Newsquawk European Market Wrap - 11th September 2026

Stocks in Europe and the US felt some reprieve as energy prices pulled back. Crude futures trimmed weekly gains as traders booked profits and Iran holds discussions with regional peers. US CPI saw a hotter-than-expected core M/M print whilst other metrics were in line with expectations. EQUITIES European bourses (STOXX 600 +0.8%) are set to end the last trading session of the week entirely in the green, with outperformance in Italy's FTSE MIB. Helping the equity upside is the pullback in energy prices, as the FT reported that Foreign Ministers in the Gulf are set to meet with the Iranian Foreign Minister to finalise a deal regarding Hormuz on Monday; later confirmed by the Iranian Foreign Ministry. On the UK data front, GDP printed stronger-than-expected; however, the FTSE 100 was little-moved at the open. Sectors highlight the positive bias, with all baskets in the green outside of Chemicals. Banks topped the sector pile, with Consumer Products & Services and Telecoms rounding out the top 3 sectors. Key movers include: Alstom (+1.2%), signed a EUR 1.2bln contract with TransPennine Express; Airbus (+1.3%), initiated a share buyback programme; GEA Group (+0.6%), upgraded to overweight at Barclays; Novo Nordisk (-2.6%), downgraded to underweight at Morgan Stanley. US cash equities opened entirely in the green. The key stock story was the earnings update from Oracle (+2.6%), after it reported strong headline metrics, with cloud infrastructure revenue impressing and guidance also helping boost sentiment. Outside of Oracle earnings, focus was on the US CPI report. Core CPI printed 0.3% M/M (exp. 0.2%) while the supercore rose to 0.51% M/M (prev. 0.19%). In an immediate reaction, equities saw downside on the expectation of a Fed hike at next week's meeting; however, markets reversed the move entirely. FX G10s were mixed against the USD, in what has been an exceptionally choppy afternoon for the Dollar. The morning saw slight outperformance in the Kiwi, whilst the CHF lagged. However, the G10 list is set to end the London session mixed, with the JPY the greatest beneficiary following the US CPI report. On that note, the report was more or less in line, but with the Core M/M printing at 0.3% (exp. 0.2%). In an initial reaction, DXY rose from 99.13 to 99.33 before then entirely reversing the move, and then some more. Market pricing currently assigns a 90% chance of a hike at next week’s meeting (vs 70% pre-CPI). Despite the hawkish repricing, it appears that the in-line print has mildly abated some further hawkish pricing for Fed activity later in the year – at least, for now. Goldman Sachs’ Wilson‑Elizondo suggested that whilst the data preserves the view that the Fed will raise rates, it does not force “immediate action”. She opines that traders may focus on energy prices and future labour data, rather than only on today’s metrics. Given the softer USD and falling US yields, JPY ended up being the biggest beneficiary following the CPI. Earlier strength was also facilitated by Reuters source reports which suggested that BoJ may signal faster hikes, at next week's meeting. GBP traded steady for most of the London session. Cable saw mild strength following the region’s strong GDP metrics – but will ultimately have little impact on the MPC at next week's confab. FIXED INCOME The morning was relatively contained for fixed income, with some modest outperformance seen in Gilts at the time. UK GDP this morning was stronger-than-expected, a series that is welcome by the Government heading into the Autumn Budget, while for the BoE it does not change the narrative into next week, but gives further ammunition to the hawks. More generally, the complex was waiting for US CPI, which came in hotter-than-expected for the core M/M at 0.3% (exp. 0.2%, prev. 0.2%). In the immediacy, this sent USTs down to a 105-29 low, taking the 10yr yield to a 4.9% peak and the 2yr to a 4.65% high. Given this, market pricing moved significantly towards a September hike, with over a 90% implied probability of a 25bps move vs 70% pre-data. Action that also impacted peers, with the German 10yr yield re-testing 3.51% to the upside and the UK 10yr 5.33%. Since, a marked reversal has taken place, leaving fixed income well above pre-data levels and in the green across the board. Action potentially participants adjusting positions after the significant move seen over the last few sessions, as at extremes the 10yr yield was 22bps higher WTD. Further, a view that perhaps near-term pricing has overextended to the hawkish side, relative to recent commentary from Fed’s Waller, Warsh’s aversion to guidance and awaiting PCE. As it stands, benchmarks are near highs of 106-19, 120.75 and 84.75 for USTs, Bunds and Gilts. Upside of a handful of ticks in USTs and Bunds, while Gilts continue to lead and are firmer by near 40 ticks. COMMODITIES Crude - WTI Oct and Brent Nov futures extended their pullback following a week of hefty gains on escalating geopolitics, with downside today amid more sanguine reports that Iran’s Foreign Minister and Pakistan’s Army Chief discussed ways to restore diplomatic efforts and de-escalate the conflict on all fronts. Talks reportedly covered the US-Iran war, the possibility of returning to negotiations and Houthi attacks on Saudi Arabia. Some modest downside was seen after Iran's Foreign Ministry said they are "planning to hold a regional meeting with the participation of the Persian Gulf coastal countries". WTI fell to a USD 98.54/bbl low from a USD 104.46/bbl high (vs yesterday's USD 95.37-104.04/bbl range and Monday’s USD 90.87-94.73/bbl range). Brent similarly fell to a USD 103.50/bbl low from a USD 109.97/bbl high (vs yesterday’s USD 100.19-109.68/bbl range and Monday’s USD 95.97-98.06/bbl range). US diesel prices also hit a record USD 6.06/gallon, with California approaching USD 8/gallon. Natural Gas - Dutch TTF extended its pullback from earlier highs. The benchmark earlier found support just below EUR 80/MWh after retreating from intraday extremes above EUR 83/MWh. Precious Metals - Precious metals firmed as the pullback in oil prices provided some relief from recent inflation concerns, and with not much upside surprise in the latest US CPI report. Spot gold extended above its 100 DMA (USD 4,336/oz), rising to a USD 4,394/oz high from a USD 4,292/oz low (vs the USD 4,433/oz weekly high). Spot silver similarly strengthened, rising to a USD 65.21/oz high from a USD 62.89/oz low. Base Metals - Base metals remained relatively capped amid overall elevated energy prices and central bank positioning, although copper recovered from earlier lows. COMEX copper traded within a USD 6.45-6.48/lb range and was around USD 6.47/lb, while 3M LME copper traded within a USD 14,165-14,356.00/t range. IEA OMR: 2026 world oil demand to fall by 2.5mln BPD (vs prev. forecast of a 1.6mln BPD fall), citing impasse in US-Iran talks on resolving their conflict. Sees total world oil supply 1.74mln BPD lower than demand in 2026 (vs prev. forecast of 1.27mln BPD lower). Now sees full recovery in oil supplies from Gulf producers deferred until 2027. IEA said need for progress in resolving Middle East and Russia-Ukraine conflicts is greater than ever to avoid further oil market tightening. Further cuts Russian oil output forecasts on Ukrainian attacks. Coffee traders plan to deliver a large amount of Arabica Coffee to the ICE exchange to boost critically low exchange stocks, according to sources. Belarus President said they are selling potash to the US. UK PM Burnham is to reportedly delay the approval for plans regarding the Jackdaw gas field until after the Holborn and St Pancras by-election, the Telegraph reported. French Finance Minister said there is currently no need to release additional oil reserves. US retail diesel price tops USD 6 per gallon, according to AAA. China's NDRC raises gasoline and diesel prices by CNY 435/t and CNY 420/t respectively, effective September 11th. EUROPEAN DATA UK GDP (Jul MM) 0.4% vs. Exp. 0% (Prev. 0.3%). UK GDP (Jul YY) 1.6% vs. Exp. 1.2% (Prev. 1.1%). UK NIESR Monthly GDP Tracker (Aug) 0.5% (Prev. 0.4%). UK Trade Balance (Jul) -3.450B (Prev. -5.537B). UK Goods Trade Balance Non-EU (Jul) -9.66B (Prev. -10.45B). UK Goods Trade Balance (Jul) -20.97B vs. Exp. -22.3B (Prev. -23.01B). UK Manufacturing Production (Jul YY) 2.6% vs. Exp. 2% (Prev. 0.5%). UK Industrial Production (Jul YY) 0.6% vs. Exp. 0.2% (Prev. -0.2%). UK Manufacturing Production (Jul MM) 0.9% vs. Exp. 0.2% (Prev. -0.5%). UK GDP 3-Month Avg (Jul) 0.4% vs. Exp. 0.3% (Prev. 0.4%). UK Construction Output (Jul YY) -2.5% vs. Exp. -2.3% (Prev. -2.3%). UK Industrial Production (Jul MM) 0.2% vs. Exp. -0.2% (Prev. -0.2%). German Current Account (Jul) 21.2B (Prev. 19B). Finnish Current Account (Jul) -0.20B (Prev. 2.80B). NOTABLE HEADLINES French Finance Minister said the government has lowered the 2026 GDP forecast to 0.5% (prev. 0.7%), sees 2027 GDP at 1%, and that debt service costs are seen at EUR 65bln (EUR 4.5bln above original plans). The French Government will downwardly revise its 2026 growth forecast to 0.5%, Les Echos reported citing sources. TRADE/TARIFFS The Japanese Trade delegation is reportedly preparing a China visit in September, Kyodo reported. Canadian Trade Minister Leblanc said they remain optimistic that a USMCA renewal will happen. CENTRAL BANKS ECB's Kocher said that it is too early to say anything about the next ECB decision. UBS expects the ECB to deliver a final 25bps hike in December 2026, before then pausing. ECB's Nagel tells CNBC that it is too early to speculate on rate hikes, recent rate hike is a clear commitment on inflation. Would not exclude going into mildly restrictive territory. ECB’s Moulin said France is not in economic danger, heatwaves cost the economy 0.1ppts of growth, and the economy will restart at a moderate pace. ECB's Kaasik said he would not describe current ECB interest rates as very high. ECB's Simkus said inflation is too high in both the EU and Lithuania. ECB's Makhlouf said hiking much more could hurt economic growth and highlights that a longer Iran war risks keeping inflation elevated. Citigroup sees ECB hiking rates by 25bps in December this year and in March next year. BoE/Savanta Quarterly Attitude Survey (Aug): 1-year ahead 3.2% (prev. 4%), 2-year ahead 2.9% (prev. 3.5%), 5-year ahead 3.2% (prev. 3.9%). CBR Governor said expects clarification of budget parameters by the end of September, Tass reported; the accelerating of price growth in the summer months was mainly caused by the situation in the fuel market. Expects a sustainable decline in inflation to resume. To cut the key rate, confidence is needed that the decline in persistent inflation has resumed. Not considering raising the inflation target. SNB Chairman said the CHF exchange rate remains a challenge for the Swiss economy, but the real franc has been broadly stable since 2020. SNB's Schlegel said inflation has recently ticker higher. RBI Governor said some liquidity will be withdrawn through FX intervention and banks’ reserve requirements, with the central bank aiming to maintain appropriate liquidity levels. NBP's Kotecki said that rate cuts are not currently an option, but could consider rate hikes in November. Riksbank maintains the CCyB at 2%. CBRT September Inflation Expectation Survey shows the 12-month inflation outlook unchanged at 23.7%. GEOPOLITICS RUSSIA-UKRAINE Russian Trade Balance (Jul) 13.59B (Prev. 12.46B). Ukraine's military said it hit Russia's Rosneft oil refinery in the Saratov region. Russia's Kremlin said a Putin-Trump-Xi meeting at APEC has not yet been planned, Interfax reported. MIDDLE EAST Yemen’s armed forces say maritime navigation is safe for all companies except Saudi vessels, which are subject to a blockade, and vow to continue striking Saudi troop buildups and escalating until the aggression and blockade on Yemen end. Yemeni Houthis say a statement will be released at exactly 16:00 local time (14:00 BST/ 09:00 EDT). A Houthi spokesperson said freedom of navigation and trade in the Red Sea and Bab al-Mandab has been guarenteed, IRNA reported. Houthis say "any attack on Yemeni infrastructure will be met with a reciprocal response". Full post: "Al-Assad Belt" from senior Ansarullah officials warned that within the framework of the "escalation against escalation" equation, any attack and targeting of infrastructure, airports or ports in the areas of Al-Mukha, Dhubab, Mayun Island and other parts of Yemen by the aggressor Saudi regime will be met with a similar response and reciprocal response. Houthis captured the port city of Dhabab along the Bab al-Mandab Strait, Yemeni government sources report. Gulf states are reportedly mulling talks with Iran over the Strait of Hormuz, Bloomberg reported; Oman is seeking a meeting of GCC and the Iranian Foreign Ministers. Talks to focus on restoring maritime through the Strait. Al Jazeera reported the entirety of Yemen’s Red Sea coastline is now under Houthi control. Iran’s Foreign Minister and Pakistan’s Army Chief reportedly discussed ways to restore diplomatic efforts to de-escalate the conflict on all fronts, sources say. Talks focused on the US-Iran war, the possibility of returning to negotiations and Houthi attacks on Saudi Arabia. Iranian Foreign Minister said the world is increasingly losing confidence in the US financial system, adding that rising debt-financing costs are only the beginning of the problem. YJC News reported that "An American missile submarine was hit by the IRGC Navy at dawn today". "Two airstrikes target the port of Mocha, causing a fire", Al Hadath reported. Yemeni government forces have reportedly withdrawn from Perim Island in the Bab al-Mandeb strait, according to sources. The Bab al-Mandeb Strait was captured by Yemeni fighters, IRIB reported; "According to a Tasnim correspondent in Sanaa, with the fall of the al-Ardi area and the entry of the Yemeni armed forces into the area, Bab Al-Mandeb is under control". Iranian President Pezeshkian said "I do not support the continuation of the war, and we must withstand the coming circumstances so that we do not have to negotiate with the enemy under other conditions", Al Jazeera reported. Iran's Foreign Ministry said "planning to hold a regional meeting with the participation of the Persian Gulf coastal countries". NOTABLE NORTH AMERICAN NEWS China's MOFCOM warned the US to immediately cease espionage against China, including operations targeting Chinese companies, and to stop actions that harm China’s sovereignty, security and development interests. China said it has firm resolve and ample means and will, under the PRC Anti-Espionage Law and other laws and regulations, take necessary measures and punish illegal acts to firmly safeguard Chinese companies’ legitimate rights and interests. US White House NEC Director Hassett said diesel is a big issue because it is a refined product and it is a major concern for the US right now. The USD 5k checks could happen through reconciliation NORTH AMERICAN DATA US Core CPI (Aug MM) 0.3% vs. Exp. 0.2% (Prev. 0.2%). 3dp: 0.290% (prev. 0.215%). US CPI (Aug MM) 0.4% vs. Exp. 0.4% (Prev. 0.1%). 3dp: 0.396% (prev. 0.074%). US CPI (Aug YY) 3.4% vs. Exp. 3.4% (Prev. 3.4%). US CPI Annualised (Aug):. Core 3.5%. 3-month 2.0% (prev. 1.6%). 6-month 2.6% (prev. 2.4%). 12-month 2.4% (prev. 2.5%). US CPI Core Goods and Services + Supercore (Aug):. Core Goods CPI M/M: 0.11% (prev. 0.20%). Core Goods CPI Y/Y: 0.68% (prev. 0.81%). Core Services CPI M/M: 0.33% (prev. 0.23%). Core Services CPI Y/Y: 3.01% (prev. 3.01%). Supercore CPI M/M: 0.51% (prev. 0.19%). Supercore CPI Y/Y: 3.01% (prev. 2.83%). US CPI s.a (Aug) 334.131 (Prev. 332.81). US Core CPI (Aug YY) 2.4% vs. Exp. 2.4% (Prev. 2.5%). US CPI (Aug) 334.98 vs. Exp. 334.85 (Prev. 333.92). LATAM Brazilian CPI (Aug MM) -0.32% vs. Exp. -0.29% (Prev. 0.07%). Brazilian CPI (Aug YY) 4.22% vs. Exp. 4.27% (Prev. 4.44%).