endpoints reached in its mRNA melanoma vaccine; SK Hynix (+4.0%), announced a KRW 40tln share buyback programme; Estee Lauder (+14.7%), Q4 metrics beat and FY27 guidance beat estimates. Elsewhere, the US Treasury announced that it is increasing the size of liquidity support buyback operations for longer-dated nominal coupons to "at least" USD 4bln from USD 2bln. This has driven yields, especially at the long end, lower and supported the equity space. FX Yields were once again in focus today, this time moving lower after the US Treasury announced it would “at least" double the size of liquidity support buyback operations for longer-dated nominal coupon securities, from the current USD 2bln to at least USD 4bln. Action from the Treasury which likely was influenced by the long end moves which have grabbed headlines in recent days/weeks, showing Bessent is prepared to take measures to ease market concerns. As such, the market reaction was macro and seemingly relieved the pain from the recent moves; broad USD weakness was seen against G10+EM peers, most pronounced against JPY which slipped c. 90 pips to a 158.156 base, while DXY fell from 99.38 to 98.95 trough, a moving target at the time of writing. Attention to the 20yr supply later will be heightened. We also have FOMC minutes and Fed’s Musalem set to speak. GBP benefitted from the aforementioned USD weakness despite not moving to UK CPI, which, in short, continues the narrative that the BoE is comfortable at 3.75% with data continuing to not surprise vs. market and BoE’s July MPR forecasts. The headline rise reflects the Ofgem price cap introduced this month, a point which was partially offset by a decent moderation in food inflation. Services moderated as expected, while ING notes the BoE's core services measure of inflation has picked up a little to 3.8% Y/Y, which, while hotter, shouldn't be too much to encourage those on the fence for tightening. In conjunction with the soft LFS on Tuesday, both show sufficient evidence to keep the BoE on hold for the rest of the year, with risks tilted both ways. JPY was the G10 outperformer throughout the session, benefitting from the weak Buck (see above). Domestic catalysts were light, though strength seen in KRW (see below) likely helped JPY earlier in the day. USD/JPY marked a session low of 158.16 after pulling back from near 160.00 earlier in the week, the pair currently trading around these levels an hour since the Treasury update. KRW was the clear EM outperformer (USD/KRW -1.8%) with overnight optimism helped by news that SK Hynix is to buy back KRW 40tln in treasury shares, the chipmaker erasing earlier c. 8% losses. FIXED Global fixed benchmarks were initially mildly firmer in the morning, as the complex took a breather following recent losses. Newsflow was light for much of the day, with Tier-1 US data lacking. The complex then soared to session highs after the US Treasury announced that it is increasing the size of liquidity support buyback operations for longer-dated nominal coupon securities, from the current USD 2bln to “at least” USD 4bln. This will be effective as of September 9th. Three interesting observations: 1) The Treasury is targeting the long-end, which has been subject to hefty selling over the past week or so. 2) Signals to markets that the Treasury is concerned about elevated yields, and seemingly ready to step in. 3) US-Japan cooperation on FX intervention; whilst Treasury Sec Bessent has urged the use of the Treasury’s FIMA repo facility, it potentially eases worries that Japan could begin selling USTs to fund its own intervention. The curve is now flatter on the session, and unsurprisingly so. The US2s30s spread now sits at 103bps vs recent peaks of 113bps. Nonetheless, the spread remains a far cry away from the month’s low of 96bps. Further tightening of the spread will likely require a clear catalyst, which could be provided by a geopolitical/Trump update. FOMC Minutes is on the docket today, but will likely be looked through given the recent US data. Perhaps more notable for the benchmark is the 20yr auction, which will likely be subject to high scrutiny given the above. USTs (+9 ticks) are set to end the London session at the upper end of a 108-16 to 108-30 range. Gilts (+32 ticks) were the initial outperformers this morning, largely thanks to the region’s inflation report. Headline was in-line, services cooled from the prior whilst the Core metrics were a touch above expectations. Overall, the report will have little impact on the MPC, given it plays in favour the BoE’s holding stance. Tractor Supply (TSCO) files to sell USD-denominated 5-year noted. Alphabet (GOOGL) has raised USD 3.89bln in its first-ever Australian dollar-denominated debt issuance. Germany sold EUR 3.769bln vs exp. 6bln 3.00% 2036 Bund: b/c 1.15x (prev. 1.10x), average yield 3.26% (prev. 3.13%), retention 37.2% (prev. 25.05%). COMMODITIES WTI and Brent futures traded either side of Tuesday's range but is set to end the European session with mild gains. Light in terms of newsflow throughout the session. Key headlines includes an Iranian official stating that a new passage in the Strait will be announced in a Iran-Oman joint statement, while Fars news, citing a source, said there had been no direct US-Iran negotiations. WTI rotated in a USD 83.45-85.42/bbl range while Brent traded either side of the USD 91/bbl mark. Spot gold initially traded in a narrow USD 4324-4374/oz range before surging higher to a peak of USD 4464/oz following the announcement by the US Treasury that it is increasing the size of liquidity support buyback operations for longer-dated nominal coupons to "at least" USD 4bln from USD 2bln. This has driven yields, especially at the long end, lower and supported precious metals as it lowers the real yield. 3M LME Copper, similarly to spot gold, traded in a narrow range before regaining the USD 14k/t handle following the US Treasury announcement. Fuel stations in Moscow have introduced restrictions for gasoline sales, according to reported, citing customer hotlines. Iraqi Parliament speaker called for special status for Iraqi oil exports via Hormuz in a meeting with Iran's Ghalibaf. Saudi Aramco has reportedly notified at least 3 European oil refiners that they will receive all requested barrels for in September, Bloomberg reported. ADNOC reportedly aims to trim the amount of crude sold to Asian customers in August and September, Bloomberg reported citing sources; piece suggests the move has helped Murban oil prices to rebound. EUROPEAN DATA European HICP Final (Jul MM) 0.2% vs. Exp. 0.2% (Prev. -0.1%). European Core HICP Final (Jul YY) 2.5% vs. Exp. 2.5% (Prev. 2.4%). European HICP Final (Jul) 103.34 vs. Exp. 103.22 (Prev. 103.02). European HICP Final (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 2.8%). European Current Account s.a (Jun) 35.1B vs. Exp. 22.1B (Prev. 25.1B). European Current Account (Jun) 46.9B (Prev. -6.2B). Italian Current Account (Jun) 5839M (Prev. 627M). UK CPI (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 2.6%); CPI services 3.4% (Prev. 3.6%). UK PPI Output (Jul YY) 3.1% vs. Exp. 3.2% (Prev. 3.5%). UK PPI Input (Jul YY) 4.9% vs. Exp. 6.6% (Prev. 7.4%). UK Core CPI (Jul YY) 2.6% vs. Exp. 2.5% (Prev. 2.6%). UK PPI Input (Jul MM) -1.7% vs. Exp. 0% (Prev. -1.9%). UK PPI Core Output (Jul MM) 0.6% (Prev. 0.5%). UK Retail Price Index (Jul MM) 0.6% vs. Exp. 0.8% (Prev. 0.3%). UK CPI (Jul MM) 0.3% vs. Exp. 0.3% (Prev. 0.1%). UK PPI Output (Jul MM) 0.2% vs. Exp. 0.2% (Prev. -0.1%). UK PPI Core Output (Jul YY) 2.8% (Prev. 2.6%). UK Retail Price Index (Jul YY) 3.2% vs. Exp. 3.3% (Prev. 3.0%). UK Core CPI (Jul MM) 0.2% vs. Exp. 0.1% (Prev. 0.3%). NOTABLE HEADLINES China government said no entity should assist in the implementation of EU anti subsidy probe, State TV reported; EU probe into JD.com is improper. French MEP Glucksmann to announce a presidential run within the next few days, POLITICO reported. He plans to take part in a closed primary being organised by the Socialist Party, according to three people close to Glucksmann. TRADE/TARIFFS Japan Kansai business delegation to China is reportedly delayed, Kyodo reported. CENTRAL BANKS ECB President Lagarde's speech on Europe’s economic challenges and growth model. Growth:. "In 2026 it has continued to grow despite the energy shock, with domestic demand contributing positively to the quarter-on-quarter growth of 0.4% in the second quarter of 2026". Domestic demand is projected to remain the main source of growth for the euro area this year. ECB's Rehn said the wage growth and outlook remain moderate, there are no clear signs of second‑round effects. Keeping inflation expectations anchored is essential. South African Core CPI (Jul YY) 4.2% (Prev. 4.1%). South African CPI (Jul MM) 0.2% (Prev. 0.7%). South African Core CPI (Jul MM) 0.5% (Prev. 0.6%). South African CPI (Jul YY) 4.3% vs. Exp. 4.5% (Prev. 5.0%). MIDDLE EAST Iraqi Parliament speaker called for special status for Iraqi oil exports via Hormuz in a meeting with Iran's Ghalibaf. Iran's Rezaei said if Iran's interests are harmed anywhere in the world, it could raise tariffs or seize assets in the Strait of Hormuz of hostile states. An Iranian official said US President Trump's talk about bombing Iran is illogical and has no effect; his statements are absurd and have no impact, Al Mayadeen reported. Iranian Deputy Parliament Speaker said "We consider the Strait of Hormuz part of Iran and the Islamic Republic will continue to administer it". Iran recognizes the Sultanate of Oman's right to the extent that this right is proven to it. The Strait of Hormuz will continue to be managed by Iran and the Iranian Armed Forces. A NATO official said it is prepared to respond to any threat, and will take necessary measures to defend all allies. said Jordan’s air defence system intercepted ballistic missiles launched from Iran towards Turkey on four occasions. Adds that NATO’s deterrence and defence posture remains strong and effective. A source close to Iran's negotiating team rejected the White House's claim, saying there had been no direct Iran-US negotiations and that talks with Oman concerned sovereignty over the Strait of Hormuz, Fars News reported. The source added that contacts with the US stopped after Washington violated the Islamabad agreement and that the latest talks were unrelated to the US. UKMTO has received a report of an incident 40NM southeast of Al Mukha, Yemen; The cargo vessel was unmanned at the time of the incident, however the damage has resulted in a complete constructive loss. Iran's military warned Gulf neighbours against assisting US forces, Al Jazeera reported. Yemeni Houthis have placed Saudi Aramco and all its facilities, oil tanks, crude transfer pipelines and export ports on their list of targets, Al-Akhbar sources say; "the process of monitoring and tracking Saudi oil tankers in the Red Sea is ongoing". Iranian head of the National Security and Foreign Policy Commission said "The Iranian nation will never forget France's constant betrayals on issues such as contaminated blood, INSTEX, and snapback", IRIB reported. Turkey's Chief of General Staff met with the US chairman of the Joint Chiefs of Staff. Arab sources note the ship targeted in the Bab el-Mandeb Strait was a cargo ship, Noor News reported. Iranian Deputy Chairman of the Parliament's National Security Commission said "A 'new passage' in the Strait of Hormuz, other than the southern route, will soon be announced in the form of a joint statement with Oman". Arab sources say that a vessel was targeted in the Bab al-Mandab Strait, SNN reported. NOTABLE NORTH AMERICAN NEWS US Treasury is increasing by at least double the size of liquidity support buyback operations for longer-dated nominal coupon securities, from the current USD 2bln to at least USD 4bln. As of September 9th. "Treasury will provide more information about future buyback sizes at the next Quarterly Refunding, scheduled for November 4, 2026.". "This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations.". China's Wang Yi said US should change its policy towards North Korea, Yonhap reported. NORTH AMERICAN DATA US MBA Mortgage Applications (Aug/14) -0.4% (Prev. 3.6%). US MBA 30-Year Mortgage Rate (Aug/14) 6.77% (Prev. 6.77%). US MBA Mortgage Market Index (Aug/14) 247.7 (Prev. 248.6). US MBA Mortgage Refinance Index (Aug/14) 755.9 (Prev. 744.4).