Finance, in brief

Japan's central bank raised its main interest rate to 1.25% on Friday, the highest in 31 years. [1]

Two of the bank's nine board members voted against the rise. [1]

The yen fell as much as 1.3% that day and more than 2% over the week, its biggest weekly fall in almost a year. [2]

The rise was widely expected, and it still did not lift the yen: two votes against and no clear word on the next rise disappointed investors. [1]

Japanese officials then rang banks to ask for currency quotes, the Nikkei newspaper reported. [1]

That is called a rate check, and traders treat it as the step before a government starts buying its own currency. [1]

By Monday morning in Asia the dollar was steady at about 157 yen. [3]

Japan's own markets are shut until Wednesday for the Silver Week holiday, so few people are trading. [3]

Thin trading makes any official buying move the price further, which is why this holiday week matters. [2]

Japan last bought yen in late July, alongside the United States, and the currency rose more than 6% before peaking at 152.89 on 8 September. [2]

Japan also stepped in around its late-April holiday, after the yen had weakened past 160 to the dollar. [2]

Governor Kazuo Ueda said the ground for setting policy had shifted, but would not say how high rates will go or how fast. [2]

Traders put the chance of another Japanese rise in late October below 20%, and the chance of one in December at almost 90%. [2]

The Federal Reserve, America's central bank, raised its own rate to 3.75%-4.00% last week on a unanimous vote. [6]

Fred Neumann, chief Asia economist at the bank HSBC, said that unanimous American vote made Japan's job harder. [1]

Why it matters. Watch whether Japan actually buys yen before its markets reopen on Wednesday; trading is thin all week, so any official purchase would move the price a long way.

Neel Kashkari, who runs the Federal Reserve's Minneapolis branch, said on Sunday that American inflation is too high across the whole economy, not only in fuel. [6] Strip out energy and food, he said, and prices are still rising too fast. [6] He backed last week's unanimous quarter-point rise to 3.75%-4.00%, after dissenting at the previous meeting because he wanted a rise then. [6] All but two of the Fed's rate-setters now expect at least one more increase this year. [6] He added that interest rates cannot reopen the Strait of Hormuz or make oil cheaper. [6][10]

Why it matters. Kashkari is saying the Federal Reserve cannot blame the war for this and wait. That is the argument that turns one rise into a series, and it lands on every American with a credit card or a new mortgage.

Futures markets now put a 56% chance on the Federal Reserve raising rates again in October, and treat a rise by the end of the year as settled. [3] Analysts at Bank of America said tightening cycles are usually front-loaded and that the Fed almost never stops after one increase. [3] They kept their forecast of two more rises, in October and December, pointing to American consumer spending running 6.3% higher than a year ago. [3] Money markets ended Friday pricing one more American rise by the end of 2026 and two more by June 2027. [7]

Why it matters. A week ago the argument was whether September was a one-off. It is now about how many more come, which is what sets the rate on anything borrowed at a variable rate.

Investors are moving into government bonds that are repaid soon rather than in decades, a bet that the Federal Reserve will get inflation down in the end. [8] The interest on two-year US debt has climbed to about 4.75%, the highest in years, as the price of those bonds fell. [8] Reuters put it at 4.7604%, up 0.36 points in a fortnight. [3] Futures markets are pricing another 0.8 percentage points of increases over the coming year. [8] Bloomberg said that shows traders believe Kevin Warsh, who chairs the Federal Reserve, will keep his promise to fight inflation. [8]

Why it matters. A short bond pays out before inflation can eat much of it, so buying short is a way of saying the fight will be won but not quickly. Savers are being offered the best return on cash in years.

The interest the American government pays to borrow for ten years passed 5% last week, its highest in 19 years. [34] It was 4% in March. [33] Two things pushed it there: shortages first from the pandemic and now from war, and governments borrowing so much that the market is flooded with their bonds. [34] Petrol is $4.47 a gallon and American home loans cost about 7%. [33] The Economist puts the ten-year rate at its highest in two decades. [32] The Wall Street Journal warns that even working out why bond prices moved is harder than it looks. [43]

Why it matters. The ten-year rate is the number most rich-world mortgages are priced from, so it reaches households long before it reaches governments.

South Korea's technology-heavy share index gained 1.1% on Monday and a wide index of Asian shares outside Japan rose 0.3%, lifted by demand for chips. [3] Japan's market was closed, though its futures rose 0.5%. [3] Oil eased despite the attack on Saudi Arabia's capital, because Saudi Arabia is trying to restart shipments through a damaged pipeline. [3] Brent settled 0.2% lower at $103.68 a barrel and US crude at $100.02. [3] Investors were weighing a recovery in Saudi shipments against the attack. [10]

Why it matters. Two forces are pulling in opposite directions on the same day: a war that removes oil from the market, and repairs that could put some back.

Vivek Dhar, head of commodities at Commonwealth Bank of Australia, now estimates that the world has five to ten weeks of oil and fuel in storage before stocks run down. [3] A fortnight ago his estimate was 15 to 20 weeks. [3] The change follows the closing of Saudi Arabia's east-to-west pipeline, which carries crude around the Strait of Hormuz, after drone attacks damaged it. [3][12] Dhar said the closure has materially altered the oil market. [3]

Why it matters. Stored oil is what keeps a price steady when supply is interrupted. A smaller store means the next interruption moves the price at the pump faster.

The daily price of hiring a ship to carry crude oil has reached a record, the Wall Street Journal reported. [12] Drone attacks shut Saudi Arabia's bypass pipeline earlier this month, pushing crude back onto ships going through the Strait of Hormuz. [12] That fleet was already stretched, and the longer voyages and short shuttle runs around Hormuz tie each ship up for longer. [12] Reuters reported Saudi Arabia is now trying to restart some flows through the line. [3] The effect has spread worldwide. [12]

Why it matters. The oil itself is only part of what a litre of petrol costs. When the ships run short, the freight bill is added to a price that is already high.

Gold was little changed on Monday at $4,379.74 an ounce, after touching a one-week high on Friday. [10] American gold futures for December delivery slipped 0.1% to $4,419.40. [10] Rising rates usually curb demand for gold, because assets that pay interest become more attractive and gold pays none. [10] Silver rose 0.8% to $66.76 an ounce and platinum 0.2% to $1,804.33. [10] Indian buyers held off, hoping gold gets cheaper. [11] In India, gold futures ended last week 1.04% higher at 154,000 rupees per 10 grams and silver rose nearly 3%. [42]

Why it matters. Gold is the asset that reacts to what people expect rates to be, not to what they are today. Tim Waterer of KCM Trade said it needs oil or bond rates to fall before it can climb again. [10]

Projections showed the far-right Alternative for Germany finishing first in state elections in north-eastern Germany on Sunday, a blow to Chancellor Friedrich Merz's conservatives. [1] Reuters described it as their worst election result since 1949. [3] The euro barely moved at $1.1482, having lost almost 1% last week. [1] Economists at the Dutch bank ING said years of economic stagnation helped split the vote, and that the split will now make the stagnation harder to escape. [1]

Why it matters. Lenders charge a government more when they doubt it can hold a majority together long enough to fix its finances. German government debt was expected to come under pressure on Monday. [3]

Switzerland, Sweden, Norway, Mexico and South Africa all set interest rates in the coming days, with the three European ones expected to hold. [7][3] Business surveys for September are due in the United States, the euro area and Britain. [7] James Knightley, an economist at ING, said that with only two American rate-setters expecting no further rise this year, the shift to a tougher line has already happened. [7]

Why it matters. A decision everybody expects changes nothing when it lands. What moves prices is the wording that comes with it, and this week there are five chances for a surprise.

The US Treasury auctions $69 billion of two-year notes on Tuesday, $70 billion of five-year notes on Wednesday and $44 billion of seven-year notes on Thursday. [7] Money markets ended Friday pricing another quarter-point American rise by the end of 2026 and two more by June 2027. [7] Buyers therefore have to decide what to pay for debt whose value falls if those rises arrive. [7]

Why it matters. These three sales test how many buyers American government debt still has this week. What they cost feeds into the ten-year rate that most American mortgages are priced from. [32]

India's ten-year government rate rose for a fifth week running to 7.0686%, after climbing about 0.26 points over the previous four weeks. [13] The Reserve Bank of India sold 500 billion rupees ($5.21 billion) of short-dated bonds last week, its first net sale at auction since November 2017, and will sell 250 billion more today. [13] The point is to pull cash out of the banks, which are flush after lenders raised $127 billion under a special currency scheme. [13]

Why it matters. Too much spare cash pushes overnight lending rates below the level the Reserve Bank of India has set, which makes its own rate meaningless. Goldman Sachs now expects the Federal Reserve to raise again in October, which pushes India the same way. [13]

Large Indian companies have been raising money in the bond market in recent days and more are expected this week. [14] They are moving ahead of the Reserve Bank of India's rate meeting on 5-7 October, where a quarter-point rise is expected, and ahead of the cash squeeze the Reserve Bank of India has started. [14][13] Surplus cash in the banking system is still strong enough that buyers are taking the bonds. [14]

Why it matters. A company that borrows now locks in today's rate for years. Every firm doing that is making the same bet: that money will be dearer in a fortnight than it is today.

India's National Bank for Financing Infrastructure and Development is raising $500 million through a ten-year bond, its first ever sale to overseas investors. [15] It is separately in talks to raise about $1 billion over 15 years with a guarantee from the Multilateral Investment Guarantee Agency, part of the World Bank group. [15] The guarantee means the World Bank arm pays if the Indian lender cannot, which lets it borrow for longer. [15]

Why it matters. Roads, ports and power stations take decades to pay back, and Indian banks do not lend that far out. A guarantee is how a country reaches money it could not otherwise borrow.

Fund managers investing in developing countries are sticking with bonds issued in local currencies rather than in dollars, as rising American rates make dollar bonds less attractive. [16] The appeal is cheap valuations and the chance to profit by borrowing where interest is low and lending where it is high. [16] Fund inflows and returns both show the shift. [16] Further American rises and a stronger dollar are the risk to it. [16]

Why it matters. This is the choice that decides whether a government in Africa or Latin America can borrow from its own savers or has to find dollars it does not earn.

Turkey's Capital Markets Board ordered two state banks, Isbank and Ziraat, to oversee the winding up of 131 investment funds run by seven managers, after a cash crunch triggered a sharp fall in the Istanbul share index. [17] One of them, Tera Portfoy, said investors asked for about 300 billion lira ($6.15 billion) back in a short period. [17] It paid out between 16 and 18 September, then could not continue because accounts were blocked. [17] Several executives have been detained. [17]

Why it matters. Ordinary Turkish savers put money into these funds and cannot now get it out. Finance minister Mehmet Simsek said the problem is contained and not a danger to the wider system. [17]

Ingenia Communities, which runs land-lease housing estates in Australia, rejected a A$2.06 billion ($1.47 billion) offer from Warburg Pincus, a firm that buys whole companies. [18] The cash offer of A$5.05 a share is 6.3% above the bid Ingenia turned down last month, and 16.9% more than the shares last closed at. [18] It still required Ingenia to abandon its own $711 million purchase of the developer Peet. [18] Ingenia's board said the price substantially undervalues it. [18]

Why it matters. Analysts at Citi said A$5.25 to A$5.50 in cash would be compelling, so the two sides are about 4% apart. [18] Ingenia's shares rose 2.6% to A$4.43, still below the offer. [18]

Perpetual, an Australian firm that manages other people's investments, rejected a third approach from EQT, a Swedish firm that buys companies, and ended the talks. [19] EQT offered A$22.50 a share in cash, about US$16.03, the same price as its second attempt in July. [19] This time it added that it would still pay in full even if Perpetual paid a dividend of up to A$0.60 a share. [19] EQT called it best and final. [19]

Why it matters. Two Australian boards turned down higher cash offers on the same morning. Both said the buyer was undervaluing a business that is harder to price while interest rates keep moving.

Telix Pharmaceuticals of Australia agreed to buy ITM Isotope Technologies Munich for about $1.65 billion, before cash and debt are counted. [20] ITM's owners will receive about $1.25 billion in Telix shares priced at $11.84 each, leaving them with roughly 23.7% of the combined company. [20] ITM already makes medical isotopes at commercial scale and turns a profit. [20] Telix uses those isotopes in treatments it is developing. [20]

Why it matters. Telix is buying its own supplier rather than paying for isotopes on the open market. It is the same instinct that made carmakers buy battery plants.

Paramount and California's attorney general have discussed a package of concessions to settle the state's challenge to its $81 billion purchase of Warner Bros Discovery, including a $1.5 billion investment in film and television production inside California. [21] Company executives and the group of states that sued spent the weekend on the detail. [21] A deal would clear the way for HBO, CBS, CNN, the streaming services and the film studios to sit under one owner. [21]

Why it matters. The states sued to stop the merger; the price of dropping that is now a number. It tells every future buyer what a competition objection costs to settle.

Sergio Ermotti, chief executive of UBS, said it is a mistake to think shareholders alone would pay for tougher rules, and that customers and staff would too. [22] Swiss lawmakers are deciding how much of its own money UBS must hold against its foreign arms. [22] A committee compromise would let it cover half with a cheaper kind of capital, which Ermotti said would mean finding $13 billion of it, painful but doable. [22] A stricter 90% option, he said, goes too far. [22]

Why it matters. UBS chairman Colm Kelleher has already said the bank would have to think hard about its future in Switzerland if the rules leave it unable to compete. [22] Ermotti also said the Swiss regulator and the Swiss National Bank bear some responsibility for Credit Suisse's collapse. [22]

China's youth unemployment, excluding students, reached 18.9% in August. [23] Car sales fell 20% in the first half of this year and housing sales fell another 14%, and prices across the economy are falling. [23] Economists close to the Chinese government have warned publicly that too much money is going into artificial intelligence, which employs few people, and too little into the rest. [23] Li Daokui, a former central bank adviser, said the economy is running too cold. [23]

Why it matters. Xi Jinping arrives in the United States this week with the strongest technology story China has had and the weakest domestic economy in decades. Both facts will be in the room.

As Donald Trump and Xi Jinping prepare to meet, the familiar demand that China let its currency rise is back from the United States and Europe. [24] The yuan is reckoned to be as much as 30% below what it would be worth if it floated freely. [24] A cheap yuan makes Chinese goods cheap abroad. [24] Raising it quickly would squeeze factory profit margins that are already thin and push unemployment higher, and would not fix the deeper problem of falling prices. [24]

Why it matters. Every country asking China to raise the yuan is asking it to accept fewer factory jobs at home. That is why the request has been made for twenty years and mostly refused.

Asian currencies barely moved against the dollar in early Monday trading as investors waited for the meeting between Donald Trump and Xi Jinping later this week. [4] Analysts at MUFG Bank said trade and economics will dominate, with technology and artificial-intelligence restrictions the hardest part. [4] The dollar was little changed at 156.87 yen and 6.6943 offshore Chinese yuan, while the Australian dollar edged up 0.1% to US$0.7125. [4] The dollar was steady against a basket of big currencies. [1]

Why it matters. MUFG said a constructive statement afterwards would lift Chinese assets and the Asian suppliers that depend on them. [4] Until then, most of Asia's currencies are parked.

Todd Vasos, chief executive of the American discount chain Dollar General, said households earning $100,000 a year are now behaving like lower-income shoppers. [25] He said his core customers, those earning under $45,000, change how they shop when petrol passes $4 a gallon: they stay closer to home, come more often and buy less each time. [25] The national average petrol price is now $4.476 a gallon. [25][33]

Why it matters. This is what the oil price looks like from inside a household budget. It is also why the Federal Reserve's own officials keep saying inflation is not only an energy story.

Williams-Sonoma, the American home-goods retailer that also owns Pottery Barn and West Elm, has gained about 23% on the stock market this year while house sales stay weak. [26] The United States is 96% of its sales, and American buyers face high loan rates plus rising energy and food bills. [26] The company lifted its operating profit margin from 7.9% in 2019 to 17.6% in 2021 by cutting discounts and reorganising deliveries. [26] Revenue fell from $8.25 billion in 2021 to $7.81 billion in 2025 while operating profit held. [26]

Why it matters. It is the clearest example this week of a company keeping its profits by selling less at full price rather than more at a discount.

The bank Jefferies kept its forecast that America's S&P 500 index of big company shares ends 2026 at 8,000 and 2027 at 9,000. [27] It expects company profits to grow 35% this year, against the 29% most analysts forecast. [27] Companies exposed to artificial intelligence and data centres make up about 46% of the index, with profits expected to grow about 60% this year and 24% next. [27] Jefferies named bond rates as the main risk. [27]

Why it matters. The ten-year American rate has already risen more than 0.6 points this year, and Jefferies notes that a rise above one point has historically made investors pay less for each dollar of profit. [27]