AFS Markets Blog: Morning 28/09/2026

• Meanwhile in markets, energy prices are rallying on the latest wave of US–Iran headlines. Bond yields are following energy higher, while equities are presenting a mixed picture;

• Brent crude is nearing its highest level of September – trading around $107.50 at pixel time – after President Trump rejected Iran's latest ceasefire proposal. According to the Wall Street Journal, Trump indicated to aides that he expects to resume the bombing campaign after the midterm elections. Still, diplomacy is not entirely dead: the ever so well informed Axios reports that Trump anticipates indirect talks between US and Iranian negotiators to continue this week, potentially as early as today;

• Still, significant friction remains, with Trump asserting that Tehran is overplaying its hand now that its negotiating position has weakened. Despite the fog of war in the Strait of Hormuz and Iranian claims of tanker strikes, the US reports that 22 million barrels of oil were exported on Friday night – the highest volume since the war broke out, effectively matching pre-war levels;

• Over the weekend, an attack on a UK airbase involving explosive-filled vans was foiled by authorities. The base houses US bombers used in strikes against Iran – a target Tehran has previously declared fair game. However, direct Iranian involvement remains purely speculative at this stage, as no evidence linking Tehran to the plot has surfaced. Nevertheless, if Iran were involved, that would mark a real escalation of the conflict;

• US Treasury yields are up 3–5 bps in a bear-flattening move this morning, with the 30-year yield reaching 5.52 percent – its highest level since 2004. In our neck of the woods, the French 10-year OAT-Bund spread closed Friday at 109bps, and we will be keeping a close eye on how it reacts to the weekend’s French Senate election results. While the conservative Republicans are set to hold their majority, Marine Le Pen’s far-right party is poised to quadruple its seat count. Though Senate elections are decided by local officials rather than the general populace, the outcome represents a significant victory for Le Pen’s party – which is leading in the polls for next year’s presidential elections;

• Shifting to broader market commentary, S&P 500 futures are down a quarter of a percent this morning, while Stoxx 50 futures are sitting on marginal gains. The broad dollar is up marginally this morning, with USDJPY trading at 157.67 at pixel time. EURUSD is holding near its lowest level since July at 1.137. Over in commodities, gold is down nearly two and a half percent this morning – and at $4,175 is trading at its lowest level since August;

• Looking ahead, today’s calendar is light on headline-worthy events – though any market surprises would be a welcome addition. The pace picks up tomorrow, with a heavy slate of ECB- and Fed-speak alongside the detailed US job openings report for August.

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