OTP Morning Brief: Rising oil prices and US labor market data pushed developed market bond yields higher
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Wednesday brought no significant moves across international equity markets, as investors focused on diplomatic developments related to the Strait of Hormuz, while awaiting US PCE data and Nvidia's earnings report. Nvidia reported stronger-than-expected quarterly results and issued a more favorable outlook than the market had anticipated. Oil prices edged slightly lower; however, US consumer price indices for consumption expenditures showed a larger-than-expected year-over-year rise, alongside an increase in personal income, while the closely watched core PCE price index came in line with expectations. Expectations for Fed rate hikes this year remained unchanged, while money markets fully priced in a September tightening by the ECB in the euro area. Long-term bond yields moved higher across developed markets on Wednesday, while the US dollar strengthened slightly. In contrast, Hungarian long-term yields declined, with the benchmark 10-year government bond yield falling to 5.46%. In line with other regional currencies, the Hungarian forint weakened against the euro. The ECB’s latest policy account and weekly US jobless claims data are today's highlights. In Hungary, the Hungarian Central Statistical Office (KSH) will release June wage data. The Jackson Hole Symposium kicks off today in the US, with markets closely watching Fed Chair Kevin Warsh’s appearance on Friday.
OTP Morning Brief: Oil prices declined as Middle East tensions eased
Major European indices mostly advanced on Tuesday as geopolitical tensions eased somewhat and favorable macroeconomic data were released in Germany; meanwhile, the MNB cut its base rate by 25 basis points, in line with expectations. US major indices advanced on Monday; Canada announced retaliatory tariffs in response to US duties; meanwhile, US consumer confidence deteriorated, contrary to expectations for stagnation. Developed market yields edged lower, while the forint strengthened against the euro following the interest rate decision. Today, data from the US are due on CPI, household spending and income, as well as durable goods orders. In addition, the detailed breakdown of Q2 US GDP will be released, while in Hungary, the statistical office will publish data on the growth in investment performance.
Supported by favorable corporate earnings reports, leading Western European stock indices mostly posted modest gains on Thursday. In contrast, US equity markets closed lower. Eurozone retail sales fell by 0.3% month-on-month in June, while the May figure was revised upward. German industrial orders increased by more than expected. The data released on Thursday continue to support the resilience of the US labor market. Developed market bond yields rose alongside higher oil prices. The forint weakened by 1% against the euro, underperforming its regional peers. Following stronger readings in May, Hungarian retail sales and industrial production declined month-on-month in June. Today, the primary focus will be on July CPI data released by the HCSO and US labor market figures.
Favorable corporate earnings reports supported European markets
Leading Western European stock indices mostly posted modest gains amid limited market movements. The Stoxx Europe 600 rose 0.2%, the DAX gained 0.1%, and the CAC 40 advanced 0.4%, while the FTSE 100 slipped 0.2%. As a result, the pan-European benchmark closed at a record high for the third consecutive session. Much of the day's advance was driven by corporate earnings. Shares of Deutsche Telekom rose 6.3% after the German telecommunications company increased its 2026 share buyback program by EUR 3 billion. The broader telecommunications sector gained 2.9%. Shares of London-based advertising group WPP soared 28.6% after the company delivered stronger-than-expected organic growth. Defense manufacturer Renk rose 5.8% following a stronger-than-expected increase in its order backlog during Q2. In contrast, Rheinmetall fell 3.5% after lowering its 2026 sales guidance. Siemens shares declined 4.5% as results from its Digital Industries division missed expectations. Hikma Pharmaceuticals gained 8.2% after reporting a 9% increase in adjusted operating profit for the first half of the year.
As for macroeconomic data, although eurozone retail sales fell short of expectations with a 0.3% month-on-month decline in June, the broader picture is less concerning. The May figure was revised upward by 0.2 percentage points, resulting in a 0.2% expansion in Q2 compared to Q1 as a whole. This suggests that consumer spending remained resilient despite the energy price shock. German industrial orders rose by a stronger-than-expected 3.1% month-on-month in June. However, the increase was largely driven by large one-off orders and a downward revision to the previous month's data.
Hungarian industrial production in June was 1.4% lower than in May. Retail sales also declined by 0.4% month-on-month. Although both economic activity indicators came in negative, the picture is somewhat tempered by the fact that the previously released May data were relatively strong. The key question is whether the more favorable readings seen in recent months truly signal a turning point in the growth trend. The Czech central bank left its policy rate unchanged at 3.75%.
The Czech PX50 gained 1.3%, while Poland’s WIG20 advanced 0.9%, whereas the BUX underperformed on Thursday, falling 1.0%. Earlier today, MOL released its Q2 earnings report, which proved significantly stronger than expected. The most closely watched metric, clean EBITDA, exceeded expectations by 27%. The Hungarian energy company benefited from elevated energy prices, the resumption of Russian oil deliveries via the Druzhba pipeline, and widening refining margins.
Wall Street indices closed in negative territory on Thursday
US equity markets closed lower on Thursday as investors assessed corporate earnings reports and monitored signs pointing toward a potential peace agreement between the US and Iran. The S&P 500 fell 0.2%, the Dow Jones declined 0.9%, and the Nasdaq Composite ended the session 0.1% lower.
Shares of data storage solutions provider Western Digital plunged 13%, while memory chipmaker Sandisk fell 6.8% following the release of their quarterly results. AppLovin shares dropped 19.7% after the marketing platform reported quarterly revenue below Wall Street expectations. Datadog tumbled 19% after the cloud security company said it expects revenue growth to slow in the third quarter. SpaceX shares erased their early-session losses and ultimately rose 6.1% after the first lockup period restricting insider share sales expired on Thursday.
The weekly jobless claims data (199,000 new applications) and July layoff figures continue to support the resilience of the US labor market. Labor productivity increased faster than expected in Q2 (+1.4% qoq), helping to moderate the rise in labor costs (+1.3% qoq).
After declining earlier in the week, Brent crude rose 3.8% on Thursday to nearly USD 82.5 per barrel.
Developed market bond yields moved higher, while the forint weakened 1% against the euro
After three consecutive days of declines, the US 10-year Treasury yield moved higher again on Thursday, supported by rising oil prices and data pointing to the resilience of the US labor market. The benchmark yield closed at 4.67%, up 5 basis points, remaining near the upper end of its post-Covid trading range. The German 10-year Bund yield rose by just 2 basis points to 3.13%. Against the euro, the dollar strengthened 0.2% to 1.153. Meanwhile, the Hungarian yield curve shifted slightly lower, with the 10-year yield declining by 2 basis points to 5.38%. The forint significantly underperformed regional currencies, weakening 1.0% against the euro to 365.3.
At yesterday's auction of 3-year, 5-year, and 10-year government bonds, Hungary's Government Debt Management Agency (ÁKK) accepted bids worth HUF 30 billion, HUF 56.5 billion, and HUF 70 billion, respectively, amid strong investor demand and significant oversubscription.
Today's highlights
Leading Asian stock indices were mixed as trading neared its close. The Nikkei was down 0.6%, while the KOSPI declined 1.1%. In contrast, the SSEC gained 0.5% and the Hang Seng edged 0.1% higher. Data released this morning showed that Chinese exports continued to expand at a robust pace, rising by nearly 24% year-on-year in July.
Today, Germany will release its June export and industrial production data. In Hungary, the HCSO will publish the July CPI figures. We expect CPI to come in at 1.6% year-on-year. However, market participants will be primarily focused on labor market data from the US, particularly the change in non-farm payrolls.
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