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- Muted US inflation markets may underprice inflation risks despite resilient TIPS demand
- Growing Treasury funding gaps could drive greater reliance on short-term debt
- French-German spreads tighten despite Fitch's revision of France's outlook to negative
- Chinese equities advance on news of official support
- Polish zloty hits a three-year low to the euro amid escalating political tensions
- Colombia’s central bank holds policy rates steady amid a split vote
- Special Feature: EM External Positions: Stronger Balance Sheets, Changing Vulnerabilities
Market Sentiment Recovers Somewhat As Oil Prices Drop
European stocks gained modestly and US equity futures signaled a positive opening as a -4% drop in Brent crude buoyed market sentiment this morning. A report by Axios that President Trump wants to give diplomacy with Iran more time helped ease pressure on oil prices in the near term, with Brent erasing Friday’s gains. Market contacts, however, remained concerned about pressure on oil prices in the medium-term, with Goldman Sachs raising its Brent forecast to $105 a barrel for December and an average of $88 in 2027, noting heightened risks to oil supply. Tech stocks outperformed this morning, with Nasdaq 100 futures +0.6% higher after a -3.7% drop on Friday as disappointing earnings from Amazon and Intel after Thursday's close, and reports that Anthropic could receive a junk rating after its IPO, fueled concerns over the borrowing spree underpinning the AI spending boom. Advanced economy sovereign bond yields were modestly lower, and the dollar was weaker this morning. French–German spreads narrowed slightly despite Fitch’s unscheduled decision on Friday to revise France’s outlook to negative from stable while affirming its A+ rating, citing weaker growth, higher borrowing costs and fiscal deterioration. Elsewhere, Chinese equities gained as news that financial regulators met with major brokerages and mutual fund managers to support stock buybacks lifted market sentiment.
