TS Pulse: All four hikes and four for one

The market is now pricing in four more hikes for each of the Bank of England, the ECB, and the Fed, while the Reserve Bank of Australia has hiked for a fourth time.

• Global PMIs hit multi-year highs in September, pushing government bond yields yet higher. The US measures hit five-year highs, with both services and manufacturing. With input costs rising the most since October 2022, mainly due to higher fuel and transport costs, and selling price inflation also going up, this will add pressure for a second hike from the Fed. While EU PMIs also recorded three and a half year highs due to a surprising rise in the services measure.
• UK consumer confidence rose for a third consecutive month in September, against forecasters expectations. Confidence in the economic outlook climbed to its highest level since August 2024, while the mood around personal finances reached an eight-month high, although rising inflation, energy, and fuel prices could weigh on households and cause sentiment to falter in the months ahead.
• France's CDS, the cost of insuring against the sovereign defaulting has leapt by more than 40% in the last 10 days, against most other developed nations moving just 2-3% wider, as worries about France’s budget resurface. Moody’s and S&P are due to update their ratings on La Republique in the next two months. A downgrade may only compound the problem and have a knock-on effect to the ratings of the country’s banks too.
• European investment grade credit spreads are at the widest levels seen since the early part of the Iran conflict, but September's issuance will come close to 2025’s record issuance of €227B. With two days of the month left, the volume to date was 25B short.
• UK shop inflation eased to 1.4% in September, from 1.5% in August, which was where it had been expected to stay. Within the constituents, food price inflation slowed to 2.5% from 2.8% and non-food inflation eased to 0.8% from 0.9%. The British Retail Consortium said retailers are absorbing higher costs and taxes for now, but warned there is a limit to how much more can be borne.

Source: Bloomberg; pricing as per 29 September 2026

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