Incoming data confirmed a picture of resilient growth overall. The Bank of England hiked its policy rate by 25 bps and signaled it could do more.
The week was dominated by large market swings triggered by the US midterms results. In the end, energy prices end the week much lower, bond yields somewhat lower and stock prices down in tech-heavy markets and slightly up elsewhere, notably in Europe. Market pressure on France eased somewhat.
Fiscal policies are heading in opposite directions. Interest payments are set to rise in all countries, as debt issued at low rates gradually matures and must be refinanced on current terms.
Data releases confirmed resilient to strong growth and above-forecast inflation in most advanced economies, with France lagging behind and earning a rating outlook downgrade from Fitch as a result. Fed, ECB and BoJ remained on hold, as expected, and on track for December hikes. Oil continues to fluctuate between escalation fears and hopes for a return to the negotiating table. The tech sell-off in equity markets intensified despite strong earnings, as markets balk at large capex plans. This helped bond yields ease from recent highs.
Equity indices, currencies, commodities, bond markets. A deep selloff in tech stocks entered a third consecutive week, taking the Nasdaq down by 10% since its last peak. Europe outperformed and bonds rallied on investor demand for safety. The bund OAT spread is back to 164, however.
The latest economic news.
Equity indices, currencies, commodities, bond markets.
Overall, based on data available through September 2026, economic activity continues to show resilience. The high levels of business climate surveys illustrate this well. Household confidence, however, is more vulnerable and sensitive to energy price pressures. Financing conditions in emerging economies also continue to hold up well against the shock (much better than in 2022) as well as against the tensions in DM bond markets.
Oil and gas markets rose in September, primarily due to the resurgence of significant disruptions to hydrocarbon traffic in the Gulf. Red Sea flows have been constrained, while the substantial oil exports through the Strait of Hormuz remains fragile. In variation, the current rise in oil and gas prices exceeds the one recorded during the 2022 crisis, although in value, gas prices remain significantly lower than in 2022.
The 2026–2027 El Niño climate event is expected to be one of the most intense in the last fifty years, with sea-surface-temperature anomalies potentially exceeding +3°C in the equatorial Pacific. According to the World Meteorological Organisation (WMO), El Niño is expected to persist until February 2027, with asymmetrical effects, as South-East Asia and northern Latin America will experience droughts, while southern Brazil and Argentina could see heavy rainfall. Above all, El Niño is compounding the effects of global warming and exacerbating existing extreme-weather events (droughts, floods and heatwaves). The economic effects of this climate shock mainly play out through three avenues: agricultural commodity prices, energy and logistics.
History tends to repeat itself in advanced economies. Once again, growth ultimately fell short of expectations by only a small margin in the first half of 2026, despite the conflict in Iran. As early as 2025, the impact of tariffs was less severe than feared. This is a sign that structural factors (notably AI, defence and electrification) are underpinning growth in these countries and are expected to continue to do so in 2027. However, there are significant risks to the economic outlook, primarily of a geopolitical nature, with a significant upside risk to inflation and interest rates
GDP, inflation, unemployment, current account balance, public deficit and public debt: key indicators for the second quarter of 2026
The drivers of economic growth in each country examined.
Economic and financial forecasts as of September 2026.
