weekly 12oct26

US CPI up next for bonds, while stocks pivot to Q3 earnings By Gustavo Medeiros and Ben Underhill

• US core CPI expected to stay subdued this week despite higher headline inflation. Contents Page

• S&P 500 breadth at its weakest since April, with financials underperforming. Global Macro 2

• President Trump is attempting to broker an ‘energy ceasefire’ between Russia and Ukraine, EM Asia 4 which Kyiv is resisting. • Trump also pledged no strikes on Iran before the midterms, with Iran hitting more tankers. Latin America 5

• Malaysia’s 2027 budget targets a narrower deficit of 3.3% of GDP. Central and Eastern Europe 7 • Flávio Bolsonaro took the lead over Lula in a Datafolha runoff poll for the first time. Central Asia, Middle East & Africa 8 • Argentina suspended local USD bond issuance after weak auction demand. Developed Markets 10 • JP Morgan placed Kazakhstan’s government debt on ‘Index Watch-Positive’. • Moody’s upgraded Ghana to ‘B3’, while Fitch revised Nigeria’s outlook to positive. Benchmark Performance 11

Last Week Performance and Comments Change 5 day PE 5 day EM Debt Yield (bp) Spread Change EM Equity* 1yr BF Change Comments

GBI-EM GD 6.44% -10 – 1.0% MSCI EM 9.5 0.0% • EM local currency bonds rose 1%, driven by falling rates, Brazil outperformance. GBI-EM FX Spot – – – 0.3% MSCI EM ex-China 9.4 -0.3% • EM USD sovereign bonds rose 1%, with ELMI+ 6.04% -4 – 0.2% MSCI EMEA 9.9 -0.6% defaulted names outperforming. EMBI GD 7.21% -1 234 bps 0.9% MSCI Latam 10.3 9.7% • EM equities were flat, even with LatAm up EMBI GD IG 6.39% -3 150 bps 0.7% MSCI EM Asia 9.7 -0.7% around 10% after Bolsonaro’s first round victory. EMBI GD HY 8.17% 2 331 bps 1.2% MSCI China 9.9 1.2%

CEMBI BD 6.94% 0 213 bps 0.3% MSCI India 18.1 -0.5%

CEMBI BD IG 6.29% -1 146 bps 0.3% MSCI EM Small Cap 13.5 1.1%

CEMBI BD HY 8.20% 1 343 bps 0.4% MSCI Frontier 10.3 0.3%

Change 5 day PE 5 day Global Debt Yield (bp) Spread Change Global Backdrop* 1yr BF Change Comments

2yr UST 4.79% -2 – 0.2% MSCI ACWI 16.3 0.7% • The UST curve bull flattened. 5yr UST 5.02% -4 – 0.3% MSCI World (DM) 17.9 0.7% • US stocks rose 1.2%, with breadth improving.

10yr UST 5.24% -7 – 0.4% S&P 500 19.2 1.2% • Brent crude prices rose 3.8% as Iran increased attacks on tankers. 30yr UST 5.60% -7 – 0.6% VIX Fut.** 17.0 -0.5%

10yr Germany 3.47% -2 – -0.5% DXY Index** 102.3 0.1%

10yr Japan 3.02% -7 – 1.1% EUR* 1.119 -0.3%

Global Agg.*** 4.40% -3 34 bps 0.0% JPY* 158.4 -0.4%

US Agg. IG*** 5.99% -6 76 bps 0.4% CRY Index** 414.7 0.9%

EU Agg. IG*** 4.25% -2 73 bps 0.1% Brent** 104.8 4.5%

US Corp HY*** 8.24% -5 308 bps 0.2% Gold** 4,174 0.8%

EU Corp HY*** 7.28% -2 344 bps -0.1% Bitcoin** 83,445 0.1%

Source & Notations: See end of document.

WEEKLY INVESTOR RESEARCH 12 October 2026

Bond yields steadied last week, with the 10-year US Treasury yield oscillating within its newfound 5.2–5.3% range and credit spreads broadly tightening. French OATs also stabilised, with the 10-year easing to c.4.8% and the spread over Bunds narrowing to c.133 basis points (bps) from a peak of 147bps on 2 October. The respite may prove short-lived. The National Assembly’s finance committee rejected the revenue half of the 2027 budget and will begin its floor debate on the original draft of the budget on Tuesday.

In the US, September’s consumer price index (CPI) inflation print, due on Wednesday, will be the next test of direction. Consensus estimates converge on an uncomfortable headline but a benign core. UBS projects headline CPI to rise 0.56% mom, the third-largest monthly increase this year after March and April, lifting the annual rate from 3.40% to 3.62%. Core CPI, by contrast, is projected to rise only c.0.2% mom, broadly in line with the pre-pandemic pace. On UBS’s numbers, core inflation edges down from 2.45% to 2.41% yoy, only 0.10-0.15pps above the level consistent with the US Federal Reserve (Fed) 2% personal consumption expenditures (PCE) target. The data continue to indicate an energy shock rather than a broadening of underlying inflation, at least for now. The key anchor remains wage growth, which is close to 0% in real terms. In our view, this backdrop leaves room to unwind more of the rate hikes priced into forward curves.…