Bond yields soar, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on September 12

Global Market Review

1. European and American market conditions

The three major U.S. stock index futures rose and fell, Dow futures fell 0.15%, S&P 500 futures fell 0.08%, and Nasdaq futures rose 0.04%. The German DAX index fell 0.17%, the UK FTSE 100 index rose 0.37%, the French CAC40 index fell 0.37%, and the European Stoke 50 index fell 0.28%.

2. Market news interpretation

Bond yields soar! Expectations of interest rate cuts in the European Central Bank cool down, and the Fed's policy paths are differentiated

⑴ European government bond yields rose significantly this week, mainly affected by investors' downgrades in the European Central Bank's interest rate cuts. Germany's 10-year government bond yield has risen to 2.69%, up about 4 basis points this week. The interest rate-sensitive 2-year Treasury yield hit a new high since April of 2.0250%, with most of the gains appearing on Thursday, when the ECB kept interest rates unchanged as expected and did not disclose future policy trends. Institutional analysis pointed out that the high confidence within the ECB in the current policy interest rate level indicates that the early stage of the yield curve will be supported in the short term. ⑵ The market's expectations for the European Central Bank's interest rate cut have cooled significantly. The capital market currently expects that the probability of a 25 basis point interest rate cut by June 2026 is less than 40%, which is significantly lower than the level of nearly 50% after Thursday's policy meeting. Meanwhile, the market has fully valued that the Fed will cut interest rates by 25 basis points next week. This differentiation of policy paths of major central banks has led to a narrowing of the interest rate spread between 10-year German bonds and US bonds until July 2023The lowest level since. ⑶ The difference between the market's pricing of the Federal Reserve's interest rate cut and the European Central Bank's policy drives changes in the yield curve. The Fed's policy prospects, especially when and at what speed it will further cut interest rates, will be the focus of market attention. Analysts noted that while Powell may reiterate that "every meeting is a live meeting", the September meeting has not yet made any arrangements for specific decisions in October. ⑷French sovereign debt ratings will face scrutiny from rating agencies after the close of Friday (Beijing time). Although the rating downgrade may be a concern for the market, analysts believe that given that some expectations have been digested by the market, the rating review is unlikely to trigger a severe market reaction. Currently, the 10-year Treasury bond yield spread between France and Germany remained at 77 basis points, down from the 6-month high of 83.38 basis points that hit this week.

Focus on the game between big powers, and the market is undercurrent.

⑴ US President Trump said that "may be a mistake" about the Russian drone flying into Poland, but was frustrated by the development and hoped that the incident would subside. In addition, Trump and his staff expressed strong dissatisfaction privately over Israel's attack on Qatar, fearing that the move could undermine efforts to cease fire negotiations in Gaza. ⑵ The U.S. Senate passed a rule modification by 53 to 45, allowing collective confirmation of nominees, a move expected to speed up the confirmation process for the Trump administration’s executive branch. ⑶Trump is "very surprised" that former Brazilian President Bolsonaro was found guilty of planning a coup. At the same time, the Qatari Prime Minister will visit the United States on Friday and will meet with Trump and others.

The favor of giants is no longer there, and the rebound alarm for long-term bond yields is sounded

⑴ The recent decline in extremely long-term government bond yields may be difficult to continue. Although demand is plentiful this week's 30-year Treasury auction, Asia Pacific market leader Thomas Mathews pointed out that structural problems remain hidden. ⑵ The second quarter financial account of the U.S. shows that traditional long-term U.S. bond buyers, such as fixed income pensions and life insurance xmaccount.companies, did not increase their holdings in the second quarter. This shows that the traditional main buying power in the market is weakening. ⑶ As of this week, the yield on the 30-year U.S. Treasury has risen to 4.659%, after hitting 5.002% on September 3. This fluctuation shows that market sentiment and short-term supply and demand relationships may become key factors driving changes in yields in the case of doubts about demand fundamentals.

Inflation expectations soar! The Bank of England faces severe tests

⑴ The British public's expectations for inflation in the next five years have risen to 3.8%, a record high since May 2019, which may make some decision makers of the Bank of England feel uneasy before next week's interest rate decision. ⑵ Although this is not an accurate prediction, the rise in public inflation expectations may become a risk factor for future inflation rises, increasing the likelihood that people will demand higher wages and accept higher prices. ⑶The survey shows that public net satisfaction with the Bank of England's method of controlling inflation fell from +6 in May to +6 in August2, although still higher than most of the past three years. ⑷ UK consumer price index rose to an 18-month high of 3.8%, the highest level in the G7 (G7), while the Bank of England expects inflation to reach 4% in September and fall back to its target level in the second quarter of 2027. ⑸ The Bank of England cut interest rates by 25 basis points to 4% in August, but the market generally believes that the possibility of a rate cut next week is slim, and the probability of a rate cut later this year is only about 40%.

Japanese silver is expected to remain calm and cautious in its leadership

⑴ Given the current volatility of the economic outlook, the Bank of Japan is likely to take a wait-and-see attitude at its meeting next week. Although recent data show GDP growth exceeding expectations, inflation is sticky and the yen depreciates again, these factors seem to provide reasons for rate hikes, political and economic uncertainty at home and abroad have made policy makers tend to be cautious. ⑵ The resignation of Japanese Prime Minister Shigeru Ishiba has brought variables to the policy prospects, and at the same time, the continued doubts in overseas markets surrounding the US-Japan trade agreement have also increased uncertainty. xmaccount.combined with weakening trends in Japan's exports and industrial output and the staggering pace of consumer spending, these factors point to a sign of an economic slowdown that cannot be ignored. ⑶Economist Stefan Angrick of Moody's analysis pointed out that there is currently a lack of sufficient demand-driven inflation to support the decision to raise interest rates this month. Although the Bank of Japan is not unable to raise interest rates, policy makers may choose to wait until the economic situation becomes clearer in the context of the current uncertain economic outlook.

EU employment data is strong, but hidden worries emerge

⑴ Data released by the European Union's Statistics Office shows that in the second quarter of 2025, the employment rate of the EU aged 20-64 reached 76.2%, a slight increase from 76.1% in the first quarter, which shows that the labor market has maintained resilience to a certain extent. ⑵ The report also pointed out that as of the second quarter of 2025, the idle rate of the labor market (including unemployed and unmet people with employment needs but unmet) accounted for 10.9% of the expanded labor force aged 20-64, the same as the previous quarter, showing a relatively stable relationship between the overall labor supply and demand. ⑶ Although the overall employment data is positive, by country, the employment rate growth in Latvia (+1.3 percentage points), Estonia (+0.8 percentage points) and Belgium (+0.7 percentage points) is particularly significant. However, employment rates in countries such as Hungary (-0.5 percentage points) and Italy (-0.3 percentage points) have declined, which may herald a differentiation in regional economic performance. ⑷ Institutional analysis believes that the steady growth of the employment market provides certain support for the economy, but in the long run, if the continued growth in employment rate is not accompanied by a significant increase in productivity, it may pose a challenge to inflation falling to the target level, and may lead to a slowdown in wage growth and stagnation in employment growth.

3. The trend of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:23 Beijing time, the euro/USD fell, and is now at 1.1715, a drop of 0.16%. Before the New York Stock Exchange (Euro/USD) fell slightly on the last trading day, pulling back to collect yesterday's gains, with a clear overbought condition for offloading (RSI), especially with the emergence of negative overlap signals, indicating that positive momentum is being lost in the near future.

GBP/USD: As of 20:23 Beijing time, GBP/USD fell and is now at 1.3541, a drop of 0.22%. Before New York, the (GBPUSD) price fell on the last trading day after approaching the key resistance of 1.3585, which represents our recommended target, in addition to attempting to unload some apparent overbought levels on (RSI), collecting its positive force to break through this resistance as negative overlap signals emerge, continuing to gain positive support from trading above the EMA50, and refusing to collect previous gains from rising gains on the short-term basis, dominated by the main bullish trend and its trading along the slash.

Spot gold: As of 20:23 Beijing time, spot gold rose, now at 3643.43, an increase of 0.25%. Before the New York Stock Exchange, the (gold) price rose on the last trading day, taking advantage of its stability above the EMA50 to provide dynamic support and strengthen the strength of the bullish trend, and in addition, trading along the supportive slash on a short-term basis indicates that the positive dominance on the technology track is still continuing.

Spot silver: As of 20:23 Beijing time, spot silver rose, now at 42.078, an increase of 1.33%. Before New York, the (silver) price closed higher in the last intraday trading after reaching our last recommended target $42.10 resistance to collect the gains from the previous rise in an attempt to unload some obvious overbought conditions on the (RSI), especially in the case of negative overlapping signals, where positive pressure from trading above the EMA50 continues to form dynamic support, maintaining the stability of the main bullish track in the short term, with trading along the slash.

Crude oil market: As of 20:23 Beijing time, U.S. oil rose, now at 63.610, an increase of 2.02%. Before the New York Stock Exchange, the price of (crude oil) continued to fall in the last day trading, affected by the negative pressure caused by stabilizing below the EMA50. In addition, the sustained bearish trend in the short term and trading along secondary bias lines indicate the strength of the negative trend, which is close to the key support level of $61.65,Its strength is being tested.

4. Institutional View

Barclays: The pound may recover due to excessive concerns about fiscal and economic growth

Barclays Bank analysts said in a report that the market's pessimism about the UK's fiscal situation and economic outlook may be excessive, and the pound is expected to rebound. They pointed out that although the UK government's fiscal wiggle room has disappeared, debt levels do not appear to be unsustainable. At the same time, the resilience of the UK economy in the past few years has exceeded previous concerns. Currently, the market is generally shorting the pound and is expected to fall. If the government launches a credible fall budget in November, xmaccount.comply with fiscal rules and is best achieved by a tendency to cut spending and expand fiscal space, this will create "conditions" for the pound to rebound. Barclays expects that the euro-GBP exchange rate will drop from the current 0.8654 to between 0.84 and 0.85 if fiscal uncertainty is eliminated.

Bank of Montreal: Stock markets usually rise after the Fed cuts interest rates

Bank of Montreal Capital pointed out that after the Fed initiates interest rate cuts, U.S. stock markets usually rise. Since 1982, the S&P 500 has achieved positive returns in eight rounds of the 10-round rate cut cycle, with an average return of 10.4% in the year after the rate cut.

Moody's: Due to uncertainty, the Bank of Japan will continue to hold its back.

Moody's analyst Stefan Angrik said that the Bank of Japan will choose to wait and see at its meeting next week. The economist said that while better-than-expected GDP growth, tenacious inflation and a new depreciation of the yen make rate hikes possible, policy makers may remain cautious in amid political uncertainty at home and abroad. Japanese Prime Minister Shigeru Ishiba's resignation disrupted the policy prospects, and the overseas situation is not much better, and doubts about the US-Japan trade agreement still exist. Meanwhile, Japan's exports and industrial output are weakening, and consumer spending is shrinking. "Demand-induced inflation is not enough to guarantee a rate hike this month," Angrick wrote. This is not to say that the Bank of Japan cannot raise interest rates, but policy makers may want to be clearer given the volatile economic outlook.

The above content is all about "[XM Foreign Exchange Decision Analysis]: Bond yields soar, analysis of short-term trends of spot gold, silver, crude oil, and foreign exchange on September 12". It was carefully xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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