Weekly Insights

Higher oil prices and AI-related investment worries are reshaping rate expectations despite resilient corporate earnings and economic activity.

• In the United States, strong PMI readings and broadly stable financial conditions point to solid momentum, while softer housing data leave Barclays expecting a hawkish October hold followed by 25bp hikes in December and January.
• In the euro area, rising energy prices keep inflation risks elevated; Barclays expects the ECB to hold rates in October but deliver a final 25bp hike in December.
• The United Kingdom shows resilient activity but weaker consumer spending and sentiment, while September inflation accelerated and labour-market data offered tentative signs of stabilisation ahead of the Budget.
• In Japan, the BoJ is expected to view underlying inflation as consistent with its 2% target and retain a base case of a December hike toward a 2% terminal rate.
• China’s Q3 GDP beat expectations, prompting Barclays to raise its 2026 growth forecast to 4.6%, but export-led industrial strength continues to mask weak domestic demand and reduces the case for major stimulus.
• Brent reached $115/bbl; the Philippines’ BSP had already surprised with a 50bp hike, while Brazil faces a tightly contested presidential runoff and Latin American inflation risks are rising.

Takeaway: Investors should prepare for higher-for-longer policy rates and renewed inflation pressure from energy, while recognising that central-bank reactions remain uneven across regions and that weak domestic demand limits China’s need for large-scale stimulus.