Morning Bid: Summiteering

This week, world leaders convened for high-profile summits as central banks continued tightening monetary policy. The United Nations General Assembly in New York hosted US President Donald Trump and Chinese President Xi Jinping in a bilateral meeting. Ahead of the summit, Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng discussed trade relations, artificial intelligence concerns, and geopolitics.

However, the news cycle was overshadowed by ongoing conflicts in the Middle East and Eastern Europe, particularly attacks on Riyadh and Moscow from Iran-backed Houthis and Ukrainian forces, respectively. Oil prices dipped slightly due to hopes of restored Saudi Arabian oil flows and increased oil shipments, though prices remained above $100 per barrel.

In the US, markets reacted positively to the crude retreat and closed higher in light trading. Japan's Tokyo markets remained closed for the week, and the yen steadied after a reported rate check. The Federal Reserve's recent rate hike left economists speculating about potential further increases, with a 50-50 chance of another hike by next month.

The Bank of England also anticipated a rate hike by year-end, while European markets awaited results from Germany's state elections. France saw its 10-year bonds' yield increase by 104 basis points compared to Germany's, reflecting investor concerns about the country's long-term finances. The government implemented spending cuts to reduce its budget deficit, facing opposition challenges.

European Central Bank President Christine Lagarde and Bank of Canada Governor Tiff Macklem were among those to speak. Japanese markets closed for the holiday, resuming trading on Thursday.