Live News CENTRAL_BANK ARTICLE H impact Oct 07, 2026, 04:05 AM UTC

EMEA Morning Briefing: France Budget Battle in Focus

MARKET WRAPS Watch For: Germany industrial production; no major trading updates expected. Opening Call: European stock futures were lower after Asia stocks traded mixed. U.S. Treasurys were higher, the dollar strengthened. Gold fell and oil rose. Equities: European equity futures were lower as investors closely monitored the developments of negotiations of France's budget for next year. France's finance minister said the government is prepared to exercise special constitutional powers and circumvent Parliament to pass billions in spending cuts if talks stall. In an interview, French Finance Minister Roland Lescure said he was willing to negotiate on all aspects of the budget, but he has two red lines-sticking to a maximum budget deficit of 5% of gross domestic product and avoiding any changes that hurt growth. U.S. stocks rallied overnight, powered by technology stocks. The AI powerhouses have grown so vast, and the momentum behind AI's build-out so relentless, that many investors now see these stocks as immune to the effects of higher interest rates, analysts said. "People look around and say 'Which areas of the market can weather this? '" said Keith Lerner, chief invest

SquawkNews Desk 1 updates Updated Oct 07, 2026, 04:30 AM UTC

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04:30:40 AM UTC

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A look at the day ahead in European and global markets from Rocky Swift Wall Street indexes scaled new heights overnight on earnings optimism, but the buzz fizzled out in Asia as oil prices climbed again following attacks by Yemen's Iran-backed Houthis on Saudi Arabia. To end a war that's roiled energy markets and stoked inflation for eight months, Iran must make a "meaningful" reduction in its nuclear enrichment capacity, US Vice President JD Vance told Reuters. But who's going to make that call? After waves of leaders in Tehran have exited the stage, nobody knows who is running the country, according to US President Donald Trump. And speaking of leaders, if Marine Le Pen isn't the hero France deserves, she's the hero the nation's troubled bond market needed. The far-right candidate considered the frontrunner in next spring's presidential election outlined plans to slash spending, prompting a relief rally in French goverment bonds whose yields had surged to multi-decade highs. The enthusiasm spread to the euro and lent a tailwind to other bond markets, all under the common cloud of inflation, central bank tightening and fiscal woes. US Treasuries rebounded, aided by a solid 3-year auction, and the government is set to test market demand again with a $39 billion sale of 10-year notes later on Wednesday. Market focus now turns to the release of Federal Reserve minutes and speeches by its policymakers. Expectations for another rate increase this month after September's hike have retreated, but markets are still anticipating more tightening later in the year and next year. Speeches by San Francisco Fed President Mary Daly and Kansas City Fed President Jeff Schmid on Tuesday offered a mixed picture on whether hikes will be needed sooner or later. Fed officials Christopher Waller, Neel Kashkari and Alberto Musalem are all due to speak later on Wednesday. The chance of a hike of at least 25 basis points in October stands at 20.5%, down from about 51% a week ago, according to CME FedWatch, but markets are pricing in an 84.5% chance of a hike at the December meeting. The pan-region Euro Stoxx 50 futures were down 0.62%, German DAX futures fell 0.55% and FTSE futures slid 0.25%. US stock futures, the S&P 500 e-minis, edged up 0.08%. Key developments that could influence markets on Wednesday: Germany industrial production (August) Canada leading index (September) US Treasury sells $39 billion of 10-year notes Germany reopening of 7-year government debt auction UK reopening of 1-year and 5-year government debt auctions US Fed publishes minutes of September 15-16 meeting Fed data on consumer credit (Editing by Jamie Freed)

MARKET WRAPS Watch For Germany industrial production; no major trading updates expected. Opening Call European stock futures were lower after Asia stocks traded mixed. S. Treasurys were higher, the dollar strengthened.

Gold fell and oil rose. Equities European equity futures were lower as investors closely monitored the developments of negotiations of France's budget for next year. France's finance minister said the government is prepared to exercise special constitutional powers and circumvent Parliament to pass billions in spending cuts if talks stall. In an interview, French Finance Minister Roland Lescure said he was willing to negotiate on all aspects of the budget, but he has two red lines-sticking to a maximum budget deficit of 5% of gross domestic product and avoiding any changes that hurt growth.

S. stocks rallied overnight, powered by technology stocks. The AI powerhouses have grown so vast, and the momentum behind AI's build-out so relentless, that many investors now see these stocks as immune to the effects of higher interest rates, analysts said. "People look around and say 'Which areas of the market can weather this?

'" said Keith Lerner, chief investment adviser for Truist Advisory Services. S. dollar strengthened, as major currencies consolidated against the greenback, but may be aided by appetite for risk assets. "The S&P 500 rose to a fresh record high, supported by optimism around AI-related spending," said CBA's Samara Hammoud.

The overnight rise in equities has boosted risk sentiment, the international economics and currency strategist said. S. Treasurys were higher ahead of Fed minutes. The central bank is expected to hold rates this month, after raising them in September for the first time in three years.

Inflation data coming next week could still change the outlook. An auction of three-year notes clears at the highest yield since 2006, as investors demand loftier returns to finance the government. Long Treasuries could also be a good bet if stocks tanks and the economy weakens, which usually lowers yields as Barron's highlighted last week, according to Founder of Bianco Research, Jim Bianco. "You get squeamish that something bigger is going on because there's always that fear in the bond market that yields rise till something breaks," Bianco said.

But "I don't think that that is a concern right now. " Energy Oil prices rose amid ongoing tensions in the Middle East that could sustain concerns over supply disruptions in the region. Attacks by Yemen's Houthi rebels damaged two airports in southern Saudi Arabia near the border with the war-torn nation, the kingdom said Tuesday. ," ANZ Research analysts said.

com. "While dovish Federal Reserve repricing and lower oil prices in the last couple of days has provided some support, the metal is still undermined by the elevated yields and the risk that oil prices may rebound and create fresh volatility for financial markets," he said. -Iran situation is a source of pressure, while central bank buying means downside is also limited, he added. TODAY'S TOP HEADLINES Inside Bessent's Treasury: Tension, Turnover and Unmet Economic Goals WASHINGTON-Scott Bessent was fuming.

President Trump had just asked his Treasury secretary to investigate allegations of fraud in Minnesota's Somali community-and Bessent thought one of his top deputies was dragging his feet. The Case for Buying the Long Bond-and What to Know Before You Do Two strategists who have long shunned government bonds are making the case to buy long bonds. Since 2022, Gavekal Research co-founder Anatole Kaletsky has recommended investors avoid sovereign debt from the seven major advanced economies. S.

government bonds. S. government debt for the first time in six years last week. French Government Is Willing to Bypass Parliament to Pass Billions in Cuts PARIS-France's finance minister said the government is prepared to exercise special constitutional powers and circumvent Parliament to pass billions in spending cuts if negotiations stall over next year's budget.

In an interview, French Finance Minister Roland Lescure said he was willing to negotiate on all aspects of the budget, but he has two red lines-sticking to a maximum budget deficit of 5% of gross domestic product and avoiding any changes that hurt growth. Jaguar Ditches the Pink Branding in Unveil of Its Big, Sleek Type 01 EV Jaguar has introduced the showroom-ready version of the electric vehicle it hopes will usher in a new, ultraluxury era for the British carmaker, leaving aside some of the provocative notes it sounded nearly two years ago when it announced its new strategy.

In contrast with the two-door concept car Jaguar debuted in pink and bright blue at Miami Art Week in 2024, the four-door Type 01 model arrived on Tuesday in silver, with an "orchid white" interior. And where the original avant-garde teaser video depicted expressionless models striding around a fuchsia landscape, the EV's first ad features a handsome driver, atmospheric smoke, cars traveling at high speeds and a color scheme heavy on red and black.

com Expected Major Events for Wednesday 06:00/NOR: Aug Industrial Production Index 06:00/UK: Sep Lloyds House Price Index 06:00/GER: Aug Industrial Production Index 06:30/HUN: Sep CPI 06:45/FRA: Aug Foreign trade 06:45/FRA: Aug Balance of payments 07:00/SWI: Sep SNB foreign currency reserves 07:00/CZE: Aug Industry, Construction 07:00/CZE: Aug External trade 08:00/ICE: Sep External trade, preliminary figures 08:30/UK: Sep Narrow money (Notes & Coin) and reserve balances 09:00/LUX: 2Q GDP 09:00/LUX: Sep CPI 16:59/POL: Polish interest rate decision 23:01/UK: Sep RICS Residential Market Survey 23:01/UK: Sep KPMG and REC UK Report on Jobs All times in GMT.

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