Persistent inflationary pressures in global markets, inflation remaining above target levels and steps by central banks toward raising interest rates increased selling pressure in bond markets. Rising oil prices also strengthened expectations that monetary policy could remain tight for longer.
Higher long-term bond yields raised borrowing costs and increased pressure on equity valuations. Although yields partially retreated after sharp increases, their remaining at high levels weighed on global risk sentiment.
U.S. Treasury yields and the dollar rose
The U.S. 10-year Treasury yield rose to 5.34% during the week, while the 30-year yield climbed to 5.69%, reaching their highest levels since 2002. The yields later stabilized at 5.28% and 5.61%, respectively.
Supported by rising Treasury yields, the dollar index reached 102.2, its highest level since April 2025, and ended the week at 101.9, up 1%. The euro’s depreciation amid fiscal concerns in France also supported the dollar.
Gold fell 3.4% on a weekly basis to $4,141 per ounce as Treasury yields rose and demand for the dollar increased.
U.S. nonfarm payrolls increased by 29,000 in September, below expectations. The unemployment rate rose to 4.2%, while the increase in employment in August was recorded at 162,000.
Following the employment data, the probability of the U.S. Federal Reserve raising interest rates in October fell to 23%. The core personal consumption expenditures price index, excluding food and energy and followed by the Fed as an inflation indicator, rose 0.2% month on month and 3% year on year in August.
Expectations had pointed to monthly growth of 0.3% and annual growth of 3% in the core index. The index rose 0.1% month on month and 3% year on year in July.
Energy markets continued to rise
U.S. President Donald Trump said he had agreed to the release of a significant portion of the diesel held in Europe’s stocks. The G7 leaders also decided to release a total of 100 million barrels from diesel and other oil reserves within four months, under the coordination of the International Energy Agency, to stabilize global energy markets.
Although the December futures price of Brent crude fell on Friday, it rose 3.5% on a weekly basis to $102.3 per barrel amid ongoing geopolitical risks.
New York stocks ended the week mixed
Weekly performance on the New York Stock Exchange was mixed. The Dow Jones index fell 1.26%, the S&P 500 declined 0.27% and the Nasdaq rose 0.45%.
U.S. markets will monitor the services PMI and ISM services PMI, the trade balance, minutes from the Fed meeting, weekly jobless claims and the University of Michigan consumer sentiment index next week.
Inflation and debt concerns weigh on European stocks
European stocks ended the week lower as rising energy costs increased inflation concerns and pressure in bond markets. Inflation data released in France, Italy and Germany coming in above expectations intensified selling pressure.
Annual inflation in the eurozone rose to 3.8%, its highest level in three years. France’s 10-year bond yield climbed to 4.96%, its highest level since 2002.
Concerns over public debt came to the fore in France, while the Paris administration aims to narrow the budget deficit by limiting spending and increasing tax revenues. The U.K.’s 30-year bond yield also rose above 6%, reaching its highest level since 1998. In addition to concerns over public debt, the new budget expected to be announced on October 28 will be monitored.
On a weekly basis, the FTSE 100 fell 2.18%, Germany’s DAX 40 declined 0.70%, France’s CAC 40 dropped 2.24% and Italy’s FTSE MIB lost 2.66%. Next week, the eurozone’s producer prices, services PMI and retail sales, along with Germany’s industrial production and trade balance, will be monitored. The European Central Bank’s meeting minutes will also be released.
Japan diverged from other Asian markets
Rising bond yields and oil prices weighed on risk appetite in Asian stock markets, while Japan diverged positively. Japan’s 10-year bond yield reached 3.11%, its highest level since 1995.
Tokyo inflation in Japan rose to 2.7% year on year in September from 1.9%. This strengthened expectations that the Bank of Japan could raise interest rates.
The Chinese government announced that it would introduce new support policies to limit the economic slowdown and consider measures to stabilize the property market. The People’s Bank of China also cut the one-year lending rate of three policy banks by 25 basis points to support the real economy.
On a weekly basis, Japan’s Nikkei 225 rose 2.93%, while South Korea’s Kospi fell 1.09%, Hong Kong’s Hang Seng declined 2.19% and China’s Shanghai Composite lost 1.19%. Japan will release services PMI, consumer confidence, the current account balance and retail sales data next week.
Borsa Istanbul fell domestically
The BIST 100 index on Borsa Istanbul fell 4.88% on a weekly basis, closing at 12,270.18 points. The dollar/Turkish lira exchange rate rose 0.35% from the previous weekly close, ending the week at 49.1285.
The Capital Markets Board decided to make interim payments to all participation share owners whose reconciliation had been completed in funds established by Tera, Pusula, Atlas and Hedef Portfolio Management Inc. and undergoing liquidation. The payments will be offset against the amounts to which investors will be entitled at the end of the liquidation process. The interim payment to each investor will not exceed 1 million liras for each fund.
President Recep Tayyip Erdoğan said in a speech marking the opening of the 5th legislative year of the 28th parliamentary term that the problem that had emerged in part of the fund market had been resolved. Erdoğan said the process was being conducted with fairness and justice within the framework of capital markets rules, adding that they would not allow the issue to threaten economic security and social peace.
Treasury and Finance Minister Mehmet Şimşek assessed developments in the global economy, geopolitical tensions and the Turkish economy. Şimşek said funds linked to troubled portfolio management companies had been placed under quarantine and that the liquidation and resolution process had begun, adding that their aim was to prevent the problems from spreading throughout the financial system.
The Central Bank of the Republic of Türkiye raised the growth limit for loans to small and medium-sized enterprises from 4.5% to 5% through a change to its reserve requirement framework. The blocked reserve requirement ratios for Turkish lira reserves were also reduced.
Markets will monitor inflation next week
Domestic markets will see the release of inflation data on Monday and industrial production data on Friday next week. Economists expect the Consumer Price Index to rise 2.18% in September.
If the expectation is met, annual inflation is expected to fall to 30.16% in September from 31.51% in August. The average of economists’ year-end inflation forecasts was calculated at 29.66%.
