Overnight
The US Treasury curve extended its climb to multi-decade peaks overnight, with the 30-year yield hitting 5.460% — levels last seen in June 2004. The 10-year touched 5.167%, its highest since July 2007, as markets priced in persistent inflationary pressures from energy costs and a resilient American economy. The S&P Global US Flash PMI released on September 23 showed business activity expanding at its fastest pace in over five years, prompting fresh expectations that the Federal Reserve could deliver one more rate increase before year-end.
The immediate catalyst was hawkish rhetoric from New York Fed President John Williams and Philadelphia Fed President Patrick Paulson, both suggesting modest further tightening may still be warranted despite current policy levels. Treasury weakness also reflects structural concerns: with US debt accumulating rapidly, the Treasury must issue bonds at yields that compel buyers to step in, creating a self-reinforcing cycle of upward pressure on long-dated paper.
Gold and central banks
The World Gold Council's latest data shows central banks undeterred by the sharp selloff on September 23. Poland has accumulated 64 tonnes of gold year-to-date through July, the largest accumulation globally, as NATO's eastern border tensions reshape reserve strategy. China added 10 tonnes in July alone, while Uzbekistan, Kazakhstan and Singapore have all reported net monthly purchases. Goldman Sachs research expects central banks to maintain an average of 50 tonnes of monthly gold purchases for 2026, a stark shift from the 17-tonne monthly average before 2022.
The buying reflects a strategic reorientation. With geopolitical tensions on the rise and confidence in fiat-denominated reserves under pressure from inflation, central banks view gold as insurance against policy divergence and currency instability. Turkey and Russia remain net sellers this year, shedding reserves under economic strain, but the broader picture shows a two-tier market: geopolitical buyers are locking in, while economically stressed issuers are liquidating.
FX and rates
Sterling weakness persisted through the session, with GBP/USD sliding to 1.3252 — a three-month low — as the Fed-BoE policy divergence widened. The Bank of England held rates at 3.75% on a 6-3 vote, leaving the door theoretically open for a November hike. However, Governor Andrew Bailey's recent comment that persistently high energy prices make rate maintenance harder sent a mixed signal to markets. Meanwhile, Fed speakers lined up to defend the case for one final hike this year, and the bond market's repricing toward that scenario gave the dollar fresh momentum.
Energy remains the pivot point. US-Iran tensions keep oil pressured above $92 per barrel, and any further escalation will tighten the global energy supply narrative — the very constraint that keeps inflation sticky and central banks reactive.
The day ahead
Markets will parse jobless claims data in the US, while Japan's Ministry of Finance is expected to release its latest JGB curve data and financial results. UK gilt futures will trade on any fresh central-bank commentary. The earnings season rolls on, with tech results due and credit conditions remaining the proxy for rate terminal expectations.
One number
5.460% — the 30-year Treasury yield, at its highest level since mid-2004, reflecting a structural repricing of long-term real and nominal risk.
One read
Why central banks are betting on gold as a backstop against geopolitical fragmentation and currency instability in an era of divergent monetary policy — a shift that has transformed gold from a speculative asset into a systemic reserve instrument. Related: The case for gold as geopolitical insurance
