European Market Wrap - 17th September 2026

• European bourses gained as yields eased off best levels; FTSE 100 (+0.7%) benefited post-BoE.
• BoE held rates at 3.75%, as expected; Gilts soared after the Bank paused APF gilt sales until April 2027.
• China reportedly presses Iran to help rein in the Houthis after Saudi appeal, according to Reuters, citing sources.

EQUITIES

• European bourses are set to finish entirely in the green, with outperformance in the FTSE 100; modest upside was seen in the UK benchmark following the BoE's hold of rates. Supporting equities is the downside in the energy complex. This was initially spurred by a Reuters report stating that China reportedly pressed Iran to help rein in the Houthis after Saudi appeal. Following up, Al Mayadeen, citing a high ranking source, reported that Saudi Arabia has asked the Oman to request a two-week truce from the Houthis.
• Sectors held their positive bias, with all but Energy in the green. Outperformance was seen in Telecoms, with Industrials and Travel & Leisure closely behind.
• Key stories include: Bilfinger (-21.6%), cut its FY26 outlook citing geopolitical concerns; Raiffeisen Bank (-7.9%), Grizzly Research is short the name; Next (+2.0%), H1 revenue and PBT beat estimates and raised its FY26 PBT guidance.
• US cash equities opened entirely in the green, with outperformance in the NDX. The biggest mover was Generac (+24.4%), after it struck a deal with Amazon to supply backup power generators for its data centres.

FX

• Snapshot: DXY was mildly pressured, waning a touch from post-FOMC highs. GBP was flat (but lower vs EUR), following an as-expected BoE decision. JPY outperformed as traders eye BoJ, whilst the Kiwi gained post-GDP.
• DXY traded within a 100.02-100.36 range in the London session; the bias for the index was lower as it pared from post-FOMC gains, cooling energy prices and easing yields. Elsewhere, Claims fell to 196k (exp. 206k), though the drop is likely due to the Labour Day holiday.
• GBP fell following the BoE’s decision to keep rates on hold at 3.75%, in a 6-3 vote split. Overall, the meeting offered balanced arguments about the economy, with the statement highlighting that inflation risks are tilted to the upside; adding that waiting too long for evidence of second-round effects is not appropriate. On growth, it highlighted that growth has proved somewhat more resilient than expected. Overall, traders can come away with mixed views from the announcement. It does leave the door wide open for a November move, whilst simultaneously pushing back on some of the more hawkish bets by markets. The GBP pressure potentially comes as yields eased off highs, following the Bank’s decision to pause its APF gilt sales until April 2027, and after it confirmed reports that it would not sell long-dated bonds to the market. Cable fell from 1.3404 to a low of 1.3349 following the decision, before stabilising around 1.3377.

FIXED

• Global fixed income benchmarks continued to bid higher throughout the session and are set to end European trade entirely in the green, with outperformance seen in Gilts.
• Focus has been on the BoE policy decision. As expected, rates were left unchanged at 3.75%, with the MPC voting 6-3 (dissent from Greene, Mann and Pill). Pantheon sees today's statement as more hawkish than July and makes a November hike more likely. The price action at the longer-end has been of note, after the BoE unanimously voted to reduce stock of UK government bond purchases held for monetary policy purposes to zero and scrapped long-end Gilt sales. The UK 2s30s spread has tightened to 103bps from 110bps at the start of the day. Looking at the price action in Gilts, the benchmark found a low at 84.80 early in a session before rising to a peak of 85.82 post-BoE.

• In a next-day look at price action following the hawkish Fed rate hike, USTs has nearly reversed the entire downside and resides at the top end of its 105-21+ to 106-08 range. Helping the upside in USTs, as well as the broader debt complex, is the downside in the energy complex. This was initially spurred by a Reuters report stating that China reportedly pressed Iran to help rein in the Houthis after the Saudi appeal. Following up, Al Mayadeen, citing a high ranking source, reported that Saudi Arabia has asked Oman to request a two-week truce from the Houthis.

• The BoJ is the last major Central Bank on deck this week. It is widely expected that rates will be hiked by 25bps to 1.25%, with money markets fully pricing in a hike.

• Wells Fargo (WFC) to sell USD-denominated 3-parter.
• Citi (C) announces USD-denominated 4-parter.
• France sold EUR 2.5bln vs Exp. EUR 2-2.5bln 2.10% 2037 OATei: b/c 1.99x, real yield 2.29%.
• France sold EUR 12.991bln vs Exp. EUR 11-13bln 2.40% 2029, 2.70% 2031, 3.25% 2032 and 2.00% 2032 OAT.
• Spain sold EUR 5.74bln vs Exp. EUR 5-6bln 0.70% 2032, 3.45% 2034 and 3.40% 2036 Bono.

COMMODITIES

• WTI Oct and Brent Nov futures extended their downside as a series of de-escalatory headlines outweighed continued Middle East supply risks. Saudi Arabia reportedly asked Oman to seek a two-week truce with the Houthis, while China was said to have pressed Iran to help rein in the group following a Saudi appeal; both reports prompted fresh downside in crude. Nonetheless, an Iranian Supreme Leader adviser said the Strait of Hormuz will not reopen until Trump and Netanyahu are removed from power, while the Houthis launched a drone towards Saudi Arabia and smoke was subsequently reported at an oil facility in Yanbu following a Houthi attack. WTI fell to a USD 99.10/bbl low from a USD 102.47/bbl high and recovered back above USD 101/bbl. Brent similarly fell to USD 101.53/bbl from USD 106.02/bbl before recovering to around USD 103.50/bbl.
• Dutch TTF extended its decline and fell below EUR 77/MWh as the broader energy complex softened, with de-escalatory Middle East headlines helping offset lingering concerns around regional energy flows and European supply security. TTF fell to a EUR 76.00/MWh low from a EUR 78.90/MWh high and traded just above EUR 77/MWh at the time of writing.
• Precious Metals extended their rebound as oil prices and the USD softened following yesterday’s FOMC-induced losses. Spot gold rallied to USD 4,381.50/oz from a USD 4,257.74/oz low and traded around USD 4,358/oz, comfortably reclaiming its 100 DMA around USD 4,323/oz and surpassing yesterday’s USD 4,367/oz high. Spot silver similarly advanced to a USD 65.73/oz peak from USD 62.86/oz and traded around USD 65.37/oz, also breaking above yesterday’s USD 64.93/oz high.
• Base Metals remained firmer despite the mixed geopolitical backdrop, benefiting from the softer USD and improved broader risk tone, although weak Chinese domestic activity continued to temper the fundamental picture. 3M LME copper traded towards the upper end of a USD 14,128.38-14,486.85/t range.
• Russia has reportedly damaged a rail bridge in Odesa, which would significantly limit Ukraine's ability to transport grain to its Danube rive ports, reported suggest.
• Frontline (FRO) CEO said oil exports from inside the Strait of Hormuz are expected to rise going forward after the shutdown of the Saudi East-West Pipeline. Middle East oil producers say they need to own tankers themselves to move oil from inside the Strait of Hormuz.
• Kazakhstan expects oil production to reach 96mln tonnes in 2028 and 99mln tonnes in 2029; Azerbaijan's oil production fell 8.3% Y/Y to 2.2mln tonnes in August, Interfax reported.
• Commodity vessel transits through the Strait of Hormuz fell to just three on Wednesday, down from 12 a day earlier and well below the 10-day average of around 17, according to Kpler data.

EUROPEAN DATA

• European HICP Final (Aug) 103.73 vs. Exp. 103.70 (Prev. 103.24).
• European Core HICP Final (Aug YY) 2.4% vs. Exp. 2.4% (Prev. 2.5%).
• European HICP Final (Aug MM) 0.4% vs. Exp. 0.4% (Prev. 0.2%).
• European HICP Final (Aug YY) 3.2% vs. Exp. 3.3% (Prev. 2.9%).
• Polish Consumer Confidence (Sep) -10.8 (Prev. -11.3).

NOTABLE HEADLINES

• Swedish Election Final Count: Centre-left opposition wins election with 176 seats vs 173 for the right-wing governing bloc.
• German Vice Chancellor Klingbeil said we want consumer relief for high fuel prices such as windfall tax and will soon put forward proposals.
• ECB's Makhlouf said he is not seeing signs of second round effects, speaking on Bloomberg TV; outlook is uncertain. Every meeting is a live meeting; but ECB is meeting-by-meeting. Inflation risks tilted to the upside.
• China's MOFCOM said Chinese and US trade teams are maintaining close contact on negotiations over mutual tariff reductions covering USD 30bln and will publish updates when appropriate. MOFCOM said China is highly concerned about a “Europe First” clause in the European Commission’s draft public procurement law, urging the EU to comply with WTO rules, maintain open markets and amend discriminatory provisions affecting third-country companies.
• Swiss SECO forecasts: raising its forecast for economic growth in Switzerland; now expects 2026 growth of 1.7% (June forecast: 0.9%), 2027 forecast remains unchanged at 1.6%; average annual inflation forecast for 2026 and 2027 remains unchanged at 0.6%.
• Germany's VDMA expects 2026 production to decline by 2% in real terms, compared with its previous forecast for no growth. "The improved order situation and slightly brighter expectations suggest production will grow again in 2027.".

TRADE/TARIFFS

• Germany's Vice Chancellor Klingbeil urges the EU to rapidly introduce tariffs on Chinese hybrid vehicles and looks for clarify on specifications on local production, Handelsblatt reported.
• Canadian PM Carney said that "we are not fair weather allies", adding that they do not pursue zero-sum deals. Alliance can fiill Europe's need for a reliable supply of critical minerals. Canada can contribute LNG and hydrogen at large scale to support Europe's energy security.
• China's MOFCOM Minister Wang held a video call with EU Trade Commissioner Sefcovic to talk on China-EU economic and trade issues.
• EU Commission Spokesperson said deal is "not against" anyone else; Canada deal is for "our common" strength.
• Japan and the US are reportedly discussing the construction of a semiconductor factory as part of the USD 550bln US investment package agreed during tariff negotiations, Nikkei reported; Globalfoundries (GFS) is likely to operate the Japan-invested plant.

CENTRAL BANKS

• STATEMENT: BoE holds rates at 3.75%, as expected; votes 6-3 (exp. 6-3), with Greene, Mann and Pill voting for a 25bps hike; APF gilt sales to be paused until April 2027.
• BoE Asset Purchase Facility Update (2026): 46bln (exp. GBP 50bln, prev. GBP 70bln); BoE scraps long-end Gilt sales in plan to unwind QE by 2034.
• BoE Governor Bailey said it is still early days on inflation risks from the Iran war but it is quite subdued so far. Monetary conditions have tightened quite a bit this year because we were expected to cut rates. Outlook is too uncertain to judge market bets on 4 rate hikes. Did not discuss the prospect of raising interest rates four times. An end to the Middle East conflict is a condition needed to cut rates. QT: Have been working on QT plan since before the Iran War. This decision is not a reaction to market conditions.
• Morgan Stanley expects the Fed to deliver a 25bp hike in March'27, adding to its rate hike call in Dec'26.
• ECB's Rehn said that there are no signs of second round effects of inflation yet. Energy markets may not return to pre-war levels. Euro-area economy has shown resilience. Inflation outlook is "somewhat" complex. The shock impact on inflation has been far lower than expected. The rate hike last week was fully justified. Currently no need for the use of ECB instruments like TPI.
• CNB said the vote to hold rates at 3.75% was unanimous, sees risk to meeting inflation target as inflationary overall.

GEOPOLITICS

RUSSIA-UKRAINE

• Turkey has reportedly proposed a Russia-Ukraine deal to end the Black Sea shipping attacks, AFP reported citing sources.
• Explosions have been sounded near the Ukraine-Polish border during a Russian drone attack, according to an Ukrainian official; no damage has been seen to border crossings.
• Russia's Kremlin said the implementation of new sanctions by the US will make it harder to find a peace deal on Ukraine.
• Military aviation operations have commenced in Polish airspace after Russia used jet-powered unmanned aerial vehicles on the western territory of Ukraine; noted that it scrambles military aircraft.
• Russian Foreign Minister Lavrov said there has been no tangible benefit for Russia from dialogue with the US and none is expected.
• Russia has reportedly damaged a rail bridge in Odesa, which would significantly limit Ukraine's ability to transport grain to its Danube rive ports, reported suggest.
• Ukrainian President Zelensky said Ukrainian forces hit Russia's Yaroslavl oil refinery overnight.
• Ukrainian President Zelensky said the Russians fired on energy in the Sumy and Odessa regions.

MIDDLE EAST

• Yemeni Houthi leader is expected to deliver a speech on the latest developments, Al Mayadeen reported (Details light).
• "Smoke raises from oil facility in Yanbu, Saudi Arabia, after Houthi attack", Journalist Elster posted.
• Pakistani Army Chief reportedly urged Iran to convince the Yemeni Houthis to not attack Saudi Arabian energy facilities, according to Kan's Kais.
• Political adviser to Iran’s Supreme Leader said the Strait of Hormuz will not be reopened until US President Trump and Israeli PM Netanyahu are “brought down from the seat of power”, Tasnim reported.
• Saudi Civil Defence said Yemeni Houthis launched a drone at Saudi Taif, according to State TV.
• Pakistan's Defence Minister said time has come to implement Mekkah pact following Houthi attacks, Al Jazeera reported.
• A high-ranking source told Al Mayadeen that Saudi Arabia has asked the Sultanate of Oman to request a two-week truce from the Houthis, during which discussions will be held to address the humanitarian situation. Saudi Arabia confirmed that an agreement on the humanitarian situation in Yemen will be announced during the truce period.
• China reportedly presses Iran to help rein in the Houthis after Saudi appeal, according to Reuters citing sources.
• Yemeni government forces are battling Houthis in strategic Kahbub mountains, near Bab al-Mandeb, Al Jazeera reported.
• A Saudi source suggested that it would not normalise ties with Israel, even if they would help the Saudis against the Houthis, Times of Israel reported.
• Former Iranian National Security Committee chief said China faces serious constraints in mediating between Iran and the US and, if it becomes involved in the crisis, would likely coordinate more closely with the US and Arab countries in the region.
• Iranian Foreign Ministry said the attack on holy sites, especially Mecca, is a condemned act, Al Arabiya reported.
• IRGC said it intercepted and destroyed a US MQ-9 drone over Qeshm Island under the command of the national integrated air defence network, saying the aircraft was the US's 53rd MQ-9.
• Yemeni sources suggested that recent operations have seemed to disrupt Saudi oil exports for months to come, Tasnim reported.
• IRGC Spokesperson said "If the US attacks again, it will face a more decisive, broader, and stronger response", Mehr News reported.
• Iranian Foreign Minister and Pakistani Army Chief discussed recent regional developments in a call during the Iranian Foreign Minister's Beijing visit on Wednesday.

NOTABLE NORTH AMERICAN NEWS

• US Senators have reportedly secured an antitrust exemption for AI companies in the defence policy legislation before negotiations over the measure were delayed, Semafor reported.

NORTH AMERICAN DATA

• US Building Permits Prel (Aug) 1.394M vs. Exp. 1.41M (Prev. 1.433M).
• US Building Permits Prel (Aug MM) -2.7% (Prev. 4.3%).
• US Continuing Jobless Claims (Sep/05) 1730.0K vs. Exp. 1780K (Prev. 1769.0K).
• US Jobless Claims 4-week Average (Sep/12) 203.25K (Prev. 206.00K).
• US Initial Jobless Claims (Sep/12) 196K vs. Exp. 208K (Prev. 206K).
• Housing Starts (Aug) 1.275M vs. Exp. 1.31M (Prev. 1.309M).
• Housing Starts (Aug MM) -2.6% (Prev. -9.0%).
• US Philly Fed Employment (Sep) 11.8 (Prev. 27.9).
• US Philly Fed New Orders (Sep) 29.2 (Prev. 30.1).
• Philly Fed Business Conditions (Sep) 52.9 (Prev. 73.6).
• US Philly Fed Prices Paid (Sep) 48.60 (Prev. 40.90).
• US Philly Fed CAPEX Index (Sep) 37.10 (Prev. 48.20).
• US Philadelphia Fed Manufacturing Index (Sep) 37.8 vs. Exp. 30.5 (Prev. 47.4).