Equities, Bond Yields & Dollar Lower as Oil Prices Extend Upturn to 5-Month High
October 20, 2026
WTI and Brent oil prices are 1.5% and 1.0% higher at $105.15 and $110.15 per barrel. That’s up from $70 and $73 at mid-2026. With U.S. mid-term elections in two weeks and early voting now starting, high U.S. officials are declaring the war against Iran essentially over. In shades of the retreat from Afghanistan in August 2021, news today from the combat front include fresh Houthi attacks and two tanker strikes in the Strait of Hormuz.
Stock markets closed down by 3.7% in South Korea, 1.3% in Hong Kong and Japan, 1.2% in India and 1.1% in Taiwan. Losses so far in key European stock markets are led by France (-2.0%) and Italy (-1.1%). Nasdaq futures are down 0.7%, while the DOW, SPX and Russell 2000 have slipped less sharply. A notable stock market outlier today can be found in Indonesia (+5.7%) where intervention and regulations limited scope for sales have been imposed to counter previous sharp and accumulating losses.
Ten-year sovereign debt yields have dropped six basis points in the United States, Canada and Germany and by a basis points in Japan and the U.K., while further rises of three basis points in France and two bps in Italy reflect political unrest and concerns over unsustainable fiscal deficits. The Macron government imposed night curfews in a number of French cities.
The dollar has dropped a half percent against the Canadian dollar, sterling and the Swiss franc and by 0.4% relative to the Korean won, Japanese yen and New Zealand dollar. A smaller dip of 0.1% versus the euro reflects renewed worries over the fragility of the region’s economic exposure to expensive energy costs, Putin’s war against Ukraine, and military mischief that Russia may redirect at Eastern Europe and other NATO countries. Trump’s unrequited friendly gestures toward Putin are unsettling, too.
Gold, silver and Bitcoin prices have fallen 0.4-0.6% so far today.
The October ZEW Institute’s surveys of investor sentiment and current conditions in Germany and Euroland show lessening optimism about the future but less negative current conditions in each case. Germany’s expectations index fell back to a 3-month low of 28.1 from a 7-month high of 34.7 in September, alongside a 41-month high but still negative 35.9 reading in current conditions. In the Euroland figures, the index for expected inflation fell to 4.7 following Septembers 30.7-point leap to 31.1, but that sign of pricing relief should be taken with a grain of salt in light of the recent extra surge in energy costs.
Producer price data reported today include
- German producer prices, which jumped 1.9% in September after 1.1% the month before, sending the 12-month PPI inflation rate up to a 42-month high of 6.7% from 4.6% in August -0.2% as recently as March and -9.2% in September 2023. Energy costs (+14.9%) dominated the year-on-year comparison.
- Portugal’s PPI increased 1.5% on month and accelerated to a 43-month high climb in year-on-year terms of 9.5%.
- In Estonia, producer prices rose 1.4% on month for a second straight time and by 4.2% year-on-year, an 8-month peak.
- Georgia’s PPI increased 0.9% on month, but the year-on-year rate slowed to a 12-month low of 4.6%.
- Polish PPI inflation in September of 6.1% was its highest since April 2023.
The latest monthly batch of British labor market data were more robust than anticipated. The jobless rate unexpectedly slowed to 4.7% in June-August, the lowest reading since May-July 2025, and was associated with 102k of jobs growth. The job claimant count increased by 30.3k in September, most in 25 months. Average weekly earnings growth was at a 69-month low in the total figure but a 7-month high when excluding bonus pay. Both those wage increases were at 3.7%.
Euroland’s current account surplus contracted sharply in August, printing at a 43-month low seasonally adjusted EUR 8.7 billion after EUR 27.2 billion in July and at EUR 7.7 billion not adjusted, 57.5% lower than the surplus in August 2025. Over the past 12 reported months, the unadjusted surplus equaled an ample 1.8% of GDP in spite to America’s protectionist wall. A separate Euroland indicator released today covering construction output in August had a 5-month high monthly increase of 1.8% and the best year-on-year change, albeit only 1.4% in ten months.
Switzerland’s trade surplus narrowed to only CHF 1.35 billion, a 46-month low, in September from CHF 5.37 billion in the prior month and a record peak of EUR 8.1 billion in July. The third quarter surplus of CHF 14 billion exceeded the quarterly CHF 12.25 billion average size in the two earlier quarters this year.
Authorities at the People’s Bank of China once again left the one-year loan prime rate at 3.0% and the 5-year LPL at 3.5%. They have been at those levels since a 10-basis point cut in May 2025.
Likewise, Hungary’s central bank base rate was also left unchanged at 5.5%. In that case, however, there had been four 25-basis point cuts earlier this year and most recently in August. Consumer price inflation in Hungary last month was at 1.6%, 0.3 percentage points above August’s reading but below a 2.5% target and an early 2023 peak of 25.7%. Way back then, the base rate crested at 13.0%.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: British labor statistics, Euroland current account, German and Euroland ZEW expectations, German PPI, Magyar Nemzeti Bank, Peoples Bank of China
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