2026-09-23 Wednesday
Covering 2026-09-22 07:00 – 2026-09-23 07:00 · 11 pieces · 202 releases from 86 institutions
The big picture
The Fed's first increase since 2023 has repriced the entire dollar curve, and the euro area is importing that tightening through the Bund, which touched its highest level since June 2009. The same impulse reaches the periphery unevenly: Serbia's eurobond yields moved roughly half as much as the CEE3 average, a reminder that the pass-through of a US hike into emerging-market local funding is a function of the issuer's own liquidity, not the Fed's. Italy's revised deficit, now −3.1% of GDP with a primary balance of 0.8% of GDP, works in the opposite direction, shrinking the supply of BTPs just as the discount rate rises.
On the watchlist
- The ECB's October meeting: whether the deposit rate stays at 2.5% or moves, against market pricing of at least three more increases.
- US 10-year Treasury yield: whether it holds above 5% after the Fed's move to 4%.
- FDIC comment period closes 23 November 2026 on parity for out-of-state state banks, with thousands of state banks and a slightly smaller number of issuer banks affected.
Decisions & policy
Data
Why it matters Sovereign borrowers priced off the US curve — Poland, just cut to A3 by Moody's over fiscal deficits and rising interest costs, and Romania ahead of S&P's October review — face higher refinancing costs at the long end.
The Fed raised its target range to 4%, the first increase since 2023, lifting the 2-year Treasury yield to 4.75% and the 10-year to 5%, while the German 10-year briefly touched its highest level since June 2009. The move pushed CEE3 eurobond yields up modestly, with Serbia's comparable paper moving by roughly half as much, and it came with a stronger dollar at 1.1474 USD/EUR and Fed projections that put the return of inflation to target only in 2029.
- 10-year German Bund yield 3.52%
- 2-year German Bund yield 3.28%
- NBS policy rate 5.75%
- ECB deposit facility rate 2.5%
Why it matters A deficit that keeps falling while nominal GDP is revised up reduces the stock of debt relative to output, so holders of Italian paper get a slower supply pipeline and a smaller refinancing need at each auction.
ISTAT revised Italy's 2025 net borrowing down to −3.1% of GDP from −3.4% of GDP in 2024, with the primary balance improving to 0.8% of GDP and real GDP growth marked up to 0.6%. The lower deficit and higher nominal GDP of €2.27trn shrink the debt ratio's denominator and trim the issuance needed to fund the shortfall, easing pressure on BTP spreads at the margin.
- Tax burden, % of GDP 42.9% of GDP
- Gross fixed investment, volume 3.9%
- Interest expenditure growth 2%
Why it matters A persistent liquidity deficit pushes the overnight rate toward the marginal standing facility of 5.5%, steepening the money-market curve and raising the cost of short-term funding for banks that hold sovereign paper.
The RBI's operations on September 22 left net liquidity injected from today's operations at ₹−228,907 crore, with the standing deposit facility absorbing funds at 5% and the variable rate repo cut-off at 5.24%. Banks' cash balances with the RBI sit below the average daily cash reserve requirement of ₹821,989 crore for the fortnight ending September 30, forcing them to bid up call money to 5.24%.
- Overnight segment volume ₹744,738.1 crore
- Net durable liquidity ₹1,066,303 crore
Issuance & auctions
Why it matters Kyrgyz banks and any holder of short som paper see the 91-day note at 13% as the marginal risk-free rate, so a curve this steep raises the hurdle for every domestic credit and sovereign issue priced off it.
At auctions on 22 September 2026 the National Bank of the Kyrgyz Republic accepted average yields of 11.75% on 7-day notes, 11.91% on 28-day notes and 13% on 91-day notes. The spread of +125bp between the shortest and longest paper prices the central bank's own liquidity absorption as the cost of holding som for a quarter, which sets the reference for local bank funding and government paper.
Why it matters Banks rolling HK$ liquidity through Exchange Fund Bills are being rationed at the 91-day point, which pushes them toward the longer-dated tenders and steepens the HKD funding curve that underpins Hong Kong dollar deposits and mortgage pricing.
The Hong Kong Monetary Authority allotted HK$66.68bn of 91-day Exchange Fund Bills on 22 September 2026 against bids of roughly double the amount allotted, at an average accepted yield of 2.77%, with the pro rata ratio near half. The same tender drew bids of nearly four times the amount allotted for the 364-day line, so the squeeze is concentrated where the Exchange Fund's paper is shortest and cheapest to fund.
Why it matters A smaller overnight drain keeps the weighted average call rate closer to the repo floor, which supports short-end G-sec carry and lowers the marginal cost of funds for banks ahead of the 23 September treasury bill auction.
The Reserve Bank of India will drain ₹75,000 crore through a 1 day Variable Rate Reverse Repo auction on 23 September 2026, after reviewing current and evolving liquidity conditions. The notified amount is a quarter below the sum the RBI set for its 21 September overnight operation, so the central bank is leaving more cash in the banking system at the very tenor it uses to steer the call rate.
Regulation & supervision
Why it matters Novation is the mechanism by which Indian banks transfer derivative exposure off their books, and a tighter legal basis for it changes how much counterparty risk stays with the original dealer.
The Reserve Bank of India has issued final instructions on the novation of OTC derivative contracts, replacing the draft directions of 9 July 2025 and folding them into the existing directions for foreign exchange, interest rate, government securities and credit derivatives. The rules bind any novation from 22 September 2026, so counterparties that reassign trades must re-paper documentation against the amended Master Direction on Risk Management and Inter-Bank Dealings.
Why it matters If adopted, the rule would strip Illinois-style interchange caps of their reach over out-of-state issuers, and the FDIC counts 3,185 state banks potentially affected, of which 111 acquirer banks face roughly $16m each in system-update costs under the baseline.
The FDIC has proposed recognising parity between out-of-state state banks and national banks, so host state laws that do not bind a national bank would not bind an out-of-state state bank either, with the chartering state's law applying instead. The proposal answers litigation over the Illinois Interchange Fee Prohibition Act, which caps interchange on the tax and gratuity portions of card transactions, and comments run to 23 November 2026.
- State banks 3,449
- Issuer banks affected 3,183
Why it matters Any finding that the ASX facilities fall short of the standards would put margin, default-fund and recovery arrangements at the centre of the next supervisory response, with consequences for the cost of clearing for Australian market participants.
The Reserve Bank of Australia has published its 2026 Assessment of the ASX Clearing and Settlement Facilities, measuring their performance against the RBA's Financial Stability Standards. It is a supervisory judgement on market infrastructure rather than a new statistical release, so it carries no fresh numbers for pricing.
Speeches & research
Why it matters Traders holding front-end euro duration on the assumption of a mechanical hiking path face a repricing if the Council treats the neutral rate as unobservable and refuses to validate market pricing.
Governing Council member Ante Žigman said inflation, currently at 3%, must return to the 2% target, while markets price at least three more deposit-rate increases from 2.5%. He stressed the ECB will not set policy on market expectations, so a data-dependent October meeting could reprice the front end of the euro curve.
Why it matters State interest payments reach €472m by 2028 and rise thereafter, so a government unwilling to cut by the recommended annual amount borrows into a rising debt-service bill that investors will price at auction.
Eesti Pank sees growth of 2.5% this year and the next two, but now expects the budget deficit to exceed €2.2bn as slower wage and consumption growth cut tax revenue. It recommends cutting the deficit by 0.5% of GDP a year to hold general government debt near 30% of GDP.
The week ahead
Aggregation of publicly available sources · automated summaries, may contain errors — verify against the linked originals · no investment advice, no recommendation, no solicitation