The Bank of Canada raised its benchmark policy rate by 25bps to 2.5% in October 2026, the first increase in three years and in line with market expectations. Policymakers said the decision aims to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services while noting that there could be a need to increase the policy rate further, although cautious is necessary. The central bank also noted that inflation is higher and more persistent than in the July Report. Growth has picked up this year and is expected to recover further. Policymakers remain committed to maintaining Canadians’ confidence in price stability. CPI inflation is expected to average 3% in 2027, a percentage point above the July projection, then come down to 2% in the middle of 2028. The Canadian economy is expected to grow 1% in 2026, and 2% in 2027 and 2028. This is a somewhat stronger overall growth projection than the July Report.

US stocks indices closed higher on Wednesday, with the S&P 500 rising 0.3%, the Nasdaq gaining 0.2% and the Dow inching above the flatline, as investors digested the latest FOMC decision and comments from Fed Chair Warsh. As expected, the Fed left interest rates unchanged, although two policymakers dissented in favor of a 25bps rate hike. Warsh struck a confident tone on inflation expectations, suggesting they remain well anchored. Heavyweight financial stocks mostly advanced, with JPMorgan up 1%, Morgan Stanley gaining 1.7%, Goldman Sachs rising 1.5%, and Wells Fargo adding 1.2%. Corporate earnings remained in focus, with Microsoft (-0.1%) and Alphabet (+1.3%) set to report after the closing bell. Alphabet also benefited from reports that OpenAI plans to buy AI computing chips from Google. Record quarterly profits at SK Hynix lifted chip stocks, including Micron (+5.9%) and AMD (+3.2%). In contrast, Apple fell 0.9% despite unveiling a revamped MacBook Pro featuring a touchscreen.

Crude oil trimmed gains to settle near $102 a barrel on Wednesday after reaching as high as 103.5 earlier in the session. Escalating Middle East hostilities heightened concerns about supply disruptions. Iran-aligned Houthis attacked Aden airport and claimed a missile strike on Saudi Arabia’s largest oil refinery, which has a capacity of 550,000 barrels per day, although Saudi authorities had not confirmed the reported refinery attack. Also, there are increased fears that the US could resume military operations against Iran after the November 3 midterm elections, potentially intensifying regional instability and threatening oil flows. Meanwhile, Qatar mediators presented Iran with a new draft proposal to end the war involving the US and Israel. However, an Iranian official dismissed the ideas as unacceptable, leaving the prospects for a settlement uncertain. Supporting prices further, US crude inventories fell by 1.9 million barrels in the week ended October 23.

UK 10-year gilt yields fell toward 5.3%, their lowest in over a month, as UK Chancellor John Healey delivered his first budget, reaffirming fiscal discipline and outlining a debt-sale plan in line with forecasts. Healey reaffirmed his commitment to the government’s fiscal rules, with the Office for Budget Responsibility (OBR) estimating fiscal headroom at £15 billion for 2029–30, in line with expectations. Key measures include energy bill relief, lower-than-expected bank tax increases, tariff suspensions on more than 100 supermarket products and a 3.9% increase in minimum wages. The budget also allocates an additional £20.4 billion to the National Wealth Fund and the British Business Bank to support investment and 140,000 jobs. Meanwhile, the OBR cut its 2027 GDP growth forecast to 1% from 1.6%, citing the economic impact of the Iran war, while raising its 2026 projection to 1.2% from 1.1%. Borrowing and public debt forecasts were also revised higher across the outlook period.

The goods gap in the US widened to $134.9 billion in September 2026, the highest since March 2025, following a revised $132.1 billion shortfall in August and compared to forecasts of a $130 billion gap. Imports went up 2.4% to a record high of $344.15 billion, led by purchases of capital goods (7.5%) and consumer goods (3.1%) while a decrease was recorded in purchases of industrial supplies (-6%), autos (-4%), and foods, feeds & beverages (-2.5%). Meanwhile, exports of goods went up 2.6% to $209.24 billion, led by shipments of capital (5.4%), consumer (6.%) and food, feeds & beverages (12.8%) while a decrease was seen for exports of industrial supplies (-1.6%) and autos (-5.6%).

The Israeli shekel depreciated by more than 2% to 3.1 per USD on October 28, 2026, its weakest level since April, as investors reacted to the country’s legislative election results. Partial results, with more than 66% of ballots counted, indicated that Prime Minister Benjamin Netanyahu’s bloc was on track to secure 56 seats, while challenger Gadi Eisenkot’s bloc was projected to win 48 of the Knesset’s 120 seats. Arab-led parties, aligned with neither camp, were expected to secure 16 seats. With neither side approaching the 61 seats required for a parliamentary majority, the results pointed to a potentially prolonged political deadlock, with coalition negotiations likely to prove challenging and raising concerns over the formation and stability of the next government. Meanwhile, Israeli financial markets came under pressure, with the TA-125 benchmark index falling nearly 3% and the yield on 10-year government bonds rising above 4.1%.