What moved this week and what it means for expats in SE Asia

The American ten-year Treasury yield reached 5.22% on 24 September, its highest since June 2007. The thirty-year reached 5.50%, its highest since June 2004. Markets now put roughly a two-in-three chance on a second Federal Reserve rise at the 28 October meeting, and those bets built through the week on strong data and worries about government debt. For anyone with a dollar mortgage, a floating-rate facility in the Gulf or a refinancing due next year, borrowing costs rose again this week without the Fed doing anything. Two numbers land before the next decision: September jobs on 2 October and September inflation on 14 October.

In London the tone changed. Deputy Governors Clare Lombardelli and Sarah Breeden, who both voted to hold rates a week earlier, said they are now closer to voting for a rise. Governor Andrew Bailey said high energy prices make it harder to keep rates where they are. Three members already voted for 4% last week, so two more changes of mind would make a majority. Markets price a November rise at about 75 to 80%. The ten-year gilt ended near 5.36% and the thirty-year at 5.85%, up 10 basis points on the week. A British expat with a tracker mortgage, or a fixed rate that ends in 2027, should budget for a higher rate rather than a lower one.

The Gulf produced a proposal and a rejection inside two days. On 24 September reports emerged that American and Iranian negotiators in New York were discussing a phased reopening of the Strait of Hormuz in return for lifting the US blockade of Iranian ports. On 25 September Iran's foreign minister set out a seven-day plan, and Brent fell 2.1% that day to $104.32. On Saturday President Trump rejected it. Friday's oil price was set before that rejection, so treat it as this week's starting point rather than a settled level. One technical point: the November Brent contract expires this week, and December traded at $97.44 on Friday. When the headlines move to the December contract, the quoted price will look about $7 lower. That is a change of contract, not a fall in oil.

Sterling fell against every currency our clients spend in for a second week running. It lost 0.69% against the dollar, 0.85% against the ringgit, 0.79% against the Singapore dollar and 0.72% against the baht. The euro held up better, down 0.50% against the dollar and 0.66% against the ringgit. The ringgit gained on the dollar for the first time in four weeks, and on sterling and the euro as well. A French engineer in Kuala Lumpur paid in euros and a British manager in Singapore paid in sterling both had less to spend locally this week than last.

Three British dates are now close. The consultation on raising the minimum pension age to 57 closes today, 28 September. The Budget is on 28 October, thirty days away, on the same day as the Fed's decision. The state pension is on course to rise 3.9% next April on the earnings measure, and that figure holds unless September inflation comes in higher. Speculation about the £268,275 cap on the tax-free lump sum continues, and nothing has been published.

American bond yields reached their highest in nearly twenty years, and shares rose anyway. The S&P 500 gained 1.21% to 7,743.41 and the Nasdaq 2.06% to 27,068.72, while the VIX barely moved at 14.87. Smaller American companies, which tend to feel rates first, fell 0.80%. A globally diversified portfolio needed no view on any of this to come through the week intact.

Higher gilt yields still mean lower transfer values for British defined benefit pensions. The thirty-year gilt rose 10 basis points to 5.85% this week, and a November rise from the Bank of England is now the expected case. For anyone weighing a transfer, the direction of travel still argues against moving out, and yields near multi-decade highs argue against trying to time it. The same yields let the fixed-income part of a portfolio lock in more income than it could a year ago. Both are reasons to know where your numbers stand before 28 October.

Gold fell 2.25% to $4,285 in a week of high yields and the strongest dollar in two months. Again it moved on the dollar and on rates, not on the Gulf. Held as ballast and sized to do an ordinary job, it earns its place. The core of the portfolio, held through Irish-domiciled accumulating UCITS funds in the right currency and without American estate-tax exposure, needed no forecast this week. That work is done once.