AFS Markets Blog: Midday 25/09/2026

• Meanwhile in markets, crude and US Treasuries are trading sideways this session as news feeds are dry. Recently, attention in markets has centered on energy and petroleum products, but these are far from the only products over which the Middle East exerts a global foothold;

• The Middle East produced roughly 15 percent of the world’s urea – a critical component of nitrogen fertilizers. A supply shortage here poses a risk of spilling over into food prices. In the opening months of the war with Iran, urea futures surged nearly 90 percent year-to-date before completely round-tripping following the ceasefire that followed the Memorandum of Understanding. Over the past month, prices have begun rising again – though gains remain more contained at just under 20 percent YTD;

• Fertilizers only a part of the broader story. The Middle East also accounts for nearly 10 percent of the world's aluminum production. At one point, aluminum prices were up 25 percent YTD before essentially round-tripping by the end of June. While prices have risen off their lows as fighting resumed, the current 8 percent year-to-date gain remains relatively contained;

• Moving to broader market commentary, the Stoxx 50 is up three-quarters of a percent this morning. S&P 500 futures are up a quarter of a percent as well. Credit where credit is due, Bitcoin is up four percent for the week, trading at $84,585 at pixel time;

• Switching to some FX commentary, the broad dollar came within touching distance of its 2026 highs yesterday – and while it has eased somewhat today, the greenback has risen one percent week-to-date. The dollar strength has prompted fresh jawboning from Tokyo, with USDJPY pushed below 158 this session after Prime Minister Takaichi called the yen undervalued – though the pair largely erased those losses and rebounded to 158.02 at pixel time. In our neck of the woods, EURCHF trades at 0.945. The cross has recovered its earlier losses this week after the Swiss National Bank delivered a distinctly non-hawkish tone at yesterday’s interest rate decision;

• Turning to geopolitics, yesterday’s US-China summit has so far proven to be a total nothingburger. The sole notable outcome so far – another extension of the trade truce through January 10 – had already been announced beforehand. Beyond that, there has been no sign of any corporate deals, AI agreements or anything else tangible;

• The work week will be closed out with August US durable goods orders and a handful of central bank speaking engagements. Looking ahead to next week, October kicks off with the usual start-of-month data dumps. Key releases include the US ISM Manufacturing PMI – where we will see whether the strong results of this week's S&P PMI are mirrored – as well as detailed US job openings data and the US labor market report. The latter is expected to confirm that labor market conditions are continuing to improve, allowing the Fed to focus squarely on inflation.

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