AFS Markets Blog: Morning 22/09/2026

• Meanwhile in markets, the pain from rising energy prices is not just limited to the bond market – just take a look at US election polling. With less than six weeks to go until the midterms, the situation looks increasingly desperate for the GOP;

• Online betting markets have long favored Democrats to win back the House, but they have now taken a lead in the Senate odds as well. According to Polymarket punters, Democrats are now favored to win the Senate majority at 65 percent – a clear shift from the 50/50 coin toss odds we saw just three weeks ago. This repricing isn't coming out of the blue. Polling points to Democrats being ahead in states like Alaska and Texas, and even being competitive in states like Kansas, where Trump won by 16 points;

• While President Trump has called on his supporters to vote as if he were on the ballot, that hardly looks like a solution to his political woes. Trump’s net approval has flatlined near -20.3 on the closely watched Nate Silver average since July – essentially the lowest level he has ever sat at. For context, he was sitting at -13.0 ahead of the 2018 midterm blue wave, while President Biden was at -11.3 before the GOP took the House in 2022. Going off the math, it seems very realistic that President Trump will be a proverbial lame duck for the remaining two years of his term;

• Moving to bond markets, US Treasury yields are pushing roughly 3bps higher across the curve this morning. Zooming out to a weekly horizon, we see a flattening picture: short-end yields have pushed higher – with the 2-year UST up 11bps on the week – while the long end has found some relief, leaving the 30-year yield down 6bps. The curve has flattened significantly with the 2y10y spread now at 20bps. While it is not inverted it is down nearly 30bps over the past month. The 5y30y spread stands at 45bps – having fallen nearly 50bps over the past month;

• Shifting to energy markets, prices have bounced off yesterday’s lows. After dipping below the psychological $100 a barrel mark for the first time in nearly two weeks, Brent crude is trading back at $102.05 at pixel time. European natural gas prices are also rising, up nearly 2 percent on the session. However, at €74 per MWh, gas is still down 6 percent over the past week;

• Touching on broader market commentary, Asian equities are trading higher this morning, while S&P 500 futures are sitting on marginal gains. Meanwhile, the crypto bros can finally come out of the shadows. Bitcoin has rallied over 10 percent in the past week, trading above $85k for the first time since January. In FX, USDJPY is trading at 157.61 at pixel time – continuing its grind back toward the 158 handle. That is the level where the BOJ stepped in with a reported rate check last Friday – so we are back on intervention watch;

• Looking ahead, we have a full slate of central bank speakers on the docket – three from both the Fed and ECB. Besides that, we’ll be keeping a close eye on the UN General Assembly for any major geopolitical headlines. We’re specifically watching for any information on the meeting between President Trump and the leaders of the Gulf states – where they are set to discuss the future of the Iran war.

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