US Secured Overnight Financing Rate

Kiwibank said on October 5 that a stronger-than-expected US economy is creating upward pressure on New Zealand mortgage rates, as rising US government bond yields have pushed up swap rates in New Zealand's financial markets, a key reference rate for fixed mortgage rates. In its weekly economic analysis report, Kiwibank said the strength of the US economy may lead financial markets to absorb expectations of higher interest rates, amid forecasts that rates will stay elevated for longer. As a small economy, New Zealand's funding costs are influenced by overseas developments, and financial market interest rates tend to move in the same direction globally, especially long-term rates. Kiwibank also noted that US interest rates have surged to a 25-year high, and the spread between New Zealand's 2-year and 10-year government bond yields has widened from 100 basis points in May to 120 basis points. Meanwhile, the New Zealand dollar's decline below 56 US cents could benefit the New Zealand economy by supporting the export sector and making investment and purchases of goods and services in New Zealand cheaper for foreigners.

Asadej Kongsiri, director and manager of the Stock Exchange of Thailand, disclosed that the foreign capital currently flowing out of the exchange is a temporary move to avoid risk and is in line with other countries in the region, pressured by rising US government bond yields together with domestic factors concerning energy, the flood situation, and concerns over non-performing loans. However, the overall fundamentals of the Thai economy have not changed, so once the flood situation eases and the numbers become clearer, capital has a chance to flow back in. As for the impact on listed companies, most of the affected companies are not listed on the exchange, and analysts have not shown much concern, assessing that overall exports can still grow. As for confidence among operators in the automotive industrial group that have invested in the country, they will continue to invest in Thailand for the long term. Asadej continued that, from a roadshow together with Prime Minister Anutin Charnvirakul in the United States, most of the investors they met were long-term funds that do not focus on day-to-day trading, and investors were mainly interested in asking the Prime Minister about the country's long-term policies, so it is possible to look past temporary volatility factors.

The euro dropped to a 17-month low on Monday, falling as much as 0.8% to touch 1.1161 per dollar in Asian trade as growing political and fiscal concerns in the region weighed on investor sentiment. Fast-money funds in Asia reportedly sold the euro for dollars in spot trading, pushing prices past barrier levels and triggering options-related selling that compounded the decline, according to Bloomberg. Brent Donnelly, president of foreign exchange trading at analytics firm Spectra Markets, said the French politics trade that many expected would escalate this winter as April 2027 elections neared is here now, adding that any budget promises made by the French government now are not super credible with a change of power coming soon. French bond futures dipped 0.13%, close to record lows they have been hugging in recent weeks, while the yield on US 10-year Treasury notes stood at 5.262% as some calm returned following a spike to a 24-year high last week that rattled markets. Sterling slipped 0.24% to $1.32064 and the Japanese yen changed hands at 157.92 per dollar, leaving the dollar index up 0.47% at 102.37.

The Global Markets Group of Bank of Ayudhya, or BAY, expects the baht this week (5-9 October 2026) to move in a range of 33.30-33.85 baht per dollar, after the baht closed weaker at 33.55 baht per dollar last week, trading in a range of 33.45-33.71 baht per dollar and touching its weakest level in two months. The dollar index hit its highest level since May 2025, while US bond yields set new cycle highs, even though PCE inflation data came in below expectations and the ISM manufacturing index fell in September. The euro touched its weakest level in 17 months amid a sharp widening in the spread between French and German bond yields, after details of the French budget were poorly received by the market. Foreign investors sold 26.769 billion baht of Thai stocks and 10.068 billion baht of Thai bonds respectively. On the domestic front, the market will monitor September inflation, while the Bank of Thailand reported a current account surplus of 2.4 billion dollars in August.

Mr. Poon Panichpibool, a money and capital market strategist at Krungthai GLOBAL MARKETS, Bank of Krungthai, estimates the baht will trade in a range of 33.25 to 33.85 baht per dollar this week. The baht opened this morning at 33.56 baht per dollar, slightly stronger than last week's close of 33.59 baht per dollar, and he estimates a 24-hour range of 33.45 to 33.65 baht per dollar. The baht still has weakening momentum, with a risk of testing the key resistance zone of 33.85 baht per dollar if the situation in the Middle East intensifies. Pressure comes from high uncertainty in the Middle East, which has pushed crude oil prices sharply higher and driven up the dollar and the 10-year US Treasury yield. Meanwhile, US non-farm payrolls for September rose by only 29,000, below the market estimate of 89,000, and the unemployment rate rose to 4.2%, higher than the market expectation of 4.1%, prompting market players to reduce the odds that the US central bank will raise interest rates at its October meeting. The Japanese yen weakened toward the 158 yen per dollar zone, making market players cautious about the prospect of currency intervention. As for Thailand, the market is awaiting the September CPI inflation report, which is estimated to rise to 3.17%, while core CPI inflation may rise to 1.60%.

Domestic gold prices opened on October 3, 2026, down 500 baht per baht-weight of gold from yesterday's closing price, according to the Gold Traders Association. Ornamental gold is selling at 66,700.00 baht per baht-weight and buying at 64,384.52 baht per baht-weight, while gold bars are selling at 65,900.00 baht per baht-weight and buying at 65,700.00 baht per baht-weight. Gold Spot stood at 4,140.00 dollars per ounce. In overseas markets, spot gold traded at 4,138 dollars per ounce, down nearly 1% after earlier touching a high of 4,227 dollars. Although US September non-farm payrolls rose by only 29,000, below analysts' forecast of 90,000, and the unemployment rate climbed from 4.1% to 4.2%, the rise in the 10-year US Treasury yield to 5.9%, up 4 basis points, continued to weigh on gold prices. Money markets expect the Fed to hold interest rates at its October 28 meeting with a probability of nearly 77%, and have raised the odds of a rate hike at the December meeting to 88%. Technical analysts note that key support for gold lies at 4,100 dollars per ounce; a break below that level could see prices test the July 29 low around 3,996 dollars and the July 17 low around 3,959 dollars.

Gold futures on the New York market closed lower on Friday, October 2, with COMEX December-delivery gold falling $40.00, or 0.95%, to settle at $4,162.30 an ounce, pressured by the dollar's appreciation this week and by 10-year and 30-year U.S. Treasury yields, which surged on Thursday to their highest levels since 2002. Early in the session, gold prices had risen more than 1% on news of a sharp slowdown in U.S. employment figures, after the U.S. Labor Department reported that nonfarm payrolls rose by only 29,000 in September, far below the 90,000 economists had expected, while the August figure was revised down to an increase of 133,000 from the previously reported 162,000. Analysts assess that gold's direction over the coming months will depend on the stance of the U.S. central bank and how much weakness in the labor market it is willing to accept, while the Fed continues to give priority to controlling inflation. Since the war between the United States, Israel and Iran began in late February, gold prices have fallen by more than 20%, as investors worry that war-driven inflation will force the Fed to keep interest rates high for longer. However, the latest inflation data came in below expectations, and the stance of at least two senior Fed officials who voted against a rate hike in October has led investors to begin expecting the Fed to hold rates steady at its meeting late this month, consistent with data from the CME FedWatch Tool showing that investors now assign only a 22% probability to a Fed rate hike this month, down sharply from 70% early in the week.

The U.S. dollar is strengthening on renewed Middle East tensions that pushed oil prices higher and on expectations of tighter Federal Reserve policy, with the dollar index at 101.7 as of Oct. 1, 2026, on track for a 2% monthly gain, its strongest monthly advance since June. The Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75-4% on Sept. 16, and with the PCE price index up 0.3% in August and annual PCE inflation holding at 3.4%, still well above the Fed's 2% target, markets expect continued hawkish policy in the near term. Brent crude climbed above $100 a barrel after President Donald Trump rejected an Iranian proposal aimed at resolving the conflict and reopening the Strait of Hormuz, while WTI crude is around $92 a barrel as of Oct. 1, 2026, and flows through the Strait of Hormuz were expected to reach 7.4 million barrels per day this month, per Reuters. Against this backdrop, several ETFs tied to the dollar, energy, Treasury yields and Japan's currency could remain in focus, including the Invesco DB US Dollar Index Bullish Fund UUP, with $430.30 million in assets under management and a 0.70% expense ratio, and the WisdomTree Bloomberg U.S. Dollar Bullish Fund USDU, with $278.20 million in assets and a 0.50% expense ratio. Energy funds drawing attention include the VanEck Oil Services ETF OIH, with $1.90 billion in assets and a 0.35% expense ratio, and the Energy Select Sector SPDR Fund XLE, with nearly $40 billion in assets and a 0.08% expense ratio.

Futures linked to Canada's main stock index edged higher on Friday as investors awaited key U.S. employment data and assessed ongoing volatility in the global bond market. By 06:09 ET, the S&P/TSX 60 index standard futures contract had risen by 5 points, or 0.2%, after the S&P/TSX composite index finished down 0.2% at 35,154.76 on Thursday, its lowest close since July 20. U.S. futures also rose, with Dow futures up 200 points, or 0.4%, S&P 500 futures up 32 points, or 0.4%, and Nasdaq 100 futures up 215 points, or 0.7%, while Brent crude fell 2.4% to $99.83 a barrel. September nonfarm payrolls are expected to show 89,000 jobs added versus 162,000 in August, with the unemployment rate seen at 4.1%, as Dallas Fed President Lorie Logan said rates will need to rise by at least 50 basis points to curb sticky inflation. Nike shares slumped more than 10% in premarket U.S. trading after the company outlined plans to cut more jobs and overhaul its global divisions, and said revenue is expected to drop in the high single digit in fiscal 2027 against analysts' projections for a decline of around 2%.

Rising interest rates and US bond yields are weighing on small-cap, bank, and utility stocks in the United States, dragging down the Russell 2000 and the KBW Nasdaq Bank Index, with many market segments down at least 5% from their recent highs after the 10-year US Treasury yield climbed to 5.34%, its highest level since 2002. Although the S&P 500 sits less than 2% below its all-time high, rate-sensitive small caps and the two aforementioned sectors have faced heavy selling. Since the Federal Reserve raised interest rates last month for the first time in three years to curb inflation, analysts at iCapital told Bloomberg TV that most stocks in the market have fallen at least 5% from their recent highs, while some segments are down more than 15%, largely due to higher interest rates and tighter financial conditions. The S&P 500 Equal Weighted Index is on track for a seventh consecutive weekly decline, and if it extends its slide through Friday, it would mark only the third such streak in history, following the aftermath of the dot-com bubble in 2002 and the 2022 bear market. Meanwhile, the Russell 2000 has just posted its second-worst quarterly underperformance versus the S&P 500 since 1999, trailing the large-cap index by nearly 10 points and falling 8.5% from its August 14 high, bringing it close to correction territory. Zombie stocks in the Russell 2000 account for more than one-third of all companies in the index.

Olli Rehn, Bank of Finland governor and member of the European Central Bank's Governing Council, said on the 2nd that while energy prices are moving closer to the ECB's "adverse scenario," a sharp rise in long-term borrowing costs is holding back the spread of high energy prices into broader inflation across the economy. Euro-area inflation has run well above 3% in recent months and could approach 4% by year-end, twice the ECB's target. The ECB, which raised rates twice this summer, is under pressure to hike further. Speaking at a meeting of the European Systemic Risk Board, Rehn said rising long-term yields slow growth and limit the extent to which the energy shock feeds into other prices and wages, adding that the outlook for growth and inflation is exposed to extremely large and broad uncertainty. Government borrowing costs have surged in recent weeks, driven by rising U.S. Treasury yields amid concerns that U.S. fiscal policy is on an unsustainable path, and by the world's largest technology companies issuing record amounts of bonds to fund AI investment. Rehn warned that borrowing by technology companies poses a financial stability risk because valuations are extremely high and a correction is possible, saying a sharp adjustment in AI-related valuations could spill over into equity and credit markets.

Global bond markets faced heavy selling pressure, driving borrowing costs from the United States, France and Britain to Japan up to multi-decade highs amid concerns over inflation, elevated energy prices and the prospect that interest rates may stay high for a long time. The 10-year US Treasury yield, a key gauge of global borrowing costs, climbed to 5.34% during trading, the highest since 2002, after posting its biggest quarterly rise since the start of the century in the three months through September, before bargain hunting helped the yield ease back to around 5.26% in late US trading. In France, the 10-year bond yield rose close to 5%, the highest since 2002, after the French bond market turned in its worst quarterly performance since 1987, while the yield spread with Germany sat near its widest since the eurozone debt crisis and the cost of insuring against a French default hit its highest since 2013. In Britain, the 30-year bond yield surged past 6%, the highest since 1998, and Japan saw government bond yields rise by double-digit amounts for a fifth consecutive quarter, something never seen before. The Institute of International Finance estimates that over the past year, developed economies paid more than 3.3 trillion dollars in interest on government bonds traded in international markets, more than the roughly 2.6 trillion dollars in estimated global AI spending, 3.1 trillion dollars in defence spending and 2.3 trillion dollars in clean energy. Investors are rapidly shifting their views, with the market expecting the Fed to raise rates at least three more times before mid-2027 and the ECB to raise rates another three times, by 0.25% each, also by mid-2027.

A report from the Institute for Supply Management, or ISM, dated October 1 said the US manufacturing prices index rose to 77.9, up 6.8 points from 71.1 in August, with 58.6% of respondents reporting higher input prices, compared with 46.2% in August. The manufacturing PMI stood at 54.5, new orders at 55.3 and employment at 52.7. This broader spread of rising input costs increases the risk to Bitcoin's funding backdrop if investors price in higher interest rates ahead of the October 2 employment report. On the latest policy backdrop, the Federal Open Market Committee, or FOMC, raised its target interest rate range by 0.25% to 3.75% to 4% on September 16, and on September 29 New York Fed President John Williams said another increase could be appropriate late this year if the economy follows his projections. Meanwhile, a study by New York Fed staff in February 2023 found no systematic response by Bitcoin to financial and macroeconomic news, so Bitcoin's direction depends on how investors interpret the employment data and rate expectations.

Australian government bond yields are poised to fall below US government bond yields for the first time in more than a year, after the market anticipated that the monetary policy of the Reserve Bank of Australia, or RBA, is nearing the end of its rate-hiking cycle, while the US Federal Reserve still looks likely to raise rates further. The spread between the yield on 10-year Australian government bonds and that of equivalent US government bonds has narrowed to around 12 basis points, or bps, close to its lowest level since September 2025. Strategists from Barrenjoey Markets and Westpac Banking Corp. expect yields in the two countries to converge to similar levels in the coming months, while National Australia Bank, or NAB, believes the spread could turn negative, meaning Australian bond yields would fall below US yields. Kenneth Crompton, head of interest rate strategy at NAB in Sydney, said the bank's base case still expects the 10-year Australian and US bond yield spread to reverse in 2027, but that if it happens sooner, it would not be considered a major deviation from market conditions. He also expects that if the policy trajectories of the RBA and the Fed diverge as much as anticipated, the spread could fall back to around -20 bps by the end of 2027. Currently, the market expects the Fed to raise interest rates three more times, by 0.25% each, over the next 12 months, while the market expects the RBA to raise rates only once more, reflecting the increasingly clear divergence in monetary policy trajectories between the two countries.

The average rate on the 30-year fixed mortgage came in at 7.28% this week, up from 7.03% the previous week, according to data released on the first by the Federal Home Loan Mortgage Corporation, Freddie Mac, reaching its highest level in about three years. The weekly increase was the largest in roughly four years. The surge in Treasury yields is behind the move, adding further headwinds for would-be homebuyers. Mortgage rates track closely with the US 10-year Treasury yield, which this week reached its highest level in nearly a quarter of a century. Mortgage rates published by the Mortgage Bankers Association on September 30 showed a similar trend, and also indicated that mortgage applications fell again in response to higher rates. The rate on the 30-year fixed mortgage has risen by more than 1.2 percentage points over the seven months since the United States and Israel began strikes on Iran. Bob Broeksmit, president and chief executive officer of the Mortgage Bankers Association, said in a statement that mortgage rates have risen for six straight weeks and reached their highest level in about three years, adding that home affordability and borrower demand have weakened in recent weeks as the high-rate environment continues to squeeze both prospective buyers and homeowners considering refinancing.

Asian stock markets opened lower today as investors worried that elevated oil prices could accelerate inflation and force central banks to keep interest rates high for an extended period. Rising US government bond yields, which have climbed to multi-year highs, also continued to weigh on risk assets. Japan's Nikkei index opened down 0.93% at 68,313.46 points, while South Korea's composite index opened down 0.47% at 6,938.27 points. The yield on 10-year US government bonds jumped to 5.327%, the highest level since April 2002, while the yield on 30-year US government bonds climbed to 5.678%, a 24-year high. Lorie Logan, president of the Federal Reserve Bank of Dallas, said US inflation remains above the Fed's annual target and that the Fed still needs to raise interest rates significantly. However, surging bond yields may help bring inflation under control, which would reduce the need for more restrictive monetary policy. In addition, the US government has told Germany and France to release emergency diesel reserves to help lower soaring global fuel prices, warning that without action the United States could consider banning exports of US diesel. Meanwhile, China announced it will suspend exports of oil products in October amid concerns about domestic stockpiles.

US stock markets closed mixed, with the Dow Jones Industrial Average ending at 50,906.05 points, down 443.87 points or 0.86%, and the S&P 500 closing at 7,651.54 points, down 19.30 points or 0.25%, pressured by elevated oil prices and bond yields. The Nasdaq closed at 26,861.06 points, up 63.52 points or 0.24%, supported by buying in technology stocks. Headline PCE for August rose 3.4% year on year, below market expectations of 3.7%, while Core PCE rose 3.0% year on year, below expectations of 3.3%. The yield on 10-year US Treasury bonds rose above 5.3% and the 30-year yield above 5.6%. Investors are therefore watching September Nonfarm Payrolls, which the market expects to rise by 98,000 positions, compared with 162,000 in August, with the unemployment rate forecast at 4.1%. In European markets, the STOXX Europe 600 closed at 634.89 points, down 3.19 points or 0.50%, with bank stocks down 0.8% and insurance stocks down 1.4%. The DAX closed at 25,199.19 points, down 200.02 points or 0.79%, and the CAC 40 closed at 7,964.51 points, down 71.36 points or 0.89%, while the FTSE 100 closed at 10,606.00 points, down 30.71 points or 0.29%. In Asian markets, the Nikkei 225 opened at 67,106.52 points, up 352.80 points or 0.53%, boosted by buying in large technology stocks, while the KOSPI fell 0.8% and the S&P/ASX 200 dropped 1.09%. The Shanghai Composite and the Hang Seng Index were closed for China's National Day holiday. Thailand's stock market is expected to trade in a volatile and consolidating range, with sentiment pressured by surging US bond yields and concerns over continued foreign fund outflows. The stock to watch today is THAI, after the cancellation or rescheduling of domestic and international flights between October 1 and 3, 2026, along with efforts to clear backlogged baggage at Suvarnabhumi Airport, which could weigh on confidence and the company's short-term operations.

Minneapolis Federal Reserve President Neel Kashkari said on the 1st that further interest rate hikes may be necessary if the economy remains extremely resilient and inflation proves more stubborn than expected. In an interview with Reuters, Kashkari said he is "approaching with an open mind" how to proceed with rate increases, and that he does not "have a strong view on whether the October 27-28 meeting should decide on another rate hike." The Federal Reserve decided on a 0.25 percentage point rate increase at its September 15-16 Federal Open Market Committee meeting, and Kashkari holds a vote on the committee this year and had voted in favor of the hike. Based on economic indicators released since the September committee meeting, Kashkari said "the U.S. economy was stronger than I had expected," and noted that "the inflation rate is still too high." He also said the Federal Reserve's current policy is not significantly restraining the economy, and that "no signs of systemic risk are visible in the markets," while adding that the banking sector needs to be monitored carefully given rapid changes in borrowing costs. The final Federal Open Market Committee meeting of the year will be held on December 8-9.

Bitcoin posted its strongest third quarter since 2017, gaining 43% across July, August and September even as long-term Treasuries lost approximately 7.7% over the same period. The divergence came as US Treasury yields surged to a 24-year high in a global bond sell-off, with the TLT bond ETF hitting an all-time low and gapping down further. Scott Melker, host of "The Daily Wolf with Scott Melker," noted that bitcoin traditionally performs poorly in the third quarter and that the large move arrived in August, preempting the expected four-year cycle. Melker argued that rising interest rates and dumping bonds, driven by fears of fiscal dominance and monetary irresponsibility, are precisely the conditions bitcoin was built for, which he said explains its outperformance.

U.S. stock futures opened October in the green, with the Dow up 179 points, the Nasdaq up 169 and the S&P 500 up 32 points, helped by Brent crude holding at $100 per barrel and WTI near $90 per barrel. Bond yields continued to climb, with the 10-year at 5.285%, the 2-year at 4.858% and the 30-year at 5.637%, keeping mortgage rates elevated. Initial jobless claims came in at 197K last week, down 3K from expectations and 1K from the upwardly revised prior week, marking the third-straight sub-100K jobless claims report. Continuing claims reached a new near-term low of 1.701 million, down 11K month over month and below the downwardly revised 1.712 million from the previous week, remaining near 60-year lows for a third straight week. Later this morning, September Manufacturing PMI is expected to rise 3.1% on the S&P print and 0.3 points for ISM, while August Construction Spending is expected to rebound 0.1% after a 0.5% decline a month ago.