Today
The final quarter of 2026 is starting on a more ominous note as the global bond selloff continues. The U.S. 10-year Treasury yield climbed as high as 5.34% intraday, its highest level since 2002, while UK 30-year yields moved above 6% for the first time since 1998. Higher oil prices and resilient economic data have added to inflation and interest-rate concerns, while technical pressures are amplifying the move as mounting losses force some investors to cut positions, triggering further selling and pushing yields even higher. The pressure has spread across global markets, with yields in France and Japan also reaching multi-decade highs and corporate credit spreads beginning to widen. The bond moves are also weighing on global currencies, with the euro, pound and yen weakening against the U.S. dollar, while European stocks are lower, led by London’s FTSE, down more than -1% at the time of writing. Markets in China and Hong Kong are closed for a holiday. Closer to home, U.S. and Canadian futures are higher this morning after North American markets finished mostly lower yesterday. We take a closer look at the quarter’s bond-market selloff in Fixed Income below.
Still spending, but for how long? The U.S. consumer continues to keep the economy moving, although there are questions about how much longer spending can outpace income. Consumer spending in the U.S. picked up in August, with inflation-adjusted expenditures rising 0.6% from July, the strongest monthly increase since March 2025, with households spending more on vehicles, clothing, dining, and accommodation. At the same time, inflation came in softer than expected, with core PCE rising 0.2% for the month and 3.0% YoY, while headline PCE increased 0.3% monthly and 3.4% annually, with prior inflation readings also revised lower. The combination of resilient consumption and moderating underlying inflation reinforced the view that the U.S. economy remains strong, with Q2 GDP also revised higher to a 2.2% annualized rate from 1.5%. Household finances showed some signs of fatigue though, as real disposable income was unchanged in August and the personal saving rate fell to 4.1%, its lowest level since 2022, suggesting spending is growing faster than income. For the Fed, the softer core inflation figures were welcome news, prompting traders to scale back expectations for an October hike, although markets still expect another increase before year-end.
Not everything on sale is a bargain. Indonesia has cut the minimum price that shares can trade on the Indonesian stock exchange from 50 rupiah to just 1 rupiah, which is less than one-hundredth of a Canadian cent, thereby allowing stocks that had been pinned at the old floor to trade at prices that better reflect supply and demand. The change is part of a broader effort to improve liquidity and price discovery after Indonesia’s benchmark index fell – 25% this year and MSCI warned it could downgrade the country over concerns about ownership transparency and potential share-price manipulation. The lower floor however, could also increase volatility. GoTo, Indonesia’s high-profile ride-hailing and delivery company, offers an early example. Its shares fell 14% to 43 rupiah on Monday after spending months pinned at the old 50-rupiah floor, well below its 338-rupiah IPO price in 2022. Regulators are hoping the reforms help restore confidence before MSCI makes its final decision in November, although some investors expect any improvement in liquidity to be concentrated in a relatively small number of stocks.
Strategists remain constructive on EM equities, saying that continued global economic and trade expansion should support earnings over the next 6 to 12 months, while improving profit trends in China and India could remove one of the biggest drags on overall EM earnings. The AI investment cycle remains a major driver, especially for Taiwan and Korea, although some expect Korean technology earnings momentum to moderate as the rise in memory-chip profits becomes harder to sustain, while non-tech earnings should play a more important role. Valuations remain a key attraction, with many EM markets and sectors offering comparable or stronger long-term earnings growth than U.S. counterparts at much lower multiples. Despite the positive outlook, there continues to be some concerns, including higher global bond yields, U.S. dollar strength, and uncertainty in the Middle East.
Global M&A activity lost some momentum in Q3, with announced deal value falling 10% YoY, although the $3.8 trillion of transactions completed year-to-date leaves the market within reach of the record $5 trillion-plus achieved in 2021. Dealmakers face growing headwinds from renewed central-bank tightening, rising borrowing costs, uncertainty surrounding AI investment, and the approaching U.S. midterm elections, all while long-term Treasury yields hit their highest levels since 2002 potentially making leveraged transactions more expensive to finance. Despite these challenges, there seems to be a strong appetite for large transactions, helped by an easing regulatory environment in the U.S., with major Q3 transactions spanning technology, real estate, consumer businesses and professional sports. Some companies are delaying announcements until after the November midterms to reduce political scrutiny, especially those involved in AI which remains an important source of transactions.
Not quite the haul they expected. Two trailers with the logos of autonomous-trucking developer PlusAI and Nvidia were stolen from a warehouse area in California a few days ago. What seemed like a valuable score of AI hardware, turned into more of a landscaping job when the thieves discovered that the trucks were carrying 40,000 pounds of sand. PlusAI uses the sand as simulated cargo for research and development testing, while its technology-equipped truck cabs remained safely inside the warehouse. The trailers, whose hand locks had been broken, were abandoned nearby and recovered with all of the sand still inside (thank goodness). Police are continuing to investigate and have made no arrests. This comes at a time of increased cargo theft targeting valuable tech equipment, including AI chips, data-center hardware, Tesla batteries, and bitcoin-mining machines.
Diversion:
Bullseye
