Markets enter the final weeks of Q3 with volatility centred on sovereign bonds, even as Brent crude starts the week 1.4% lower after a 3% drop last week and equities are set to open firmer. The focus is shifting from crude to refined fuels: US diesel hit a record last week, while UK unleaded petrol rose to 161.66p per litre, a fresh four-year high, keeping CPI pressure alive and feeding uncertainty in rates. Bond moves remain sharp; French 2-year and 10-year yields rose 10bps each on Friday, pushing the 10-year to its highest since 2007. In the UK, the Bank of England has recalibrated QT, cutting the planned balance sheet unwind to £46bn over eight years from £70bn and pausing Gilt sales until April 2027.
Economic Data and Policy Expectations
Data and geopolitics now frame the week ahead. UK public finance figures on Tuesday are expected to show August borrowing of £15.7bn, with net debt at 94.1% of GDP, while August 2025 borrowing was £18bn. Global PMIs will be watched alongside the Atlanta Fed’s GDPNow estimate of 5.1% US Q3 growth, and sterling may be tested after GBP/USD fell 0.88% last week, with $1.34 a reference point.
Energy Supply and Equity Market Performance
Energy supply risks have intensified after reports Saudi Arabia is halting more oil exports to Europe following attacks, and after Ukraine’s largest-ever drone strike on Moscow; half of Russia’s six largest diesel refineries have cut or stopped output in September. Equity performance has held up: the VIX fell, and the Philadelphia Semiconductor index rose 1.5% last week.
