Oil snaps losing streak, yields climb: Daily Outlook

Key developments

Oil breaks five-day decline: Brent crude rose 3.9% to $103/b on Wednesday, ending a five-session losing streak. Iran’s president, Masoud Pezeshkian, told the UN that Iran would not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place. Prices have eased slightly in early trade.

Strong US data, higher yields: The US composite PMI rose to a five-year high of 58.4 in September, with both manufacturing and services beating expectations. Stronger activity came with sharper price pressures, as input costs rose at their fastest pace since 2022. The data, together with higher oil prices and a weak Treasury auction, helped push yields sharply higher: the 2-year yield rose 14bp to 4.9% and the 10-year yield gained 15bp to 5.1%. Renewed inflation concerns weighed on equities, with the S&P 500 down 0.8%.

Tariff pause: Treasury secretary Scott Bessent said the US-China trade truce will be extended by two months, avoiding tariff increases due on November 10. The announcement came as President Xi Jinping arrived in Washington for his first state visit in 11 years.

Europe steadier, UK softer: The Eurozone composite PMI rose to 53.1 in September, a three-year high, driven by stronger services activity. Germany outperformed, with its composite PMI reaching an 11-month high. By contrast, the UK composite PMI slipped to a three-month low of 51.7, while price pressures intensified.

Hotter inflation ahead: The OECD’s September interim outlook made modest upward revisions to global growth in 2026, partly reflecting AI-related investment and production. But it warned that inflation will be higher than previously forecast across almost all G20 economies.

Today's major data

US jobs, Germany sentiment and Trump-Xi: Initial jobless claims are due from the US, alongside Germany’s Ifo survey. Markets will also watch for signals on trade and tariffs from the Trump-Xi summit.