The data calendar is light over the next few days. That means bond market swings and volatility might continue to take centre stage in financial markets. Rising US Treasury yields have hit multi-decade highs and anxiety has curbed near-term Fed rate hike expectations. The probability of a move at FOMC meeting at the end of the month has declined close to 20%, down from around 70% just a week ago. Along with market sentiment, data releases from the past week also provided some support for the central bank to hold rates steady.

The core PCE printed three-tenths lower than forecast at 3.0% y/y. JOLTS job openings data was softer than expected while Friday’s non-farm payrolls report was unspectacular, which dragged the three-month average for the headline down to 51k. The low-hire, low-fire jobs market in the US seemingly continues. The soft data tallies with some of the less hawkish comments we’ve recently had from various Fed officials. Big hitters, Williams and Jefferson, recently suggested they see no urgency to hike rates, and the recent data certainly buys the Fed some time. We will be eagerly watching other rate setters like Waller ahead of the FOMC at the end of the month. Next week’s US CPI is undoubtedly a critical release.  

We note that rising bond yields only had a minor impact on FX markets through the summer. But that has changed in the last few weeks, with the main beneficiary being USD, which has risen to fresh 2026 highs. Relatively resilient US growth and still-elevated energy prices still see money markets price in more than three Fed rate hikes by the middle of next year. In contrast, eurozone rate rise expectations have been curbed.

One major reason for this is the volatility in the French bond markets. A budget plan for fiscal consolidation fell flat and saw French borrowing costs soar to levels last seen in the sovereign debt crisis. Upcoming French presidential elections next year simply add to the uncertainty, with the race between either hard right or hard left candidates. This has hit EUR hard, and even allowing for the pullback late last week, will be worth monitoring going forward. Ultimately, a tightening of financial conditions means less need for ECB rate hikes. In this environment, we are watching some of the euro crosses like EUR/GBP which we highlighted last week, and major levels of support in EUR/AUD. EUR/CHF is key for gauging eurozone political stress more broadly.

In Brief: Major Data Releases of The Week

Monday, 5 October 2026

US ISM Services: Continued expansion is expected in the headline but softer activity and demand. Non-manufacturing services activity is forecast to ease to 55.0 from 55.4. Prices paid are predicted to rise to 73.2 from 72.6, employment is seen at 49.0 from 47.8 and new orders at 60.5 from 60.9. The services sector is booming, in contrast to consumer sentiment which is at an all-time low.

Wednesday, 7 October 2026

FOMC Minutes: These minutes are from the meeting which saw the first rate hike since 2023. The quarter point move took the target range to 3.75%-4%. Expectations are for broad support for further tightening, with ‘almost all’ officials seeing at least one more rise this year, and ‘several’ favouring two. The minutes predate the recent jobs and PCE data.

Friday, 9 October 2026

Canada Jobs: Consensus sees the headline print at 9.2k, up from the shock -41.7k in August. The jobless rate is expected to tick up one-tenth to 6.5%. This data has been choppy in recent months. Uncertainty around ongoing trade tensions remains a headwind hindering firm decision-making and hiring.