Capital Economics, an independent economic research consultancy, has released a new episode of its "Weekly Briefing" podcast, published on 9 October 2026, in which the consultancy's economists discuss turbulence in government bond markets, France's fiscal reckoning and the dilemma Europe faces over its economic relationship with China. The episode features Group Chief Economist Neil Shearing alongside Capital Economics economists James Reilly and Jack Allen-Reynolds.

The podcast is available to stream on Spotify and Apple Podcasts, or can be found on other leading podcast platforms.

Bond market turbulence

The episode's first theme is the recent turbulence in government bond markets. Long-dated yields in major advanced economies have come under sustained upward pressure in recent years as heavy sovereign debt issuance, persistent fiscal deficits and softer demand at auctions have tested market depth. Unlike short-term policy rates, long-dated yields are set by markets, so movements at the long end feed through to government debt-servicing costs and form part of the backdrop against which central banks make policy. The episode page links to a related Capital Economics analysis on what the bond sell-off means for monetary policy, as well as a note on how an increasingly narrow equity rally rings alarm bells.

France's fiscal reckoning

France, the euro area's second-largest economy, has faced prolonged fiscal and political strain. Repeated rounds of political instability have made it difficult to pass budgets, public deficits have run well above the European Union's 3% of GDP ceiling, and successive credit rating downgrades have pushed the country's borrowing costs higher, widening the premium investors demand over safer German bonds. That gap — known as the spread — is one of the most closely watched gauges of fiscal stress inside the euro area, and as home to one of the bloc's largest government bond markets, France's fiscal trajectory matters well beyond its borders. The podcast examines what this reckoning means for France and the wider currency bloc.

Europe's China dilemma

The third theme is Europe's evolving stance toward China. European policymakers have been weighing how to respond to a surge of competitively priced Chinese goods, electric vehicles to industrial products, driven by manufacturing overcapacity — a response that has already included tariffs on Chinese electric vehicles introduced in 2024 following a European Commission anti-subsidy investigation — while seeking to preserve trade relations and cooperation on climate goals. The episode explores the trade-offs involved in a debate that sits at the intersection of industrial competitiveness, consumer prices and the bloc's diplomatic relationships.

Related Capital Economics research

Brazil's next government faces a fiscal reckoning — Senior Emerging Markets Economist Liam Peach writes that Brazil's next government will inherit a fiscal position that requires fiscal tightening to the tune of 3.0% of GDP to stabilise the public debt ratio. Brazil's gross public debt has climbed to elevated levels in recent years, with interest costs absorbing a growing share of government revenue.

Indonesia replaces finance minister amid signs of policy reset — Senior Asia Economist Gareth Leather reports that Indonesia's decision, announced on 9 October 2026, to replace Finance Minister Purbaya Yudhi Sadewa with his deputy is a welcome development, although more evidence is needed. Purbaya was appointed finance minister in September 2025 after the abrupt removal of long-serving minister Sri Mulyani Indrawati, a move that unsettled financial markets at the time.

"Economic D-Day" Sanctions (Aug. 2026) — Chief Climate and Commodities Economist David Oxley writes that the announcement of the "greatest financial offensive ever" by the United States ups the ante on Iran and could widen the divide between factions within the country. The US has maintained broad sanctions on Iran for decades, targeting its oil exports and financial system, and has repeatedly escalated restrictions on Tehran since withdrawing from the 2015 nuclear accord in 2018.

Source: Capital Economics — Weekly Briefing Podcast