Newsquawk European Market Wrap - 13th October 2026

• European bourses were mixed; AEX underperformed, weighed on by pressure in memory-names.
• DXY pressured on easing yields/energy prices; JPY digested a BoJ source report.
• Houthi Spokesperson said, "The Yemeni Armed Forces warn all employees and citizens in the vicinity of any Aramco oil facility."

EQUITIES

• European bourses are set to end Tuesday’s session mixed, with the AEX and broader EuroStoxx 50 lower as luxury names feel the heat following LVMH earnings while chip names extended Monday’s decline.
• Sectors held their positive bias. Chemicals remained the sector outperformer, with Food, Beverages & Tobacco and Media rounding out the sector gainers. To the downside held the Tech space, with Industrials and Basic Resources following closely behind.
• Key stories include: LSEG -3.5%, confirmed reports that they are in talks to acquire Octus for USD 3.5bln; Whitbread +0.8%, H1 revenue beat estimates and remained confident for 2027; Givaudan +7.9%, Q3 revenue and LFL sales topped estimates; Publicis +2.3%, Q3 net revenue beat consensus and expected the business to turn positive globally in Q4.
• US cash equities opened mixed, with the NDX underperforming as chip/memory names extend their losses following reports that CXMT have made progress on new memory architecture. The main focus today was on US big bank earnings. Goldman Sachs (+1.4%) was the standout outperformer, topping top and bottom line estimates while also raising its FY26 NII. For JPMorgan (+1.3%), the initial metrics disappointed, with FICC sales & trading revenue missing by some margin. However, the initial downside reversed following upbeat NII guidance.

FX

• USD faltered throughout the European session, on the back of easing yields and energy prices. The Kiwi outperformed, joined by the EUR, whilst the JPY posted only modest gains. The geopolitical environment remains a tense one, with no progress made in terms of diplomacy on both the Russia-Ukraine and US-Iran fronts. In fact, in the afternoon, the Saudi-Houthi situation appears to be escalating, with the Saudi-led coalition warning civilians to evacuate from an oil facility in Yemen. In response, the Houthis told Aramco to evacuate civilians, further adding to supply-related concerns.
• DXY held towards the bottom end of a 102.20 to 102.57 range. Aside from the aforementioned geopolitical factors, focus was on the Fed’s Waller, who mentioned that higher yields could do some of the Fed's work on demand. Elsewhere, Goolsbee was fairly hawkish, as he noted that inflation is still way too high, adding that “I’m getting increasingly nervous that that’s just straight, old-fashioned overheating demand”.
• JPY had a hawkish BoJ report to contend with. It suggested that the BoJ is leaning against back-to-back hikes in October. Instead, the Bank may change the language surrounding its 2% target to signal that it is “approximately” at the level, rather than “approaching” it. This essentially corroborates a Reuters source report from earlier in the month, but still managed to spur a hawkish reaction in the JPY. MUFG (following the Reuters piece) suggested that the language change will back its case for a December hike. Given it essentially confirms market pricing (80% chance priced in for Dec’26), the initial strength seen in the JPY has ultimately pared.

FIXED

• A bullish session thus far for fixed income. USTs entered the US afternoon with gains of just under 10 ticks, and remained towards the upper end of 104-18 to 105-01 parameters, but did see a modest pullback off that high into the cash equity open.
• Specifics for the US included Fed’s Waller, who spoke on higher yields, while ADP weekly lifted modestly from the prior. No sustained move to either. Instead, action has been an extension of the APAC move, which was characterised by a FTQ on the tech-led sell-off and yield respite as energy benchmarks slipped.
• Points that have also driven the session for EGBs and Gilts. For Bunds, they peaked at 121.44, and while they are around 20 ticks off that mark, they remain firmer by about 25 ticks on the day. Specifics for the bloc and Germany light, with focus on familiar themes.
• Gilts see relative outperformance, as is often the case when energy is driving. Additionally, a crypto-related windfall for the Treasury and an FT report on CGT have been welcomed as we count down to Chancellor Healey’s budget. Points that contributed to an 84.47 peak, with gains of over 50 ticks at best.
• Germany sold EUR 3.352bln vs Exp. 5bln 2.90% 2031 Bobl: b/c 1.08x (prev. 1.21x), average yield 3.22% (prev. 3.28%), retention 33% (prev. 25.3%).
• Italy sold EUR 7bln vs Exp. EUR 5.5-7bln 3.00% 2029, 3.35% 2033 and 3.95% 2041 BTP.
• The UK sold GBP 500mln 4.00% 2063 Gilt via Tender: b/c 3.98x (prev. 3.51x), average yield 5.802% (prev. 5.722%).
• The Netherlands sold EUR 3.26bln vs Exp. EUR 2.5-3.5bln 2.50% 2031 DSL: Average yield 3.281% (prev. 2.911%).

COMMODITIES

• Crude futures gradually fell throughout the European morning with WTI and Brent falling to a trough of USD 91.70/bbl and USD 104.35/bbl respectively. There was no clear driver for the energy downside, and prices have since rebounded heading into the US cash session. Saudi-Houthi tensions remain high, with the Saudi-led coalition warning citizens to evacuate Sana’a, the location of a Yemen Petroleum Company facility. In response, the Houthis threatened to strike Aramco facilities, as well as Saudi aviation companies and airports. As a result, WTI briefly regained the USD 93/bbl mark while Brent returned above USD 105/bbl.
• Precious metals have given back some of the earlier gains, with spot gold set to end the European session in the middle of a USD 4150-4200/oz range. The next catalyst for the yellow metal will be the US inflation print on Wednesday, headline expected to rise to 3.6% Y/Y (prev. 3.4%).
• Base metals remained relatively contained throughout the session, as 3M LME Copper rotated in a USD 14.55k-14.67k/t range.
• Germany's Ministry of Economic Affairs reportedly plans to finance a planned national crisis gas reserve via a levy, Handelsblatt reported citing a draft.
• Argentina’s government files request for provisional measures at international tribunal to prevent UK from exploiting hydrocarbons on the Falklands continental shelf.
• OPEC MOMR (Oct): 2026 demand trimmed, 2027 demand modestly increased; supply forecasts modestly increased.
• Russia's Penza Governor said gas pipeline rupture will not affect supply in the region.
• UKMTO has received a report of an incident involving a tanker in the vicinity of Sohar anchorage on October 11th.
• Russia reported rupture on major gas link in Penza region, according to Interfax.
• Kazakhstan Ministry of Energy said oil production at Kashagan fell by 6.6% in the first nine months of 2026, with 12.8 million tons produced, Interfax reported.
• UK Foreign Secretary Miliband has approved a new oil field development off the Falkland Islands, Telegraph reported; production possible as soon as 2027. The Sea Lion field is thought to contain up to 1.7bln barrels of oil.
• Kazakhstan January-September oil production 69.4mln tonnes, -8.3% Y/Y.
• Ukraine President Zelensky said they have not targeted Russian energy in two days.

EUROPEAN DATA

• German Current Account (Aug) 10.3B (Prev. 21.8B).
• German HICP Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.2%).
• German CPI Final (Sep YY) 3.3% vs. Exp. 3.3% (Prev. 2.9%).
• German CPI Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.2%).
• German HICP Final (Sep YY) 3.3% vs. Exp. 3.3% (Prev. 2.9%).

NOTABLE HEADLINES

• French PM Lecornu wrote a letter to the socialists, stating his willingness to discuss "three key areas" on which compromises can be made. "the fight against violence against women and the protection of children, agriculture, and youth and the future of education".
• Sweden's Social Democrats said it has not yet been possible to form a government.
• UK Chancellor Healey is reportedly rejecting called to equalise capital gains tax and income tax rates, FT reported citing sources; Treasury could still decide to raise CGT by a small amount. Treasury is working on CGT relief to encourage entrepreneurs who sell their business to reinvest back in the UK.
• German Chancellor Merz said Germany needs to increase its long-term growth potential. Wants a comprehensive pension reform. There will be temporarily higher contributions paid by workers and employers into the pension system.
• Italian Finance Minister said Italy will continue to improve its public finances.
• Retail bosses are to warn UK Chancellor Healey that a tax raid on shops will push up prices and worsen the cost of living crisis, according to Telegraph.

TRADE/TARIFFS

• German government official said the recent EU-China trade agreement is a step in the right direction but does not solve the overall issue of the large deficit.

CENTRAL BANKS

• Fed's Goolsbee (2027 Voter) said AI is an inflation problem, inflation is still way too high, reported Semafor. The job market still looks very stable to me. Growth has been solid, consumer spending solid. We’re falling down on the inflation side of the mandate. “Prices are going up in spaces that are not just components in data centers and the directly adjacent industries,” he said on Semafor’s Compound Interest. “I’m getting increasingly nervous that that’s just straight, old-fashioned overheating demand.”. “If inflation remains persistent, then I think it’s clear what the Fed has to do,” he said, when asked whether the central bank should raise interest rates again when it meets later this month. Inflation tied to the AI boom is "jumping out of its lane" and starting push up prices in unrelated corners of the economy. Need to start showing some progress if we’re going to get back on the kind of rate-cutting path that we were on.
• Fed's Waller (Voter, Dovish) said the US remains the dominant country in building AI models and AI could contribute to widening GDP per capita. If AI investment falls off, it will put a check on prices. Hyperscalers are still planning on spending trillions of dollars over the next three years. Inflation expectations are well anchored. AI build-out is definitely having an impact on yields. Real yields reflect the impact of real growth. Higher yields could do some of the Fed's work on demand.
• BoJ is reportedly to lean back against back-to-back hikes in October, Bloomberg reported citing sources; Could adjust language on the 2% inflation target; it had previously been described as "approaching 2%", to approximately 2%. Financial developments have been in-line with expectations, though underlying prices continue to rise. Report suggests that December is still in play. Caution is needed about exceeding the 2% target.
• ECB's Elderson said the heatwave in Europe may have imposed costs equivalent to the area's projected 2026 economic output, underscoring a potentially material macroeconomic risk.
• NBP's Duda said rates could rise in the near term if November forecasts show inflation remaining higher for longer, fuel prices and risk of a broader global commodity shock are main upside risks to inflation.
• CNB said diesel and petrol prices drove inflation higher in September and is now contributing over 1ppt to headline inflation.

RUSSIA-UKRAINE

• Russia's Penza Governor said gas pipeline rupture will not affect supply in the region.
• Russian President Putin holds a phone call with UAE's President and discussed Middle East and diesel deal with US.
• Russia reported rupture on major gas link in Penza region, according to Interfax.
• Ukraine President Zelensky said they have not targeted Russian energy in two days.

MIDDLE EAST

• Houthi Spokesperson said "The Yemeni Armed Forces warn all employees and citizens in the vicinity of any Aramco oil facility to evacuate and stay away from it, as it is a legitimate target for our forces".
• Iranian Deputy Foreign Minister said agreement between Iran and Oman on shipping in the Strait of Hormuz may be registered with the UN IMO, RIA reported.
• Yemen’s Houthis spokesperson warns Saudi Arabia that any attack on Sanaa will be met with a “harsh” response in Riyadh.
• UK MI5 spy chief said Iran is seeking to come at harder targets such as military sites in the UK and elsewhere.
• Saudi-led coalition spokesperson said warning to be issued shortly for civilians to evacuate site in Yemen's Sanaa ahead of special operation.
• Iranian Deputy Foreign Minister said Washington’s choice of military scenario with respect to Iran will have consequences beyond the region, according to Iran’s deputy foreign minister, RIA reported.
• Iran's Gharibabadi said the US is aware of Tehran's demands and if they are met, Iran will be ready to take the necessary steps to normalise relations, Iran International reported.
• Iranian Foreign Ministry said Iran and Oman have reached an understanding on establishing a temporary shipping route and the implementation details are being followed up, Al Jazeera reported. The Iranian-Omani understanding is a different matter from the reopening of the Hormuz Strait.
• Iran's Major General Rezaei said that the Strait of Hormuz is not open and is under Iran's control. "some smuggling operations are taking place along the southern coast under extremely costly and dangerous".
• Iran and the US remain divided over the sequencing of a diplomatic agreement, Al-Akhbar reported via Kan. Tehran is demanding an end to the war, removal of the naval blockade and oil sanctions, and release of frozen assets before reopening the Strait of Hormuz and discussing nuclear issues. Washington insists on nuclear concessions first. Talks have failed to bridge differences amid growing concerns over escalation in the next three months.
• Iran's Foreign Minister Araghchi said that the Foreign Ministry is seriously pursuing the use of diplomatic capabilities to secure national interests, IRIB reported.
• Saudi-led coalition spokesperson called on civilians to evacuate Yemeni oil company site at Al-Sabaha Central Station in Sanaa.
• Saudi-led coalition said it destroyed three drones north of Riyadh, Al Arabiya reported.
• The political official of the IRGC said US President Trump is facing internal pressure, and we cannot bear the cost of this state of neither war nor peace alone.
• A Delta Air Lines (DAL) aircraft that landed at Ben Gurion Airport from New York was searched on Tuesday following an anonymous bomb threat, Ynet reported.
• Bulgaria's PM said that two ships off Bulgaria's Black Sea Coast were hit by drones, and one sank.

NOTABLE NORTH AMERICAN NEWS

• US NEC Director Hassett expects income effect to be strong at the turn of the year; Fed to keep inflation in control and not kill the economy. Fed may see inflation slowdown as reason to hold.
• BofA Fund Manager Survey suggests that a US 10-year Treasury yield at 5.9% would prompt a shift in allocations from equities into bonds. Investors turned negative on global growth outlook, with net 4% expecting the economy to get weaker over the next 12 months. Investors is the most overweight on tech since August 2020.

NORTH AMERICAN DATA

• US Redbook (Oct/10 YY) 10.4% (Prev. 8.6%).
• US ADP Employment Change Weekly 24.75K (Prev. 23.75K).
• NFIB Business Optimism Index (Sep) 97.9 vs. Exp. 98 (Prev. 98.7).