Global economic instability impacts European markets

Persistent inflation and rising energy costs are driving social unrest across Europe, including in France and Albania. Brent crude oil prices have risen above $110 per barrel due to supply shortages and increased winter demand.

France faces significant fiscal challenges, with national debt reaching €3.6 trillion, or 120% of its GDP. The government is struggling to secure approval from the National Assembly to limit the 2027 budget deficit to 5.1% of GDP, while needing to raise €340 billion from markets next year. In response to rising 10-year bond yields reaching 5%, the European Central Bank is preparing to utilize the Transmission Protection Instrument (TPI) to purchase bonds in the secondary market.

In the United States, the Federal Reserve is expected to postpone interest rate hikes in late October, despite inflation reaching 3.7% in September, citing a warming labor market. Meanwhile, while S&P 500 company profits are projected to exceed 30% for the nine-month period, debt associated with AI-related companies has reached $3 trillion.