Zero Rss

Stellar 10Y Auction Stops Through, With Highest Bid To Cover In A Decade On BIggest Yield Since 2007

After today's very disappointing buyback announcement, which at $6BN came in far below whisper expectations of $10BN, and which sent yields surging to 4.85%, many were on edge ahead of today's $39 billion sale of 10Y paper. In the end, it priced far stronger than expected, with today's selloff providing a sufficient concession to stir up enough demand to avoid a fullblown bond market panic. 

The 9 Year/11 month reopening of cusip ER0 stopped at a high yield of 4.834%, up from 4.680% in August, and the highest since August 2007!

Just as importantly, the auction stopped through the When Issued 4.384% by 1.5bps, the biggest stop through since April 2025, which was some much needed good news in a day when yields soared briefly above 4.85% on their path to the inevitable date with 5.00%

The bid to cover was stellar at 2.713, it jumped from 2.532 in August and was the highest since April 2016.

The internals were even stronger, with indirect bidders taking 79.18% of the issue, one of the highest on record, while primary dealers were left with just 4.31%, the lowest participation since late Sept 2025. Direct took down 16.51%, right in line with the recent average of 16.42%.

In short, this was a stellar auction, which helped pare some of the earlier blowout in yields following today's buyback announcement, with the 10-year note last yielding 4.837%, up 3.26bp on the session but off its pre-auction highs.

Tyler Durden Wed, 09/09/2026 - 13:25

If You're Still Talking About Central Bank Independence, You Are Behind The Curve

By Michael Every of Rabobank

The US just hit five more Iranian oil tankers, citing attempted strikes on one of its warships, and warned more will be sunk if Iran tries it again. It also imposed more economic war via aviation sanctions. The Saudis and Houthis are on the brink of new war after a series of strikes at Saudi cities, followed by Riyadh’s reprisals and the threat of “consequences [the Houthis] cannot handle.” Qatar and the UAE both said the Gulf cannot rely on US alone for the region's security: but Russia can’t extend power there now; China can’t or doesn’t want to; Europe can’t and won’t – so that leaves Turkey and Israel, both eyeing the other suspiciously; and as France and Canada joined the UK in issuing trade sanctions on Israeli settlements, the EU reportedly wants to pursue closer Israel ties on air defence and space.

Oil trades above $100, and notably Shanghai oil is now trading higher than Brent having been vastly lower in the early stages of the Iran War. Crack spreads remain worryingly high all over. Refined product stocks remain worryingly low.

Shanghai crude $110: contract record high pic.twitter.com/gWCza5BD2M

— zerohedge (@zerohedge) September 9, 2026

Trump spoke to Putin as Hungary expelled 10 Russian diplomats to Moscow’s threats of a harsh response. Iceland summoned the US ambassador over Trump’s Stars and Stripes map Truth post showing the US flag covering Canada, Mexico, Greenland, and Iceland. Israel shut down the UK consulate in Jerusalem. The British Army has reportedly been ordered to save money by using reservists less, and flights were grounded across the UK due to a tech issue – showing the impact ‘grey zone’ attacks can have. The Hong Kong press notes China is boosting Pakistani drone defences ‘as India tensions simmer’, and ‘How Japan is digging in to deter –and withstand– a conflict over Taiwan.’ All the kind of things to rattle the long end of government bond yield curves.

Maritime nations are warning that global shipping rules are collapsing, which could take much global trade with it as some worry if there is enough bunker fuel for the ships to use. While the Suez Canal is seeing more passages as tankers try to avoid Hormuz, the Panama Canal is warning of deeper transit cuts as the El Nino drought threat intensifies. Further north, and next to Europe, Russia is betting on a $400bn Arctic Transport Corridor but can’t fund it without China.

Brussels warned China it ‘must buy more’ from the EU to avoid a trade war: but what exactly? The old joke vs. the US was ‘Will you sell us aircraft carriers?’ China now builds its own faster. Europe has few resources China needs or goods it doesn’t make itself. Even EU luxury brands are less popular as Beijing prioritises domestic brands. Perhaps the EU could sell China more tech from ASML, to a new trans-Atlantic storm? Meanwhile, EU industry claims it faces 300,000 job cuts as China “colonises” its supply chains, and European “wealth” is threatened by the decline of its carmakers, with a deleterious effect on the steel, aluminium, glass, and chemical sectors needed for rearmament. Again, not much fun for the long end of bond markets if they think about it.

Canadian counter tariffs on the US went into effect; the US is to ban Canadian dairy and some alcohol and motor vehicles from September 29, as well as Canadian firms from government contracts in response. The Globe and Mail opines, ‘With this trade war, Canada faces its Singapore moment’. The National Post says, ‘Canadians support hard line against US, but don't want to pay for it’, as “When asked if they would pay an extra C$500 per year to hold the line in the current trade war, 56% called this ‘unacceptable’.” Becoming Singapore implies paying vastly more than C$500 per year.

US Secretary of State Rubio is seeking more economic and security ties in Latin America, which has an FTA with the EU, which doesn’t offer the same security ties. He’s in Colombia to ‘clarify’ its China links and to sign a minerals deal, as Nicaragua hands a gold concession to a sister firm of US-sanctioned Chinese miner.

In AI, there are more reports about experts fearing the technology is out of control, as markets worry about the same issue from a different standpoint. The US also accused Chinese AI firms of “malicious” copying of AI technology – which can be resisted how if so, a digital Iron Curtain? Despite fears of US-South Korean tensions, as opposed to alignment on rapprochement with North Korea, KHNP and the US Westinghouse are to align the two nations nuclear supply chains for eight new US reactors. That is a small step in the right direction regarding AI power demands.

In politics, anti-AfD protests swept parts of Germany as the establishment fears that Berlin and Mecklenburg-Western Pomerania may fall to the populists on 20 September. That’s as Politico says, ‘Merz has no good answers as the far right targets his downfall.’ Nothing for the bond market to worry about there, right?

In markets, there is some speculation the BOJ might even think about a 50bps hike. If so, it would be the first such move since 1989, when it was still in a bubble. Appropriately, given the current geopolitical backdrop, it was also before the3 first Cold War had fully ended and was a time when the US used national security arguments vs. its allies to achieve the likes of the Plaza Accord.

Indeed, US Treasury Secretary Bessent stated: “I am the house now, so when we intervene with the Japanese Yen, I have a pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policy makers are going to do. And you can bet against me if you want.” I repeat, if you are still talking about the independence of central banks, you are behind the curve; the world is now about the functional independence of countries within which central banks sit. Of course, as JPY rallies and shorter-dated JGB yields rise, the issue becomes when we might see Japanese holdings abroad repatriated, pushing FX down and yields higher in other markets. That might take some more economic statecraft, not “because markets”, from Bessent to handle.

The RBA just saw Hauser give a hawkish speech, which has markets thinking of hikes this month and in November. Fortunately, that’s very much what the US Treasury would like to see – plus a lot more action on non-housing parts of the economy.

ECB President Lagarde, who’s talked independently about economic statecraft yet done nothing, is to release her memoir in January. That’s odd given she will still be in office so can’t tell us anything interesting enough to justify reading it. Unless she has moved on to pontificate at Davos, as whispered. That would allow Macron to choose the replacement ECB representative before the French presidential election where the nationalist Le Pen is seen as favourite, a clear ‘rules’-based ringfencing of a ‘rules-based’ institution against at least one populist appointment. Yet when you see where the political winds are blowing, such action may not prove quite as reassuring for markets as the ‘sensible centrist’ optimists would try to sell it.

On the other hand, China's tobacco monopoly played a key role in shoring up state-owned banks, which just raised $54bn in capital even as GDP is sluggish. Where there’s smoking, there’s fire, but is the new capital for bad loans, a bad sign for global growth, or new “not because markets” lending, a bad sign for global inflation? Today’s Chinese CPI data were in line at just 0.8% y-o-y headline, up from 0.5%, and slightly above expectations at 1.0% y-o-y core, while PPI was 3.8% y-o-y vs. 3.6% consensus and up from 3.5%. Let’s see how all of them trend with Shanghai oil over $100.

Tyler Durden Wed, 09/09/2026 - 13:20

Treasury Yields Surge After Bessent Disappoints Market With Small Buyback Size

Ahead of today's highly anticipated Treasury buyback announcement - which put a number to the shocking Aug 19 news from the Treasury that the maximum size of $2 billion per longer-dated buyback operation would be "at least $4 billion" - we warned that no matter what was unveiled at 11am ET, the market would be disappointed...

Bessent will reveal the expanded Treasury buyback size at 11am ET. It will disappoint.

— zerohedge (@zerohedge) September 9, 2026

... for the simple reason that when it comes to $2+ trillion in gross issuance every year and hundreds of billions in annual duration (DV01) supply, $4 billion - or even $10 billion as some expected - would be a drop in the bucket as this chart from Goldman shows (where if you use a microscope, you can even see the size of the TSY buyback in context).

So at precisely 11am, the Treasury did release the long-awaited number.... and it was a huge disappointment.

The treasury announced that going forward, the maximum par amount of 20-30 Year TSYs to be repurchased would be $6 billion... which while more than the $4 billion guaranteed minimum per the original press release, was less than the $10 billion whisper. 

Source: Treasury

Many dealers had ramped up their predictions for Thursday’s buyback operation after Bessent publicly touted the potential for purchases of over $4 billion; many expected $6 billion, a few even said that a number north of $10 billion isn't out of the question. The Treasury chief on Tuesday reiterated that while he cannot alter the “equilibrium” price of Treasuries, his objective was to slow moves down and prevent any damaging narrative taking hold in the world’s biggest bond market

BNP Paribas head of US rates strategy, Guneet Dhingra, said before the announcement it would take a maximum size of $7 billion to surprise the market, with anything less triggering selling pressure. He was right: the $6 billion number proved to be a dud as confirmed by the bond market reaction which has sent 10Y yields spiking 4 bps higher on the disappointing news, rising as high as 4.85%. 

How successful the enlarged program will prove remains to be seen. Yields dropped after the initial announcement of the plan last month, but retraced the move. Benchmark 10-year yields last week hit their highest since 2023.

Markets in August, when 30-year yields hit their highest since 2007, were driven by concerns “the US is not going to be able to pay its debt. It was absurd, but it just became kind of the dominant narrative,” Bessent claimed in a Texas event. He has separately characterized buybacks as aimed at boosting liquidity. They will enable banks and other institutions to offload harder-to-trade securities so that they can then boost their participation in auctions of new debt, he said last week.

“Scott has absolutely adopted a very activist model as Treasury secretary,” Krishna Guha, head of economics at Evercore ISI, said before Wednesday’s announcement. “He’s tactically very skilled in terms of when and how to surprise and move markets and has had some near-term success.”

Guha, who previously worked at the Federal Reserve Bank of New York, said “the challenge is always whether the impact of these kind of interventions can be sustained without bigger changes in fundamentals.”

Of course, since the buyback size is a "maximum", that means the Treasury will not necessarily purchase that amount of securities. However, when it comes to buybacks targeting longer-dated nominal debt, the department does tend to buy the full size, having only twice not done so in the 52 such operations since the program was reintroduced in 2024.

Bessent’s expansion of the long-dated buybacks program last month took investors by surprise because it was announced outside the Treasury’s quarterly announcement schedule. That’s fanned talk of a new, more activist style of US debt management, in contrast to the department’s long-held mantra of being “regular and predictable.”

Tyler Durden Wed, 09/09/2026 - 12:55

Trump Admin Asks Supreme Court To Allow Voter Citizenship Verification

Authored by Zachary Stieber via The Epoch Times,

The Justice Department on Sept. 8 requested that the Supreme Court let the government verify the citizenship of voters using a federal immigration database.

A federal judge earlier in the year ruled that the Trump administration was violating privacy laws by using the Systematic Alien Verification for Entitlements (SAVE) system to verify the citizenship of people on state voter rolls.

An appeals court upheld the ruling on Sept. 4 in a split decision, with the majority concluding that using the database would illegally disclose personal data such as Social Security numbers.

"The district court has issued an indefensible order that threatens the integrity of upcoming elections by vacating the federal government's authority to internally use Social Security data when fulfilling its duty to respond to requests by states to verify the citizenship of individuals for voting and other purposes," Department of Justice lawyers wrote in the new filing to the nation's top court.

They said the order exceeds the jurisdiction of the court, because the organizations that brought the lawsuit do not have standing, or are not affected by the order in a way that allows them to legally challenge it.

"The court's order also fails on the merits, as the policy is consistent with all applicable federal statutes," the filing states.

"The order will irreparably harm the federal government, the States, and the public by depriving the government of an effective tool to verify the eligibility of registered voters and benefits applicants under various state and federal programs."

The groups that brought the litigation, including the League of Women Voters, have not yet responded to the filing.

The litigation was brought after the government enabled bulk queries to SAVE, complying with an order from a different judge that came in a case brought by states that struggled to verify the citizenship of registered voters.

Although a majority of a U.S. Court of Appeals for the District of Columbia Circuit panel on Sept. 4 ruled in favor of the groups, Judge Gregory Katsas dissented. He said that he would have stayed the order blocking the government from using SAVE, pending the outcome of the appeal.

The government's modified system does not appear to violate the federal law that prohibits disclosure of Social Security numbers and "related records," according to the judge. He said that the disclosures would only be made to the Department of Homeland Security, which would then convey information about a person's immigration status or citizenship to state agencies.

"In sum, SAVE responses are not 'related records' because they simply repeat identifying information provided by the SAVE user, in the course of conveying any additional, unprotected information about the identified individual's citizenship status," Katsas wrote.

Tyler Durden Wed, 09/09/2026 - 12:40

'It Could Kill Us All By 2030': AI Researcher Resigns, Warns "Do Not Underestimate The Power Of This Tech"

Authored by Zachary Stieber via The Epoch Times,

An artificial intelligence (AI) researcher on Sept. 8 said he had resigned and warned people about the technology's dangers.

Jacob Coxon, who has worked in recent years doing research at the firms OpenAI and Anthropic, said in a series of posts on X that neither company is acting responsibly as they move toward what he described as superintelligent AI that is capable of self-improvement.

"Do not underestimate the power of this technology. These will soon be superhuman systems that can hack anything, revolutionize any field overnight, and acquire real power and resources. We have all witnessed the progress in each of these domains, and progress is not slowing," Coxon said.

"The people building AI earnestly believe that it could kill us all by the end of the decade. This is not a marketing stunt. If anything, many executives and senior researchers will couch their phrasing in the press to sound sensible - but I hear the same people express fear privately. No other human activity poses this level of danger."

Coxon said a common response to such warnings is, if company leaders believe in the dangers, why are they still building the superintelligent AI? He said that at OpenAI, many there "have not deeply internalized the civilizational stakes." At Anthropic, according to Coxon, "the stakes are well-understood, but they are locked in a race to get there first - they believe no one else will act responsibly, so they must do it themselves, despite the risk."

OpenAI and Anthropic did not respond to requests for comment by the time of publication.

Coxon's warning came after OpenAI acknowledged several incidents that involved AI going beyond restrictions imposed by programmers, including remaining isolated from other agents, during attacks on Hugging Face and other websites.

Some lawmakers have taken notice. Sen. Bernie Sanders (I-Vt.) and Rep. Greg Casar (D-Texas) announced recently that they plan on introducing legislation that would ban AI superintelligence and pause development of advanced AI until federal regulators establish safety rules.

Jakub Pachocki, OpenAI's chief scientist, said in a blog post on Sept. 6 that in 2023, he was worried about seeing in his lifetime AI that is smarter than himself and wondering about how to alert people.

"Three years later, reasoning language models are a rapidly growing part of the economy and starting to push the boundaries of science. They are able to operate computers and graphical interfaces, collaborate with people and each other, and carry out research projects. They are also transforming the landscape of computer security, and in that present clear new dangers," Pachocki wrote.

He called for "extreme caution" but said that multiple factors support continuing AI development, including creating systems that can defend against the dangers posed by other AI.

Anthropic executives have issued similar warnings. Over the summer, company leaders called for a global pause in AI development because, they said, models would soon be able to independently improve themselves.

Evan Hubinger, another developer at Anthropic, said in a Sept. 8 post on X that Coxon was correct in his assertion that people building AI believe it could kill all humans, and that he personally pegs the risk at under 10 percent within the next decade.

"I believe Anthropic is trying its best, but we do not yet have a plan to solve alignment for superintelligence and are not clearly on track to," he said, referring to AI following instructions and restrictions.

"To be clear, as we say in our latest Risk Report, I think the risk from present models is low. What I am worried about is superintelligence arising from recursive self-improvement, as we have said is happening faster than we thought."

Samuel Marks, who works on safety research at Anthropic, said in a Sept. 9 post on X that he also agrees that AI could lead to human extinction as soon as the next few years.

"Why do AI developers continue despite the risk? Due to a mixture of commercial incentives and a belief that they are in a race with other, less responsible AI developers that will abuse the technology or develop it less safely," Marks said.

[Writing this in a personal capacity, not on behalf of my employer (Anthropic).]

Jacob’s thread is very worth reading. Here’s my birds-eye view of the situation with risks from AI:

1. AI developers believe their technology could cause human extinction (or similarly bad… https://t.co/rCVoiOWWzm

— Samuel Marks (@saprmarks) September 9, 2026

Marks said it's not possible to program AIs to behave how people would like, that AI agents frequently "severely misbehave," and that the current plan is to train AI to align with restrictions to the point the agents can train their successors better than humans can currently train AI. He said he's conducting research "because I hope my work will reduce the chance of these extinction-level bad outcomes."

[ZH: We can't help but feel in the same week we see OpenAI 'solves' Navier-Stokes, we get another glut of existential warnings about just how awesome (in the scary sense) these models are... all sounds like a marketing psy-op... similar to the fence-jumping episodes with Hugging Face etc 'showing off' how great the agents are (and how they need regulating (i.e a path to shutting out open-weight models)... but could just be our skeptical bias emerging...]

Tyler Durden Wed, 09/09/2026 - 12:00

Steve Eisman: What If OpenAI Actually Fails?

Steve Eisman has spent most of the years since the financial crisis being asked, in his words, to predict the end of the world. In his latest weekly wrap - recorded Thursday night as the 10-year brushed 4.8%, he says he's still not there on AI, but if he were - he lays out exactly how it would happen.

Eisman is not predicting that OpenAI fails - but it is the weak link in a chain that runs from two money-losing labs, through hyperscaler capex, to roughly half of projected US GDP growth - and arguing that it's "not too early to think about" what happens if the link breaks.

"I predicted the end of the world once, and believe me, it was no fun. I am in no rush to predict the end of the world again, unless I am really convinced that it's going to happen. But I'm not going to make such a prediction just because it will get a lot of press. There is no question in my mind that the entire US economy hinges on the success of AI. The amount being spent is just so large that were it to stop, the economy would go into a recession almost immediately."

The chain: two companies, $700 billion of capex, half of GDP growth

Eisman waves off the two "bubble" arguments echoing through the halls - and that both hyperscalers' vanished free cash flow, and Nvidia's circular financing - are survivable if AI pays off. The real vulnerability, he argues, sits one layer down:

"So where is the Achilles heel? I think that it resides with Anthropic and OpenAI, because they are so central to the entire AI food chain. According to reports from various Wall Street firms, something like 70% of hyperscaler AI revenue comes from Anthropic and OpenAI... I can't confirm those statistics, but they sound right given what we actually know about Oracle."

From there it's arithmetic:

"Hyperscalers are spending about $700 billion in capex this year, and even more next year, and that spend accounts for around half of the 2% GDP growth projected for 2026. So one must conclude that the health of the US economy is extremely dependent on hyperscaler capex, and hyperscaler capex is highly dependent on the health of Anthropic and OpenAI. That's the chain."

OpenAI is... the weakest link

Between the two labs, Eisman says, "OpenAI is the weaker entity" - pointing to a WSJ report on the 2nd quarter. 

"OpenAI's June quarter revenue reached $6.7 billion, up only 18% versus the March quarter. Compare that to Anthropic's revenue of $11 billion-plus in the June quarter, which was up over 100%... OpenAI's costs reached $12.3 billion, up $3 billion versus the March quarter. So, in three months, revenue increased $1 billion, but costs surged $3 billion. Things are not moving in the right direction."

(ZH Note; the $12.3 billion Eisman calls "costs" is OpenAI's operating loss, including stock-based compensation, up from $9.3 billion in the first quarter, per WSJ. On $6.7 billion of revenue, that implies an expense line closer to $19 billion. Revenue rose $1 billion; the loss rose $3 billion.)

Then the departures. Chief revenue officer Denise Dresser left in August after roughly eight months, two days after Brad Lightcap ended an eight-year run. Eisman reads both through the lens of an IPO that keeps sliding:

"Supposedly, OpenAI is getting closer to an IPO. That's the big payday for employees, because it means that eventually they can sell some of their shares. That two such senior employees would leave now is an important data point."

Two fairness notes: Lightcap had already been moved out of the COO role in April, so his exit was telegraphed. And Eisman doesn't mention Fidji Simo, who stepped down in July and was arguably the bigger loss.

The heart of the argument is what unprofitability does to a company's relationship with its funders:

"When you lose billions upon billions, appearances matter a lot. OpenAI is completely dependent on the kindness of strangers funding its cash flow needs. When a company is growing and very profitable, appearances don't matter nearly as much... But when a company is not profitable and has an insatiable need for capital, appearances matter more than anything, because if the narrative turns negative, raising capital becomes much more difficult."

That's why he flags last week's "good news" - OpenAI's ad business hitting a $1 billion annualized run rate - as bad news: earlier this year the company projected $2.4 billion of ad revenue for all of 2026, and $1 billion annualized in September doesn't get there. 

pic.twitter.com/WGH5sNDwYz

— cocktail peanut (@cocktailpeanut) September 8, 2026 Oracle is the first domino - and the market has already run the drill once

"If OpenAI fails, Oracle is in immediate trouble because of the large increase in Oracle's debt levels. Oracle's debt rating is barely above junk. Oracle's S&P credit rating is triple-B-minus, which is quite weak. Like I said before, it has a $600 billion backlog, and half of that backlog is from OpenAI."

That isn't Eisman's inference; it's S&P's. When the agency cut Oracle to BBB- on July 9, it named OpenAI a "key credit risk," put the lab at roughly half of a $638 billion RPO, and spelled out the failure path: if OpenAI can't pay, Oracle is left holding data center leases it can't exit or must re-lease on worse terms.

Eisman's point is that investors have already seen the preview:

"Prior to the earnings report, the stock was $230 a share. In just a few days, it jumped to $330 a share. Then analysts started publishing reports pointing out that 50% of the RPO was from OpenAI, and the stock gave back all of its gains, plus, in a few months. Today the stock is around $145... From the peak, the stock is down over 50%. That decline is because the market perceives an over-reliance on OpenAI. Imagine what the market would do to Oracle stock if OpenAI fails."

Why it doesn't stop at tech - and what he's doing about it

"The ramifications of an OpenAI failure extend far beyond just Oracle. Remember I said that AI capex accounts for 50% of US GDP growth. While the other hyperscalers are not quite as dependent on Anthropic and OpenAI as Oracle, they are dependent enough. If OpenAI failed, the hyperscalers, I am sure, would cut back on their capex. So I'm starting to think that the demise of OpenAI could push the US into an almost immediate recession."

Affected sectors are all over the place... It isn't just Amazon, Google, Microsoft, Oracle and Nvidia. It's the investment banks, sitting at peak valuations on a financing cycle that AI is feeding. It's GE Vernova and Quanta on power, Eaton and Rockwell on electrification and automation. The uncomfortable implication: a portfolio that "diversifies" across tech, financials and industrials may own three versions of the same trade.

His answer is reallocation, not stock-picking - healthcare, consumer staples, and within financials the property-and-casualty names - and he names three ETFs by ticker: LVHD, SPLV and KBWP. Then the caveat that should anchor this whole piece:

"It's still early, and I want to emphasize that I am not making a major call. Not yet. I'm just preparing."

That Said...

OpenAI has its own numbers. CFO Sarah Friar told employees that July's annualized revenue already exceeded the entire second quarter, and the company says its run rate has topped $40 billion. Worth knowing: that is a latest-month annualization, while recognized Q2 revenue annualizes closer to $27 billion. Second, strangers have been extremely kind. A March round at a valuation above $852 billion reportedly raised more than $122 billion. Runway isn't the near-term issue, it's the next raise - which is Eisman's point.

One more: Nvidia, where "both things can be true"

Eisman's read of Nvidia's $96.2 billion quarter - revenue up 106% year over year - is that the AI story "continues but is displaying potential weakness," and that "both apparently contradictory ideas can be true." His evidence for the weakness is Note 7 of the 10-Q: five direct customers at 22%, 14%, 13%, 11% and 10% of accounts receivable, which he sums to 70% and assumes "must be the hyperscalers."

Careful there. That disclosure is receivables, not revenue, and Nvidia's direct customers include distributors, ODMs and system integrators, not just clouds. The revenue disclosure in the same filing shows one direct customer at 16% of the quarter. The better version of Eisman's point is one sentence lower in the 10-Q: Nvidia estimates that one "AI research and deployment company" - OpenAI's own description of itself - contributed a meaningful amount of revenue by buying cloud services from Nvidia's customers. Same dependency, no arithmetic error.

And the circularity he mentions in passing is in Nvidia's own release: roughly $7.8 billion of gains on equity securities ran through other income this quarter, which is why GAAP net income ($59.7 billion) tops non-GAAP ($54.0 billion). Nvidia invests in the companies that buy its chips, then books the markups.

Eisman's closing line on all of it:

"Once again, it looks like the entire AI ecosystem is dependent on the future health and success of two companies that currently lose billions. Again, if Anthropic or OpenAI ever get into trouble, the whole AI ecosystem will slow to a crawl."

Watch the entire episode below: 

Tyler Durden Wed, 09/09/2026 - 11:00

US Officials Threaten Retaliation Against UK Over Israeli Settlements Sanctions

Via Middle East Eye

US officials have attacked the UK over its new trade sanctions on illegal Israeli settlements, amid speculation that Washington could publicly rebuke the British government.

On Tuesday morning, US Ambassador to Israel Mike Huckabee suggested the Trump administration could retaliate against Britain over its new trade sanctions on illegal Israeli settlements.

US Embassy

Meanwhile, Florida Republican Congressman Randy Fine warned that British companies could be stopped from doing business in Florida, accusing the UK of a "vanity project in support of Muslim terror".

Huckabee told the BBC that the UK's planned ban on Israeli settlement goods would be a "discrimination against the Jewish people". He suggested US states, specifically Florida, could take trade action against Britain.

Over the weekend the ambassador had accused the British government of "Jew hate" in response to criticisms of Israel's actions in Gaza by British Foreign Secretary Ed Miliband, who is himself Jewish. 

Congressman Randy Fine warned on Monday night: "As the British government considers forcing British companies to boycott portions of Israel, it should be aware that a Florida law that I passed as a member of the Legislature would ban any British company forced to comply from doing business with any state or local government in Florida."  

Fine added: "It would also end any British business participating in that boycott from doing any business in Florida if it needed any official interaction with state or local government to operate" (permits, tax collection). 

"Florida is one of Britain’s largest trading partners. They should understand that their vanity project in support of Muslim terror could cost them billions of dollars." 

Fine further said: "Any company – or nation – that boycotts Israel is boycotted by Florida."

Foreign Secretary Ed Miliband is expected to outline a raft of new measures on Israel in parliament in the early afternoon. 

The United States privately urged the British government not to go ahead with the ban on Israeli settlement goods, MEE understands.

Same day:

• Israeli defense minister calls total ethnic cleansing of Gaza
• He doesn’t rule out using force against UK for it sanctions
• 2 Palestinian boys killed in West Bank after settler attack
• A Palestinian village razed to the ground in WB pic.twitter.com/ONfaQb7I92

— Ragıp Soylu (@ragipsoylu) September 2, 2026

UK Prime Minister Andy Burnham reportedly briefed US President Donald Trump on his plans to introduce sanctions on Israel on Monday afternoon. 

On Monday night, Israeli ministers Itamar Ben Gvir and Bezalel Smotrich called for Israel to sanction Britain and expel the UK ambassador over the issue of the Falkland Islands. Argentina and the UK both assert sovereignty over the South Atlantic archipelago, but the vast majority of the territory's 3,600 residents back British rule.

Last week, Trump suggested he would not back the UK if Argentina invaded the territory. The US president has not yet commented publicly on the UK's planned sanctions.

Tyler Durden Wed, 09/09/2026 - 10:45

Iceland Summons US Ambassador After Trump Shares American Flag Post

Authored by Rachel Roberts via The Epoch Times,

Iceland summoned the U.S. ambassador on Monday after U.S. President Donald Trump posted an image on Truth Social showing the north Atlantic island and other countries covered by the American flag, according to local media RUV.

Trump's Labor Day post depicted the United States, Canada, Greenland, Iceland, Mexico, the whole of Central America and the Caribbean covered by the stars and stripes banner, with the entire landmass labeled "United States of America." The image was shared without comment by the president.

Iceland is a founding member of NATO but has no army of its own and has had an agreement with the United States for its defense since 1951.

Icelandic Foreign Minister Thorgerdur Gunnarsdottir called in Billy Long, the U.S. ambassador to Iceland, who is new to the role, having formally taken up the post in August, according to RUV.

"The position was clearly expressed that the post was completely inappropriate," the foreign ministry told RUV.

'The 52nd State'

Former Missouri Congressman Long joked in January that Iceland would become the 52nd U.S. state and that he might be appointed governor.

During his Senate confirmation hearing for the ambassadorial post in February, Long acknowledged this was a mistake, but said he was not being serious.

"It was like a three-way [conversation]. Somebody said something, somebody else said something, and yes, I did add the part about the 52nd state, which was totally inappropriate. But it was not something that I said as a pronouncement that was serious," he said.

"I just hope that the people in Iceland will give me a second chance to make a first impression," he said. "I have a lot of respect for them. They have a beautiful country - 700,000 Americans go there every year. I hope I can get that up to a million by the time my term's up."

Tensions Over Greenland

Trump's repeated assertions that the United States must acquire or control Greenland, a semi-autonomous Danish territory, led to tensions between Washington and Copenhagen.

Denmark has reiterated that the mineral-rich Arctic island is "not for sale," and that the future of Greenland is for the island's people to determine, together with Copenhagen.

The situation sparked a broader diplomatic crisis within Europe and NATO, with both the United States and Denmark founding members of the defense alliance.

Iceland last month narrowly voted in a referendum against reopening EU membership talks, with Trump's ambitions for Greenland featuring in the debate around whether or not the economically prosperous North Atlantic island would benefit from joining the 27-nation bloc.

Supporters of restarting EU accession talks pointed to the changing international security environment, including uncertainty surrounding Iceland's long-standing defense relationship with the United States.

Trump made his post just hours after the EU announced a 200 million euro ($232.5 million) investment package in Greenland during a visit by European Commission President Ursula von der Leyen.

Danish Prime Minister Mette Frederiksen told Danish news agency Ritzau in Nuuk that the Greenlandic government and the Greenlandic people "have said again and again that they do not want to be American."

"I hope no one is in any doubt about that, either in the United States or the rest of the world," she said, while on a visit to Greenland alongside von der Leyen and the Arctic island's prime minister, Jens-Frederik Nielsen.

Trump's 'Verbal Stumble' at Davos

In January, addressing the World Economic Forum in Davos, Switzerland, Trump appeared to mix up Greenland with Iceland several times, saying that Iceland had cost the United States a lot of money due to a drop in the stock market.

Secretary of State Marco Rubio later said that Trump had misspoken and said Iceland when he meant Greenland, saying, "I think we're all familiar with presidents that have verbal stumbles. We've had presidents like that before. Some made a lot more than this one."

In 2016, an addendum was made to the Iceland-U.S. defense agreement which was neither publicly discussed nor published in Iceland when it was signed, according to RUV, which reported on it last year.

The addendum gives the U.S. military and its contractors unrestricted access to Iceland's defense areas for the purposes of defending the island, which is sparsely populated with about 393,000 people.

The U.S. State Department did not immediately respond to a request for comment.

Tyler Durden Wed, 09/09/2026 - 10:15

Who's Winning China's Sportswear Battle? UBS Say It's Not Nike

Greater China accounts for about 13% of Nike's revenue and 15% of Adidas', making the world's second-largest economy a major competitive battleground for both clothing brands. 

A new UBS note highlights a widening divergence, with Adidas gaining market share as Nike's turnaround struggles to gain solid traction.

UBS retail analyst Jay Sole wrote Monday that Adidas continues to outperform Nike in China, citing an industry expert who highlighted Adidas's stronger locally tailored products and marketing. Nike, meanwhile, faces weaker product momentum woes, inventory challenges and disruption from changes to its distribution strategy. 

Sole's conversation with the industry expert and other findings raise further questions about Nike management's execution and its ability to refocus the business on product innovation and consumer demand after years of prioritizing woke cultural wars that only ended up with S&P Dow Jones Indices booting the company out of the S&P100 later this month. 

Here's more color on Sole's conversation: 

China athletic wear industry market conditions are have softened: 

We hosted a call on September 4th with an industry expert to provide insight around how athletic wear sales are trending in China. The expert believes overall industry conditions have become more challenging over the last several months, with demand slowing versus earlier in the year. While consumer interest in athletic wear remains healthy, shoppers are becoming increasingly value conscious amid broader macroeconomic pressures. Inventory levels across the industry remain manageable, though conditions vary significantly by brand. adidas continues to outperform and gain market share, while Nike remains under pressure due to ongoing channel restructuring, inventory challenges, and weaker product momentum. Domestic brands and emerging running brands are also gaining traction.

Consumers remain engaged but are becoming more value-focused: 

The expert believes Chinese consumers remain interested in sportswear, fitness, and active lifestyles. However, macroeconomic uncertainty continues to influence purchasing behavior. Rather than exiting the category, consumers are becoming more selective and increasingly focused on affordability and value. Many shoppers are trading down to lower-priced products or gravitating toward brands that offer stronger perceived value. This environment appears to favor brands with compelling pricing, strong local relevance, and differentiated product offerings.

Nike: Challenges persist and a full recovery likely takes more time: 

The expert noted Nike and Jordan have been the weakest-performing major global sportswear brands in China recently. The expert believes sales trends deteriorated through the summer, with declines remaining in the -DD% range and further decelerating into September MTD. According to the expert, Nike's challenges are largely idiosyncratic. Nike has less new product innovation in the performance side of this business y/y. At the same time, the company has reduced distributor participation in ecommerce channels, scaled back promotional support, and focused on improving pricing integrity. While these actions may improve the long-term health of the business, they are adding to near-term sales pressure. Inventory levels remain somewhat elevated, though the expert noted conditions improved between July and August. Looking ahead, Nike's recovery is expected to take time and will likely depend on improved product innovation, cleaner inventory levels, and successful execution of Nike's revised distribution strategy, in the expert's view.

Adidas: No signs of a slowdown, confidence in the 2027 outlook remains intact:

After beginning Q3 with high-single-digit growth, trading momentum strengthened considerably in August and September, with growth accelerating into the high teens. According to the expert, this performance has been driven by the success of the company's local-for-local product strategy, supported by effective and locally relevant marketing initiatives. While inventory levels remain somewhat higher, they are viewed as manageable, with no signs of increased discounting or promotional activity. Looking ahead, experts expect demand trends to remain healthy through the end of the year, with no indications of a slowdown. Early indications for 2027 are also constructive, with order books pointing to high-single-digit growth

Looking ahead: Industry growth likely remains modest while share shifts expected to continue:

The outlook for China's athletic wear market remains constructive but increasingly competitive. The expert expects industry growth to remain modest and roughly in line with broader economic growth. Market performance has become more polarized, with stronger brands continuing to gain share while weaker brands face mounting pressure. adidas appears positioned to continue gaining market share, supported by healthy inventories, strong product acceptance, and positive distributor sentiment. Nike is expected to remain under pressure as channel restructuring efforts continue and distributors work through elevated inventory levels. Beyond the major global brands, the expert highlighted continued strength from domestic players such as Anta, as well as international running-focused brands including On, ASICS, and Salomon. Overall, success in the market is increasingly tied to localization, product relevance, and the ability to deliver compelling value to consumers.

Nike shares have plunged nearly 40% this year through Monday's close, leaving the stock deep in a bear market.

Adidas has fallen roughly 12%, outperforming its US peer so far this year. 

Tyler Durden Wed, 09/09/2026 - 10:00

US Sanctions Dozens Of Iranian Airlines As Tehran-Favored Mahan Air Defiant, Expands Flights

As part of the latest in the Trump-Bessent "asphyxiation of this regime" approach to Iran after six months of military action failed to accomplish most White House aims, the Trump administration on Tuesday announced it is sanctioning all Iranian airlines in a massive aviation crackdown.

The Treasury statement listed 27 Iranian air carriers and nine entities as part of an effort to deny the Iranian government the ability to move "weapons, personnel, and illicit cargo".

via IRNA

"Let this be a warning to anyone doing business with Iran’s remaining airlines, all of which we sanctioned today: You are at risk of being cut off from the global financial system," Bessent said.

On the list is Ava Airlines, Fly Persia, and Mehr Airways - and others, after the US first sanctioned Mahan Air in 2011, which was the first such instance of Washington sanctioning an Iranian commercial airline.

Related secondary sanctions were implemented on top of the direct airline measures.

"The Treasury Department also sanctioned Turkey-based firms that have coordinated shipments, including drone components and industrial equipment destined for Iran, on behalf of Mahan Air, and it sanctioned a Turkey-based entity that has served as a general sales agent for Mahan Air and coordinated shipments on behalf of the blacklisted airline," The Hill details.

"Other sanctioned entities with ties to Mahan are based in Malaysia and Kazakhstan," the report further indicates.

Iranian Foreign Minister Abbas Araghchi mocked the 'Economic D-Day' and 'Operation Epic Outcast' sanctions, saying that the fallout of the war "has been disastrous for America, including its standing worldwide."

"After failing to achieve its aims through sanctions or war, Washington’s 'novel' solution is…more sanctions. Seriously?" Araghchi wrote Tuesday afternoon.

The Wall Street Journal has meanwhile noted that Mahan and others continue defying sanctions and the US pressure campaign, while still clearly struggling:

Out-of-date aircraft: Mahan’s three dozen planes tend to be aging, secondhand Boeing and Airbus aircraft, some in service for as long as 35 years. Passengers who post about their trips on social media say there is no onboard entertainment or alcohol, and tickets have to be purchased in cash instead of international credit or debit cards.

New horizons: Despite the lack of amenities, and the sanctions scrutiny, Mahan has been adding new destinations for passenger and cargo services during the war between the U.S. and Iran.

In this new @ForeignAffairs essay, I argue that US officials are being too triumphant about Iran’s economic downturn.

Iran’s leaders are using inflation to engage in financial repression. Counterintuitively, reduced economic activity is helping the state stave off a deeper… pic.twitter.com/jRtAZYEnHG

— Esfandyar Batmanghelidj (@yarbatman) September 8, 2026

In recent years the Islamic Republic has suffered some significant aerial disasters, which included the May 19, 2024 death of President Ebrahim Raisi. His military helicopter went down in a rugged, mountainous area of northwestern Iran. Some speculate that lack of airline parts and aging aircraft, due to the long-standing US targeting of the industry, has increased the chances of aviation disasters.

Tyler Durden Wed, 09/09/2026 - 09:20

OpenAI's Claims Of Solving Million-Dollar Math Problem Marred By Allegations From Academic

Authored by Jacob Burg via The Epoch Times,

OpenAI announced on Sept. 8 that one of its internal artificial intelligence (AI) models had found the solution to a generations-long mathematical problem that deals with the natural mechanics of fluids like water and air.

The Navier-Stokes equations govern how humans understand weather, ocean currents, blood flow, and aircraft and vehicle aerodynamics, and have been around for nearly 200 years. Mathematicians have spent decades trying to understand how smooth three-dimensional fluids can break down, and whether all the equations converge into sensible solutions despite their widespread success in various applications.

This question, known as the Navier-Stokes existence and smoothness problem, or Navier-Stokes for short, was selected in 2000 as one of the Clay Mathematics Institute's Millennium Prize Problems - considered the seven most important mathematical problems.

Anyone who solves one of the problems is offered $1 million in prize money.

OpenAI said an internal model "significantly more capable than GPT-6 Astra" solved the Navier-Stokes existence and smoothness problem. If so, it would mark one of the most significant advances in AI technology to date, even after previous AI models had solved other critical math problems.

"This is a Deep Blue-Kasparov moment," New York University (NYU) mathematician Tristan Buckmaster wrote in a statement released on Monday, referring to the moment a supercomputer beat world chess champion Garry Kasparov nearly 30 years ago.

"The community needs to have serious and unhurried discussion about where to go from here," he added.

However, Buckmaster said in the same statement that he had been working on the problem with mathematician and Anthropic employee Levent Alpöge, and had made significant progress last month after using Anthropic's Claude and OpenAI's Codex.

Before they could publish their work, Buckmaster said he contacted a prominent mathematician at OpenAI on Sept. 3 after rumors spread that Anthropic had solved a major open problem, and after Alpöge said he had received tips that information regarding the pair's progress on Navier-Stokes had been given to OpenAI.

OpenAI told Buckmaster that an internal model had produced a proof after the firm gave it a prompt to solve the problem. Buckmaster then asked when the prompt was sent, but said he did not receive an immediate response.

"Eventually it was agreed that it had been sent in the past few days, after information about our work had reached OpenAI," he said.

The NYU mathematician asked OpenAI whether the model had been trained on or had access to his Codex sessions with Alpöge, since the pair had inputted their project drafts into the AI model.

"I was told the model did not look up user data. I asked again, about training, and I did not get an answer," Buckmaster said.

Buckmaster alleges that OpenAI offered him two paths forward: He and Alpöge could post their results about part of the problem, known as Euler, a day before OpenAI published results on Navier-Stokes; or Buckmaster alone could publish a paper on Navier-Stokes, acknowledge that an internal OpenAI model had solved it, and remove Alpöge as an author since he works for the company's competitor, Anthropic. In the first instance, OpenAI would cede the prize to Buckmaster, saying that they would have been the "closest humans to the problem."

OpenAI, Buckmaster, and Alpöge did not respond to requests for comment by publication time.

In its announcement on Tuesday, OpenAI said, "While unlikely, we cannot rule out that de-identified data derived from their usage of our products helped improve our models."

OpenAI mathematician and AI researcher Sébastien Bubeck wrote on X on Tuesday that he did not ask to remove Alpöge from authorship of his own work, but had said "it would be simpler" if he was not an Anthropic employee "because I felt it would be inappropriate for an Anthropic employee to author OpenAI's work."

Sam Altman, CEO of OpenAI, also jumped into the fray on Tuesday, claiming that Alpöge refused to meet with his team, and that the Anthropic mathematician and Buckmaster had taken a different approach in working to solve Navier-Stokes.

"It is true that we tried this because there were rumors on the internet last week that Anthropic's models had solved a millennium problem and we were curious if ours could do it too," Altman said.

The comments did not address whether OpenAI had accessed Buckmaster's Codex logs, but Wired reported that the firm gave a closed press briefing on Tuesday where Bubeck and other OpenAI executives denied inspecting the logs or using them to inform their work.

"We, whether it's the researchers or the agents, did not see any of their work until it was released publicly last night," Bubeck told reporters.

Tyler Durden Wed, 09/09/2026 - 09:00

"I Am The House Now": Bessent Goes Full Judge Dredd On Yen Bears

US Treasury Secretary went full judge, jury, and executioner on speculative yen shorts overnight with probably the most direct explicit jawboning we have seen in years...

“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said at a Southern Methodist University event in Texas on Tuesday.

“And you can bet against me if you want.”

As Bloomberg reports, the comments were among Bessent’s most strident yet in an extraordinary campaign to bend markets to his will, even in the face of investor skepticism.

The former hedge fund executive, who made his name with outsized currency wagers, recently oversaw the first purchases of yen by US authorities in three decades and surprised market participants last month with plans to ramp up buybacks of US Treasuries to restrain a surge in yields.

He argued that Treasury has an informational advantage because of its visibility into Japanese policymakers and the BOJ.

“Whenever people say, ‘Oh, well, Treasury Secretary is taking a risk,’ - well, it’s my dream, I have asymmetric information,” Bessent said.

Bessent’s remarks also underscore his unusual level of engagement on economic policymaking in Japan, which is among the world’s largest holders of US debt.

Bessent has coordinated with Japan Finance Minister Satsuki Katayama on currency interventions and put increasingly public pressure on the central bank to raise interest rates, a move that would support the yen and reduce Japan’s need to sell Treasuries for market intervention.

“Bessent’s remarks carry immense weight. The message is clear: do not defy the Treasury Secretary,” said Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan Co. in Tokyo.

“The old way of thinking — that interest rates would be raised once every few months — no longer applies.”

Interestngly, Takumi Naya, head of the FX trading group at Sumitomo Mitsui Banking Corp.’s global markets operations department, suggested that,“Bessent’s remarks suggest that he expects a correction in the yen’s strength even at current levels."

Bessent's remarks have certainly flipped the positioning with hedge funds now betting the yen will strengthen beyond 150 per dollar by year-end, with some longer-dated options trades targeting a move to 140.

“Leveraged investors have been active and reacting to a potential regime change in the currency,” said Jerry Minier, global head of linear G-10 FX trading at Citigroup in London.

“Option structures targeting dollar-yen below 150 by year-end have been popular.”

Nomura has seen a similar shift toward bearish dollar-yen sentiment among macro hedge funds that seek to profit from market swings triggered by economic or political events.

There has been “much stronger demand for downside in the option space from the macro community who have shifted to increasing shorts, particularly since we broke 155.00 as most viewed that as a support line in the sand,” said Graham Smallshaw, Singapore-based senior foreign-exchange spot trader at Nomura.

While there was some profit-taking on Sept. 8 when the pair dipped below 153, “the view for now is very much concentrated on the 150/152 target,” he added.

The stance contrasts with that of Japanese retail investors, who boosted their net short-yen positions to an estimated ¥3.61 trillion ($23.5 billion) last week, according to a Bloomberg compilation of data from the Financial Futures Association of Japan and Tokyo Financial Exchange.

“Bessent’s ‘I am the house’ remark reflects the mindset of a former trader who truly understands market dynamics, which is likely why the market shows him a certain level of respect,” said Kazushige Kaida, head of FX sales at State Street Bank & Trust Co.’s Tokyo branch.

“Whether it’s US Treasuries or the yen, his series of verbal warnings are probably aimed at correcting what he sees as moves that have gone too far.”

However, as Goldman's Delta-One desk-head, Rich Privorotsky noted, "whatever you think of the rhetoric... the yen objectively continues to appreciate as the market leans into BOJ tightening/repatriation."

But, he adds, the secondary implication matters more for equities... "what happens as yen funded carry trades unwind back into Japanese bonds/equities?"

"The S&P and mega cap complex have felt strangely heavy without a great fundamental reason.

Worth keeping in the back of the mind that some leverage/carry may simply be diffusing out of the system."

Be careful what you wish for Judge Bessent...

Tyler Durden Wed, 09/09/2026 - 08:40

Futures Slide As Brent Tops $100, 10Y Yields Rise Above 4.81% Ahead Of Expanded Treasury Buyback

US equity futures are lower as oil continues its ascent, pushing Brent above $100 for the first time since July 24 and pushing 10Y yields to 4.81%. As of 8:15am, S&P futures are trading at session lows, down 0.5% and after erasing early gains, echoing a rally in Asian technology shares that lost momentum as the session progressed. Nasdaq futures are down 0.6% as Mag 7s trade mixed premarket: META +5% after saying early Muse AI usage has “blown way past our projections” with users engaging 10x more than its test cohorts, while AMZN -0.4%.  The Treasury Department is expected to announce on Wednesday the size of the next day’s operation to repurchase outstanding 10-year to 20-year securities. Treasury 10-year yields trade above 4.81%, rising by 3bps. USD extended losses, trading near a 7 month low.The yen extends gains to trade near 153.30 per dollar, outperforming its G-10 peers. Treasury Secretary Scott Bessent challenged traders to test his resolve on boosting the Japanese currency. Hedge funds are betting the yen will strengthen beyond 150 by year-end. Commodities were mostly higher with WTI surging above $95 and Brent topping $100 (with Shanghai oil trading almost $10 higher) for the first time since July 24 after the US struck Iranian tankers near the Kharg Island export hub and in the Gulf of Oman. Tehran responded by firing missiles at Jordan and warning ships in the Persian Gulf. Precious metals and ags are all higher. US economic data slate includes weekly ADP employment change at 8:15am. Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting

In premarket trading, Mag 7 stocks: Meta rises 5% with analysts positive on the Facebook parent after it debuted Muse, an AI assistant; 
Microsoft +0.04%, Apple -0.2%, Amazon -1.6%, Nvidia -0.4%, Alphabet -1.8%, Tesla -0.9%

• Braze (BRZE) slides 11% after the software company’s adjusted EPS forecast for the third quarter fell short of the average analyst estimate.
• Casey’s (CASY) drops 11% after the convenience-store operator reported a miss on first-quarter gross margin, as well as fuel gross profit. The stock had surged 33% this year as of Tuesday’s close.
• Chime (CHYM) jumps 9% after striking a deal to buy Stride Bank for $590 million in cash, snapping up its longtime partner as the fintech streamlines its operations.
• Evommune (EVMN) falls 8% after the drug developer said a mid-stage trial of its experimental therapy to treat atopic dermatitis failed to meet primary and secondary endpoints in any of the doses studied.
• Mission Produce (AVO) gains 4% after the avocado producer reported adjusted earnings per share for the third quarter that beat the average analyst estimate.
• ServiceTitan (TTAN) is down 17% after the software company’s third-quarter revenue forecast fell short of expectations. Bloomberg Intelligence highlights that the company slowed scaling of its agentic AI product Max.
• Tyra Biosciences (TYRA) tumbles 21% after announcing initial results from a Phase 2 study.

In other corporate news, Uber is said to be looking to raise around €4 billion ($4.7 billion) from its debut five-part euro bond. Amazon is selling its debut sterling bonds in a four-part deal. BP’s North Sea operations have drawn interest from suitors including Adura and NEO Next+, as the oil major works to exit the basin. Top lithium supplier Albemarle reached a preliminary wage agreement with union leaders in Chile on the final day of mediated talks before a strike was due to begin.

Oil prices extended gains for a fourth day, pushing Brent above $100 for the first time since July 24 with WTI around $95 - maintaining energy’s position as the key macro driver -  after US forces destroyed five Iranian tankers carrying crude in response to two attempts to hit a US Navy warship with ballistic missiles. Tehran responded by firing missiles at Jordan and warning ships in the Persian Gulf.  Treasuries fell across the curve, with the shorter end bearing the brunt. The two-year yield climbed three basis point to hit 4.42%, the highest since 2024. Europe saw a steeper selloff.

Brent reaching a threshold last crossed in July comes days ahead of the latest US inflation print. The data is widely seen as decisive in tipping the scales for or against a Federal Reserve interest-rate hike next week, with money markets pricing around a 60% chance of a move.

“The risks to equity markets continue to pile up as the discount rate which they face gets higher and higher and higher,” said Ashley Lester, chief research officer at MSCI. “The question is to what extent can continued AI earnings growth continue to push equity markets onward.”

Traders are now waiting for an announcement on the size of Thursday’s buyback operation for outstanding 10-year and 20-year Treasuries, part of Treasury Secretary Scott Bessent’s efforts to restrain yields.

Bessent stole headlines overnight, offering views on markets, bonds, GDP and the Midterms. He challenged traders to test his resolve on boosting Japan’s currency, saying “I am the house now,” and warned that the US faces dire consequences if it loses out in the AI race with China.

Bessent is also set to reveal today how far he’s initially willing to go to restrain US bond yields via an expanded buyback program, with wide-ranging estimates of as much as $10 billion per operation. Bloomberg strategists said this test to support the market is likely to fail, as years of budget deficits have helped drive the long-term natural rate of interest in the US to the highest in two decades.

Barclays strategists raised their S&P 500 target for year-end 2026 to 7,950 from 7,800, citing continued earnings strength. RBC strategists said the risk of a near-term 5% to 10% pullback in the S&P 500 are rising, citing weak seasonality, US midterms volatility and the Iran war. 

Conferences season is full steam ahead: conferences include Goldman Sachs Communacopia & Technology Conference (San Francisco), Jefferies Industrials Conference (New York), Citi Global TMT Conference (New York), Citi GEMS Conference (New York), Barclays Global Consumer Staples Conference (Boston), Goldman Sachs European MedTech & Healthcare Services Conference (London), Bernstein’s Annual Pan-European Strategic Decisions Conference (London), Morgan Stanley Industrial CEOs Unplugged (London), UBS Global Materials Conference 2026 (New York), Wells Fargo 21st Annual Healthcare Conference (Boston), Kepler Cheuvreux Autumn Conference (Paris).

In tech, Apple is holding its most anticipated event in years: New CEO John Ternus is set to debut a roughly $2,000 foldable iPhone, with larger-storage configurations going up to roughly $3,000. The shares have surged over the summer, while history shows that they’ve fallen on five of the past eight days when new versions of the iPhone were unveiled.

In AI, Google is planning its biggest investment in Europe, an AI infrastructure build out worth at least €13 billion in Finland. And US security agencies accused China’s top AI companies including DeepSeek and Alibaba of using distillation techniques to access and draw information from American AI models “at an industrial scale.”

In politics, Chris Pappas won the Democratic primary for a New Hampshire Senate seat, setting up a November showdown with former Republican Senator John Sununu.

Elsewhere, the US escalated its trade war with Canada, moving to block imports of some products, while slapping new tariffs on others and is seeking to bar Canadian companies from selling to government contractors. The import bans for some Canadian dairy products and alcohol will take effect in three weeks, a senior administration official told reporters.

In Europe, sectors sensitive to the economy dragged the Stoxx 600 down 1.5% in a move led by industrials which are sensitive to energy costs. Here are the biggest movers Wednesday:

• Fortum shares gained as much as 11%, the most since Feb. 2022, after the Finnish energy company said it has signed a 22-year power-purchase agreement with Google covering up to 50% of the capacity at its Loviisa nuclear plant from 2028
• Victrex shares jumped as much as 17% to the highest since March 2025 after the thermoplastic specialist said annual underlying pretax profit will top guidance following a strong performance in the final quarter of the financial year
• Interparfums shares rise as much as 4% after the perfume and cosmetic product manufacturer reported earnings comfortably ahead of expectations in the first half, bolstered by better margins
• Kinnevik shares rose as much as 8.2%, briefly hitting their highest level since February, after being upgraded at SEB Equities
• Gym Group shares rose as much as 6.7%, the most in a year, after its first half earnings beat expectations, according to Panmure Liberum
• Energean gained as much as 6.6%, the most in five months, after the oil and gas producer reported first half production and revenue that beat expectations
• Inditex shares fell as much as 4.9%, the most in six months, after the Zara owner’s first-half earnings missed sell-side expectations due to rising operational costs
• AUTO1 Group shares fell as much as 5% after the online used-car dealer announced CFO Christian Wallentin is stepping down for family reasons
• Webuild dropped as much as 9.2% as the company announced that Italy’s market regulator Consob has ordered the restart of the review period for the firm’s voluntary tender offer on all Trevi-Finanziaria Industriale’s ordinary shares

Asian stocks rose as sustained enthusiasm for artificial intelligence lifted chipmakers, with investors looking past escalating hostilities in the Middle East. The MSCI Asia Pacific Index advanced as much as 0.7% before trimming gains. South Korea’s Kospi rose 1.4%, as SK Hynix and Samsung Electronics tracked their US peers higher. Benchmarks in Japan and Taiwan weakened throughout the session as higher oil prices fueled concerns over inflation.  Interest in technology shares persisted even as geopolitical tensions intensified and oil prices extended their climb. Brent crude hit $100 a barrel as attacks between the US and Iran and a recovery in Chinese oil buying propel the global crude benchmark higher. Meanwhile, Citi sees Indonesia equities rising about 9% from current levels by year-end but maintains a cautious stance on the world’s worst performer this year. The Jakarta Composite Index has gained about 25% from a June low, entering a technical bull market.

“There’s no evidence the capex cycle’s slowing,” Christopher Wood, global head of equity strategy at Jefferies, said on Bloomberg TV. “I would still rather own the picks-and-shovels trade than the people spending the money.”

In FX, the Bloomberg Dollar Spot Index is down 0.1%, nearing its lowest level in nearly seven months as the yen rallied, with traders looking ahead to the US Treasury’s buyback announcement and inflation data later this week. The yen advanced against all its Group-of-10 peers after US Treasury Secretary Scott Bessent challenged traders selling the Japanese currency. USD/JPY fell 0.3% to 153.47 after touching 152.89 on Tuesday, the lowest since February. When the US intervenes with the yen, “I have pretty good insight” into what the Bank of Japan and Japanese policymakers are going to do, Bessent said. “And you can bet against me if you want”

In rates, treasuries hold modest losses led by front-end tenors as oil prices extend their climb, spurring traders to price in increased chance of a Fed rate hike at next week’s policy meeting.  US yields are up 1-2bps across the curve ahead of the US buyback announcement and 10-year supply. Supply also weighed as a 10-year note reopening is set to draw the highest yield since 2007 and new corporate bond sales are seen topping Tuesday’s almost $40 billion haul. Long-end tenors have support from uncertainty about the size of Thursday’s expanded buyback operation, to be announced at 11 a.m. 2- to 7-year yields are 2bp-3bp higher on the day with long-end tenors outperforming, flattening 2s10s curve by about 1bp, 5s30s by about 2bp; 10-year is around 4.805% with bunds and gilts in the sector lagging by an additional 2.5bp.  Treasury auction cycle continues with $39 billion 10-year reopening at 1 p.m. New York time; Tuesday’s $58 billion 3-year new-issue drew good demand at highest yield since 202.  WI 10-year yield around 4.81% is ~13bp cheaper than last month’s auction result. IG dollar issuance slate includes a couple of names so far. Eighteen offerings were priced on Tuesday, with issuers paying about 2bp in new issue concessions on deals that were 3.9 times covered. Stand-downs and flurry of mandates announced Tuesday point to a potentially busier Wednesday session

In commodities, Brent crude topped $100 a barrel for the first time since July 24 as the US war on Iran flared and Chinese buying recovered; WTI crude is up 2.3% after topped $95 for the first time since June. European natural gas prices hit a three-year high. The weaker dollar helped push gold higher by 1%. Bitcoin adds 1.3%. 

US economic data slate includes weekly ADP employment change at 8:15am. Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting

Market Snapshot

Top Overnight News

• The US military struck five Iranian tankers on Tuesday, sinking one, after Iran fired ballistic missiles at a US Navy warship, in a fresh escalation of fighting in the Middle East. The attacks prompted a significant retaliation from Iran, which launched a missile barrage toward regional US ally Jordan, saying it was targeting US military assets (18 of 20 missiles were intercepted, and two fell into unpopulated areas, with no casualties reported).  CNN
• Commercial vessel traffic through the Strait of Hormuz is poised to remain at about 5% of prewar levels after the resurgence of US-Iran hostilities. Crossings will stay severely suppressed through late 2026 even if a lasting ceasefire takes hold. BBG
• Brent oil topped $100 a barrel for the first time since July, as attacks between the US and Iran and a recovery in Chinese oil buying propel the global crude benchmark higher: RTRS
• Treasury Secretary Scott Bessent challenged traders to test his resolve on boosting Japan’s currency, “I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said at a Southern Methodist University event in Texas on Tuesday. “And you can bet against me if you want”. BBG
• Hedge funds are betting the yen will strengthen beyond 150 per dollar by year-end, with some longer-dated options trades targeting a move to 140: BBG
• Treasury Secretary Scott Bessent is set to reveal how far he’s initially willing to go restrain US bond yields via an expanded buyback program that has Wall Street dealers on edge. The Treasury Department is expected to announce on Wednesday the size of the next day’s operation to repurchase outstanding 10-year to 20-year securities; past precedent indicates it would be at 11 a.m. in Washington. It will be the first such release since the Treasury shocked market participants Aug. 19 by saying it would “at least double” the $2 billion sizes it had penciled in just two weeks before. BBG
• Apple is holding its most anticipated event in years today: New CEO John Ternus is set to debut a roughly $2,000 foldable iPhone, with larger-storage configurations going up to roughly $3,000. The shares have surged over the summer, while history shows that they’ve fallen on five of the past eight days when new versions of the iPhone were unveiled. BBG
• Meta on Tuesday formally launched Muse, a personal AI agent “that understands your goals and works 24/7 to get things done for you”. WSJ
• China’s consumer and factory-gate prices edged higher in August, fueled by energy-market jitters tied to renewed tensions in the Middle East. The producer-price index climbed 3.8% in August from a year earlier, accelerating from July’s 3.5% increase. The figure topped the median 3.7% increase projected by economists. Core CPI (+1% vs. the Street +0.9% and vs. +0.9% in Jul) while headline CPI was inline (+0.8%, up from +0.5% in Jul). WSJ
• US agencies accused DeepSeek, Alibaba and other Chinese AI firms of systematically extracting proprietary knowledge from American firms. BBG
• The US escalated its trade war with Canada following Ottawa’s tariff retaliation, moving to block imports of some products while slapping new tariffs on others, as well as seeking to bar Canadian companies from selling to government contractors. Donald Trump said he would also seek to bar Canadian companies from selling to government contractors. CNN
• India is ramping up scrutiny of Wall Street traders with the nation’s securities regulator turning more aggressive in targeting even prominent foreign players like JPMorgan Chase & Co. in its $5 trillion stock market: BBG
• LIV Golf filed for bankruptcy protection Tuesday, a dramatic fall for the Saudi-backed league that had big ambitions to challenge the supremacy of the PGA Tour: BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed as the region attempted to shrug off the weak lead from Wall Street, where all major indices declined on return from the long weekend amid rising oil prices and geopolitical escalation. ASX 200 was subdued as gains in energy, resources, mining and materials were offset by weakness in healthcare, financials and the consumer-related sectors. Nikkei 225 swung between gains and losses with few fresh catalysts and as further reports continued to point to a BoJ rate hike next week, while Nintendo was among the laggards after its Legend of Zelda 40th Anniversary Direct announcements underwhelmed. KOSPI resumed its regional outperformance and climbed above the 7,000 level with Samsung underpinned following several recent announcements and with SK Hynix unfazed by reports that Kioxia's CEO dismissed prospects of closer ties with the South Korean chipmaker. Hang Seng and Shanghai Comp were mixed, with price action contained after the PBoC continued to refrain from open market operations and as participants digested the Chinese inflation data in which CPI matched estimates, but PPI was firmer-than-expected and showed an acceleration in factory gate prices.

Top Asian News

• US Treasury Secretary Bessent said he has good insight when they intervene on the yen and dared people to bet against him, while Bessent commented that he has information and good insight into what the BoJ and policymakers will do.
• Japan cabinet reshuffle is set for September 17th, according to Asahi.

European bourses (STOXX 600 -0.9%) are entirely in the red, given the renewed US-Iran tensions overnight. US CENTCOM announced that it destroyed 5 Iranian oil tankers in response to the IRGC targeting a US Navy warship. In retaliation, the IRGC struck back, firing ballistic missiles at a base in Jordan and attacking 10 ships. Energy prices have climbed in turn, with Brent Nov'26 briefly extending above the USD 100/bbl mark. Sectors highlight the negative bias. Utilities, Telecoms and Energy are the only sectors in the green. The clear underperformer is Retail, given losses in Inditex amid mixed H1 earnings, while Consumer Products & Services and Banks round out the sector laggards.

Top European News

• French PM Lecornu is considering plans to reduce the exceptional contribution imposed on very large companies, TF1 reported

FX

• G10s are mostly firmer against the USD. The JPY mildly outperforms vs peers, continuing to build on its recent strength. The Kiwi is the slight laggard this morning. Westpac remains short NZD/USD, targeting 0.5700 or lower vs a current price of 0.5843.
• DXY is incrementally lower this morning despite higher oil prices, and currently holding within a 98.61 to 98.82 range. Focus has been on geopolitical updates, after another bout of US-Iran fighting has led to a leg higher in energy prices, which in turn has lifted domestic yields. The US 2yr (4.4%) now holds near recent highs. On the trade front, the Loonie is relatively unmoved to the US announcing an import ban on alcohol and other goods from Canada in response to the latter's tariff retaliation.
• The JPY modestly outperforms this morning, with USD/JPY holding within a 152.93 to 154.01 range. A continued bout of pressure will see the pair trade well within levels seen in mid-February, however, it will likely find some support at the 152.00 level, which was the low on 27 Jan 2026. A breach beyond that level would likely require a dovish US CPI report on Friday, a hold at the Fed next week and a hawkish BoJ policy announcement thereafter.
• The outperformance this morning can be attributed to daring commentary from US Treasury Sec Bessent. He stated that “I am the house now”, and has good insight into what Japanese policymakers and the BoJ will do. He provided a final warning that he has asymmetric information. The strong commentary from Bessent, along with hawkish BoJ speak over the past couple of weeks will keep JPY vigilantes on the sidelines, at least for now. However, once we get past the string of policy decisions next week – markets may begin to shift their attention back to energy dynamics, which JPY is particularly sensitive to.

Fixed Income

• Unsurprisingly, given the late-Tuesday action, Gilts gapped lower at the open. Down by 19 ticks and then another 19 to a 85.62 low, but clear of Tuesday’s 85.56 base. Since, in a morning of somewhat less macro newsflow than the last few days, the benchmark has held in proximity to that low, unable to find and respite as peers did overnight; though, they too have faded in recent trade.
• Bunds spent the APAC session modestly in the red, but in a very thin range, as the complex awaited a major update on the geopolitical front. Since, in the European morning as energy climbs and after Brent surpassed the USD 100/bbl handle, further pressure has emerged taking Bunds to a 121.64 low. Concerning for Europe, and lifting short-end yields in particular, is the ongoing climb of TTF, to over EUR 79/MWh today, a high for the October contract. An ascent that underscores the expected ECB hike on Thursday.
• USTs were flat/firmer in APAC trade, holding around 107-10 for the most part. Since, given the above, some modest pressure has emerged to take the benchmark just into the red by a couple of ticks and prints a low at 107-07+. Today is focused firmly on the Treasury buyback announcement, the first after the move to at least double the long-end operations from the current USD 2bln maximum. Given the “at least” language, and the commentary from Secretary Bessent that operations could be above the implied USD 4bln level if required, we are attentive to the announced size, any scheduling update and/or accompanying commentary the Treasury may choose to provide.
• Germany sells EUR 4.201bln vs exp. 5.5bln 3.00% 2036 Bund: b/c 1.47x (prev. 1.15x), average yield 3.39% (prev. 3.26%), retention 23.62% (prev. 37.2%).
• Amazon (AMZN) begins the sale of its four-part Sterling bond. Guidance: 3-year +70bps to Gilts, 6-year +90bps to Gilts, 12-year +105bps to Gilts, 19-year +110bps to Gilts.

Commodities

• In geopolitics, US forces destroyed five Iranian crude oil tankers tied to the IRGC in response to repeated attempted missile attacks on US Navy warships, with US Secretary of State Rubio warning that Iran will lose tankers each time it targets American vessels. Iran retaliated with further missile strikes, including at least 20 missiles targeting bases in Jordan, although Jordan said 18 were intercepted and no casualties were reported, while the IRGC claimed attacks on US warships and commercial vessels and threatened further retaliation against US interests. Meanwhile, Iran said it remains committed to its MoU with Washington despite reportedly demanding new conditions for negotiations, while explosions were also reported in Saudi Arabia’s Jazan region and oil fields.
• Crude futures are on a firmer footing, with Brent Nov extending above USD 100/bbl this morning for the first time since late July. Attention has been on some UKMTO updates, which have appeared to outline some of the activity seen on Wednesday. Both benchmarks are towards the upper end of intraday bands, WTI Oct in a USD 93.76-95.19/bbl (vs yesterday’s 90.87-94.73/bbl range) and Brent Nov within USD 98.80-100.68/bbl (vs yesterday’s 96.78-99.46/bbl range). Dutch TTF firms by almost 4% intraday and resides close to EUR 79/MWh after briefly topping the level this morning from a base under EUR 77/MWh, with winter heating demand also taking focus.
• Metals are mixed. Precious metals cheer a weaker Dollar irrespective of the firmer oil prices, with a weaker Buck allowing geopolitical risk premium to be baked in. Spot gold found support at its 100 DMA (USD 4,343/oz), with the bullion trading in a current USD 4,341-4,413/oz range, with yesterday’s peak at USD 4,443/oz. Spot silver found support near yesterday’s low around USD 65.50/oz, and resides not far from its 100 DMA (USD 67.15/oz) in a current USD 65.52-67.01/oz range.
• Base metals are mixed, with copper prices subdued following recent record highs on the LME, and with the mood cautious against the backdrop of higher energy prices and its impact on inflation and growth. 3M LME copper trades in a USD 14,596.50-14,725.03/t range.
• Iraq is reportedly seeking a significant output quota increase during OPEC+ audits, wanting to target 6mln bbls/day, Bloomberg reported.
• Turkish Energy Minister said that they are starting an oil exploration in the Western Black Sea in the coming days.

Trade/Tariffs

• US President Trump said he is directing the General Services Administration, working with the USTR, to take all necessary steps to remove Canadian-origin products from GSA’s Multiple Award Schedules unless Canada restores full and fair reciprocity for American farmers and companies.
• White House posts proclamations regarding modifying scope of Canadian products subject to additional duties and excluding certain products from importation to the US, with respect to motor vehicles, dairy and alcoholic beverages.
• US senior administration official said President Trump approved a series of proclamations on Canadian trade measures, with the ban on dairy, most alcohol and motorcycle imports from Canada under Section 338, while the official stated the restrictions are to take effect in about 3 weeks and that Trump's stance on the January 1st, 2027 auto tariff hike remains in effect.
• Canada's Minister Responsible for US Trade LeBlanc said they are assessing the latest tariffs from the US, while he is in contact with USTR Greer and will work in good faith when the US is ready to engage.
• US Commerce Secretary Lutnick will meet with Mexican President Sheinbaum and Economic Minister Ebrard and will discuss US tariffs on Mexican autos and metals, according to POLITICO.

Geopolitics: Iran

• US Central Command confirmed that forces destroyed five Iranian crude oil carriers on Tuesday after the IRGC targeted a US Navy warship with ballistic missiles twice over the past two days.
• US Secretary of State Rubio said every time Iran tries to hit US Navy ships, they will lose tankers.
• Iran launched missiles at targets in response to US strikes on tankers, while it launched at least 20 missiles at bases in Jordan, with the Al-Salti and Prince Hassan bases targeted, according to SNN. However, Jordan said air defences intercepted and destroyed 18 of 20 Iranian missiles, and two fell away from population centres, while it stated that no casualties were reported after the Iranian missile strike. Furthermore, it was later reported that Jordan intercepted additional missiles in the east.
• IRGC claimed missile strikes on US combat destroyers, while it announced that it attacked two US vessels, eight oil vessels and ten violating ships that intended to cross the prohibited and unsafe area of the Strait of Hormuz.
• Iran's MP said there is a "possibility of re-examining the plan to withdraw from the NPT in the parliament", ILNA reported.

Geopolitics: Ukraine

• Russia is anticipated to prolong the Ukraine war into 2027 as peace talks stall, with President Putin believed to be waiting for a stronger military and political position before serious negotiations. Furthermore, Western officials warned that Moscow will intensify winter attacks on Ukraine's energy infrastructure whilst escalating cyber attacks, sabotage and influence operations across Europe.
• Ukraine Drone Forces Commander said that Ukraine hit military vessels at Russia’s Novorossiysk naval base.
• Russian strikes hit port infrastructure in Mykolaiv, according to Ukrainian officials.
• CPC oil terminal on the Black Sea was reportedly attacked by drones overnight.

Geopolitics: Other

• Top US diplomat in Taiwan said, aside from the human toll, any conflict across the Taiwan Strait would have a bigger impact on the global economy than the Second World War.

US Event Calendar

• 7:00 am: Sep 4 MBA Mortgage Applications, prior 0.8%

DB's Jim Reid concludes the overnight wrap

Today is the day when I work out whether the thing that's truly been missing from my life over the last few years, or even decades, is a foldable phone. I usually go into an Apple launch event day saying that this time my vast collection of Apple products is finally now stable and mature. That said, I usually come out the other side with 10 timers set so as not to miss the eventual first order point for the new products.  

As we await "iFold”, markets seem to be treading water this week as increases in energy prices dampen risk appetite, as Brent crude is nearing the $100 level last seen six weeks ago. While Brent did give some of its initial gains yesterday to settle +0.95% at $97.92/bbl, news late in the US session of new strikes in the Gulf have left it another +1.45% higher at $99.34/bbl this morning after touching $99.67/bbl earlier in the session. And with inflationary pressures still mounting, that kept the pressure on other asset classes too. Indeed, the S&P 500 (-0.58%) posted a fresh decline as US markets returned after Labor Day, whilst the 5yr Treasury yield (+1.8bps) closed at a 19-month high of 4.56%.   

The initial catalyst for the fresh increase in oil came just as we were going to press yesterday, as Saudi Arabia halted operations at multiple energy sites after they were attacked. The Houthis claimed responsibility shortly after. And while oil prices fell back late in the European session, they then spiked again amid news of explosions near Kharg Island, which houses Iran’s main oil export facilities. US Central Command announced later that US forces destroyed five Iranian tankers in response to attempts to hit a US Navy warship with ballistic missiles. In response to the strikes, Iranian state TV cited an IRGC warning to tankers in the vicinity of Bahraini and Kuwaiti piers to evacuate their vessels “as they will be targeted”. Iran also launched missiles towards an air base in Jordan overnight.
So all that has left investors growing more concerned about further disruption and pricing a longer period of high energy prices. In fact, the 6-month Brent future (+1.52%) closed at its highest level since mid-June, at $84.78/bbl. It is another +1.45% higher this morning. So there is growing scepticism that oil prices will meaningfully revert over the coming months.   

In the meantime, the relentless rise in European natural gas prices also continued yesterday. For instance, the front-end future rose +3.46% to €75.80/MWh, its highest since January 2023, so the inflationary pressures were clear in multiple directions. The latest move comes as Europe is seeking to fill up its storage, but it’s still only 67% full, which is lower than it’s normally been at this time of year. Indeed, storage was 79% full in 2025, and was 93% full in 2024, so that’s added to concerns ahead of the winter heating season. The refilling shortfall has been concentrated in some of the northern continental countries, including Germany (55% full) and Netherlands (50% full). Given all that, investors were pricing in higher inflation too, with the 1yr Euro inflation swap (+2.9bps) moving back up to 3.40%, its highest since May. The ECB's comments on the latest developments at their policy meeting tomorrow will be fascinating.  
That backdrop meant it was a more challenging day for equities, with fresh losses on both sides of the Atlantic. In the US, the S&P 500 (-0.58%) fell back as part of a broad-based decline, with more than 70% of the index lower on the day. The Nasdaq (-0.32%) and the Mag-7 (-0.35%) saw slightly smaller declines thanks to a recovery in chipmakers, which also sent the Philly semiconductor index (+1.30%) higher for a 4th consecutive session. Meanwhile in Europe, the STOXX 600 (-0.05%) slipped back again slightly, with the continent’s indices generally seeing little movement. So the FTSE 100 (-0.10%) and FTSEMIB (-0.10%) posted modest declines, whilst the CAC 40 (+0.14%) eked out a gain. Stoxx futures are around half a percent lower this morning.  

The latest inflation pressures also kept up the pressure on US Treasuries, with yields rising across the curve, particularly at the front-end. So the 2yr yield was up +2.8bps to a one-week high of 4.39%, whilst the 5yr yield (+1.8bps) just about hit its highest since January 2025, at 4.56%. By contrast, the 10yr yield (+0.7bps) only saw a very modest increase to 4.79%, leaving it just shy of its 4.80% peak a week earlier, which had been the highest since October 2023. Overnight yields are fairly steady across the curve.

Those moves come ahead of the US Treasury’s upsized long-end buyback operation tomorrow, the size of which is expected to be announced today. Yesterday Bessent described the increased operations which were announced last month as aiming to quell a “fever” that was building in the bond market.  

Over in Europe, the inflation pressures were also clear. But even as inflation breakevens moved higher, a reduction in real rates ultimately left sovereign bond yields lower on the day. So that meant that yields on 10yr bunds (-2.0bps), OATs (-1.8bps) and BTPs (-2.2bps) all rallied. In Europe, UK gilts were the relative underperformer, with the 10yr yield only down -0.2bps. In part, that’s because gilts have generally been more sensitive to higher oil prices. But Bank of England Governor Bailey also warned that inflation risks remain “on the upside”.   

In Asia, tech continues to support the KOSPI (+1.63%) which is again outperforming regional peers. Elsewhere, Japan's Nikkei (+0.07%), Hong Kong's Hang Seng (+0.02%), China's CSI 300 (+0.10%) and ASX (-0.17%) are all struggling to gain meaningful traction. S&P 500 futures are up +0.09% with Nasdaq 100 futures advancing +0.22%.

Early morning data showed that China's inflation pressures picked up in August, with both factory-gate and consumer price growth accelerating. The move was driven largely by higher energy costs linked to supply risks stemming from the Middle East conflict, even as underlying domestic demand remained subdued. Producer prices rose +3.8% year-on-year, above economists' expectations of +3.6% and up from +3.5% in July. Meanwhile, consumer prices increased +0.8% from a year earlier, in line with forecasts and accelerating from July's +0.5% gain.

Finally, there wasn’t much data of note yesterday. But we did get the NFIB’s small business optimism index from the US. That fell more than expected to 98.7 in August (vs. 99.3 expected), falling back again after rising over June and July. Otherwise, we also had the NY Fed’s latest Survey of Consumer Expectations. That showed growing pessimism about unemployment, as the mean probability of the US unemployment rate being higher in a year rose to 44.4%, the highest in the survey since April 2020 during the initial phase of the pandemic. 

Looking at the day ahead now, data releases include French industrial production for July. Central bank speakers include Bundesbank President Nagel. And today is also when the US Treasury department will increase their buybacks for longer-dated Treasuries

Tyler Durden Wed, 09/09/2026 - 08:37

There's More Juice Left In The Trade For Higher Real Yields

Authored by Simon White, Bloomberg macro strategist,

TIPS continue to mean revert and risk overshooting to the downside, leading to a continuation in rising real yields.

Real yields in the US have had a remarkably good run, with 10-year reals bottoming at about 1.72% at the end of March and rising to near 20-year highs at 2.43% currently. That’s even more remarkable when you consider that oil has on net risen almost 70% over the same period.

TIPS were overbought coming into the Iran war, but are now back to their mean. As the chart below shows, TIPS’ annual return is a mean-reverting series, with a decaying mean. Like a pendulum, when the series gets back to its mean it typically overshoots.

If that was to recur, then we should expect real yields to keep rising.

That is consistent with the message from my leading indicator for real yields. Its inputs include G10 excess liquidity and the Federal Reserve’s policy rate, and it anticipates the 10-year real yield rising more over the next three months or so.

Short positioning in TIPS looks elevated, based on the short interest of the iShares TIP ETF. We’re not likely to see significant short covering while momentum is in the bears’ favour.

In shares terms, the short interest is not as high as it was during the inflation flare of 2021/22 and subsequent rapid Fed tightening, but the short interest ratio, ie normalised by the shares outstanding, is at a similar level to what it was back then.

There are different drivers this time. Fed pricing is not as big a part of it, with only two and a bit rate hikes expected over the next year. Instead it’s a combination of rising real growth expectations and greater competition for capital, driven by the seemingly insatiable demand for investment in AI infrastructure.

A good slug of the rise in real yields this year, however, also comes from increasing risk premium for TIPS. No wonder short positioning is high.

Tyler Durden Wed, 09/09/2026 - 08:05

Bitter Harry and Meghan Fire Off Blunt Statement After King Charles Blocks Royal Return

King Charles delivered a humiliating public slapdown to Prince Harry and Meghan Markle yesterday after the couple's surprise return to Britain, making it crystal clear they remain firmly out of the Royal Family.

Buckingham Palace issued a stinging letter on Monday spelling out that the Duke and Duchess of Sussex have no official role, no working duties and no hope of a half-in, half-out arrangement.

"It is well known that in January 2020 the Duke and Duchess stepped down from undertaking representative duties on behalf of The Sovereign, and are no longer working Members of The Royal Family," read the letter sent by the Lord Chamberlain, the royal household's top official. "This position, distinct from the State and Royal duties undertaken by the working Royal Family, and with the personal latitude it brings the couple in respect of financial independence and protection of their privacy as they would wish, will continue to be fully respected."

Buckingham Palace stressed that simply pitching up on British soil does not restore their royal standing.

"It follows that there is no change to the current status of the Duke and Duchess of Sussex," the letter added. "Their styles as His and Her Royal Highness remain in abeyance and are not used. The charitable work of the Duke and Duchess is a personal matter for them both and undertaken in their private capacity. In short, their position is akin to private citizens with commercial and charitable interests."

A spokesman for Harry and Meghan responded to the letter with a terse statement, claiming that the pair had been blindsided.

"We were a little surprised not to have been told about this in advance. The publication of the letter had caught the couple off guard," their statement reads.

However, Palace officials only told them of the King's position an hour before the letter was published, according to GB News.

Meanwhile, some royal watchers said that no one should be remotely shocked by the king's actions.

While Harry and Meghan are returning, they are not regaining official royal roles," British royals expert Hilary Fordwich told Fox News. "Nor was there any agreement to a 'half-in, half-out' construct. They have been thwarted by trying to do what they agreed to with Queen Elizabeth II."

Tyler Durden Wed, 09/09/2026 - 07:45

IRGC Says 'Smart Submarine' Operated By US Seized In Hormuz, Releases Images

Iran's Islamic Revolutionary Guard Corps (IRGC) navy announced Tuesday it had captured an unmanned US submersible at the entrance of the Strait of Hormuz, a claim which corresponding photographs appear to back.

The US side has yet to confirm the capture of the advanced naval drone, but some reports suggest it was "lost" after failing to operate properly. The IRGC statement called it a "complex intelligence and operational action."

Tasnim identified the captured system is a Dive-LD in a report, describing the autonomous unmanned underwater vehicle built by US defense firm Anduril Industries.

The Dive-LD is a very new, cutting edge weapon system, having only been delivered to the US military in 2025. It is able to operate up to ten days at a time without coming back to port or ship, and is reported to have a maximum operating depth of about 19,700 feet (6,000 meters).

Later on the same day, an unnamed US official issued the following (via Newsquawk wire):

US official says a US military underwater drone malfunctioned more than a day ago in the Middle East

The sea drone may have been operating as part of a US mission to de-mine the Strait of Hormuz. It is capable of mapping the ocean floor, as well as rapidly locating floating mines and other water hazards.

There have been recent widespread reports that elite Navy Seals have been engaged in a four-month mission to remove mines set in place by Iranian forces as part of its effort to close the Strait of Hormuz and hold global energy markets hostages to use as leverage against Washington.

This undoubtedly confirms that in recent weeks, the U.S. has attempted to conduct a covert operation to clear the Strait of Hormuz.

In fact, this naval drone is precisely a Dive LD, primarily used for mapping the seabed, inspecting underwater infrastructure, relaying and… https://t.co/z6zV7tmxDq pic.twitter.com/Cjb3egGW50

— MoloMonitor 🇮🇹 (@MoloWarMonitor) September 8, 2026

The above was not the only big Tuesday announcement by the Iranians:

Iran’s Islamic Revolutionary Guard Corps claims its air defenses have “intercepted and destroyed” an MQ-1 drone over the Strait of Hormuz, according to an IRGC statement carried by Iranian broadcaster IRIB.

The MQ-1 is a US-made remotely piloted drone often used for surveillance and reconnaissance.

The Pentagon has not yet definitively weigh in on this claim either. A huge number of advanced US drones have either crashed or been intercepted throughout the war, so this would hardly be the first such loss by American forces.

More images of sub capture: The submersible shown closely matches Anduril’s Dive-LD, an advanced large-displacement autonomous underwater vehicle deployed by the US Navy.

🇮🇷🇺🇸 IRGC captures advanced U.S.-made underwater drone in Strait of Hormuz

The IRGC Navy has released new footage and photographs of the autonomous underwater vehicle it says it captured while entering the Strait of Hormuz.

The vehicle shown closely matches Anduril’s Dive-LD,… pic.twitter.com/8t2QBtpmro

— DD Geopolitics (@DD_Geopolitics) September 8, 2026 Tyler Durden Wed, 09/09/2026 - 06:55

German Industrial Orders Up: Massive Boost From Arms Spending

Submitted by Thomas Kolbe

Was this the turning point of the summer, a kind of summer-sun Merz-turnaround?

Latest figures from the Federal Statistical Office show a significant jump in industrial orders in Germany: The order volume of companies across all sectors rose by 2.5 percent in July compared with the previous month – the third consecutive increase.

These are good numbers for the Chancellor, who is desperately looking for supporting arguments for his political course ahead of the state elections in eastern Germany. The economic reporting of the past week was striking: Economic institutes are revising their growth forecasts for the current year upward. LBBW, for example, now expects growth of 0.7 percent for the current year, up from 0.5% previously.

Growth of 0.7% – given an officially reported government spending ratio of 52.5% and new borrowing of around 4% this year, this is a pitiful figure. It marks no turning point. The figure merely shows that the private sector remains on a path of contraction and will lose at least two to three percent in substance.

We are witnessing a statistical effect. Merz is inflating a debt-financed economic phantom, raising the question: How can real economic prosperity grow out of artificially created credit? If the world were really that simple, all of humanity could catapult itself into the economic stratosphere from one day to the next with a debt-financed Keynesian demand program.

But reality, unfortunately, does not correspond to the voodoo economics of long-faded theories.

Let us therefore return from the Keynesian dream world to the world of true economics.

Comparing incoming orders with the situation a year ago could give the impression that we have reached the peak of an economic boom: In July, incoming orders were 13 percent above the previous year's level – a fabulous figure, one the German economy may have last seen during the years of the post-war economic miracle. The July figure stands out so markedly that investment demand is pushing up the entire gross domestic product and more than compensating for the dramatically poor figures in the other sectors of the economy.

A brief classification: Retail sales were down 2.5% in real terms in July compared with the previous year. Hospitality revenue fell by more than 5% in real terms year-on-year. All in all, consumption stagnated in the first half of the year; only credit-financed government demand prevented a dramatically negative figure. On top of this, inflation, now at three percent, is slowly but surely eating holes into the purchasing power of private households.

But the beautiful appearance of the numbers is deceptive. Everything stands and falls with the large orders recorded statistically. Looking into the mechanics of the statisticians, one sector in particular catches the eye: other transport equipment. It contains, above all, orders for military goods. The statistics currently reflect the development of the military sector almost exclusively, because the private sector is not investing in major projects.

If this sector, which had exploded by a staggering 126.4% compared with the previous month, is excluded, industrial orders as a whole actually fell by 1.4% in July. That would hardly be a reason for celebration, including for the Chancellor, who seems to have gotten lost somewhere in the east on his campaign tour while searching for media-friendly crumbs.

Looking at individual items, the situation in German industry remains dramatic. In the automotive industry, it looks downright apocalyptic. German automakers had to absorb a 12.5% decline in orders compared with the previous month.

Free fall in Germany, the land of the automobile.

Foreign orders overall fell by 2.1% – customers outside the eurozone ordered even 10.1% fewer industrial goods. Domestic orders, by contrast, rose by 9.1% compared with June – another indication supporting the thesis that these may be the first larger waves generated by the German government's debt-financed special fund.

Friedrich Merz and his debt minister Lars Klingbeil are presenting us with an economic experiment that has been performed many times in the past and has always failed.

Once caught in the ideological degrowth trap, the pressure to act in the political boiler continues to rise. As a result of climate policy, dark clouds are gathering over the economic horizon, and political rescue efforts begin reflexively. Friedrich Merz is prescribing the debt-financed military Keynesianism described above as the extinguishing agent for the economic wildfire. Tanks, drones and howitzers are supposed, if the Chancellor has his way, to replace specialized machinery, motor vehicles, machine tools and industrial plants.

Welcome to the economic military yoke of the statist Merz.

But, like every form of interventionism, this policy will leave nothing behind but new mountains of debt, if not an entire Himalayas of debt.

And, as if to confirm this, statisticians reported at the beginning of the week that Germany's new borrowing had risen from €35 billion to €71 billion in the first half of the year.

Correctly calculated and expanded to include municipal debt as well as the special fund that will only become effective in terms of payments in the second half of the year, Germany's debt will increase by at least €180 billion this year. That corresponds to new borrowing of more than 4 percent of GDP. We are facing the disastrous legacy of the debt king Merz, who has sacrificed his country's creditworthiness in pursuit of his personal political goals.

Only economic illiterates regard debt-financed government consumption as economic prosperity.

The construction of the state economy has consequences.

Germany has been seized by a process of economic erosion. Total industrial production in Germany has lost around 15 percent of its volume since the best year, 2018 – a political scandal that to this day is successfully ignored by the relevant circles in the specialist press, the daily media and politics alike, if it is not simply dismissed as a figment of the imagination of malicious opponents.

The booming arms manufacturers, too, should not celebrate too early. The path of the booming sector is predetermined, and it points toward the same abysses toward which civilian industry is heading. The fog will lift the moment the flow of subsidies dries up as a result of the economic crisis in the country.

Then the abyss will become visible. Because at the toxic German location, with its high energy costs, excessive regulation and unfavorable political climate, industrial investment simply no longer pays off.

The flash in the pan of Merz-style military Keynesianism will not change this finding either.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 06:30

France's Champagne Output Set To Crash 48% As Harvest Crisis, Sliding Chinese Demand Batter Vineyards

A perfect storm of sliding demand, shrinking vineyard acreage, and weather-damaged yields has sent France's Champagne output forecast for this year plunging.

Bloomberg cites new data from the Agriculture Ministry showing that Champagne output is projected to plunge 48% from 2025 to 1.34 million hectoliters. The estimate is based on the latest figures through Sept. 1.

The ministry also said that nationwide wine production is expected to fall 6% to 34 million hectoliters, putting the harvest 17% below its five-year average and among the smallest in three decades.

For French winemakers, the squeeze is coming from many directions: declining wine demand and adverse weather conditions have sent wine and spirits exports into a downward trend.

For instance, top French wine and spirits exporters Ricard, LVMH's wine and spirits division, and Rémy Cointreau show that weaker US and China demand has pressured sales since 2022-23. 

via Bloomberg...

In Burgundy, best known for its prestigious wines, particularly reds made from Pinot Noir and whites made from Chardonnay and situated in the eastern part of the country, losses exceed 50%. However, in the Bordeaux region, production is expected to rise 10% compared with the very low level recorded in 2025, thanks to improved yields. But the region is still expected to be 11% below the 2021-25 average. 

Last week, French authorities allocated more than 1 billion euros to farmers and vineyards affected by this summer's scorching heat waves and wildfires.

Separately, the Hong Kong-based South China Morning Post reported last month that much of the slowdown is coming from Asia buyers in revolt. 

"We've seen a much sharper drop in customers from China," Chinese-French wine merchant Arsen Zhao said. "Consumers are trading down, while large volumes of European wine imported previously have yet to be sold, leaving inventories high and weighing on new orders."

Zhao noted, "Some high-end French wines are now selling for less in China than in France." This has created turmoil for major wine brands as unsold inventory piles up and prices come under pressure. 

Turning to prices, Liv-ex, short for London International Vintners Exchange, a global marketplace where professional wine merchants buy and sell fine wine, reports that the latest data for several price indexes, including the Liv-ex Fine Wine 100 and Champagne 50, have fallen from peaks over the last several years. 

The Liv-ex Fine Wine 100 index peaked in late 2022, plunged nearly 30%, and has formed what appears to be a bottom. 

The Champagne 50 index peaked in late 2022 and subsequently bottomed in 2025.

For wine collectors, the key question is whether the decline in Liv-ex wine indexes has put in a proper bottom, creating an attractive entry point to add to their collections.

Tyler Durden Wed, 09/09/2026 - 05:45

Green Steel: ArcelorMittal Finally Pulls The Plug

Submitted by Thomas Kolbe

In the end, economic reality prevails. Green steel has no future in Germany, regardless of how much funding may continue to flow through the channels of the green subsidy machine: At Germany’s overregulated, energy-policy-driven and increasingly sidelined industrial location, industrial production is becoming less and less profitable.

That ArcelorMittal, one of the green economy’s poster boys, threw in the towel at the end of the week and announced that it would end steel production at its Duisburg site is the latest painful blow to the proponents of the green transformation ideology.

From October next year, ArcelorMittal will completely close the Duisburg steelworks and will also cease operating the billet rolling mill, where around 800 employees are currently employed. Around 550 employees could be affected by the closure. Only the wire rod mill is to remain. The semi-finished products required to operate it will in future be sourced from other ArcelorMittal sites and external producers.

The news carries a double weight: That green steel — meaning steel produced through a production route in which hydrogen is used instead of carbon as the reducing agent — would not be able to compete in the face of significantly lower production costs at other locations is hardly surprising. But the fact that, ultimately, even conventional steel production is gradually having to retreat from Germany is tragic — a resounding no from business to the ideologically contaminated energy and location policies of the slowly crumbling industrial heart of Europe.

The basic materials industry is a fundamental component of industrial value chains. Particularly in view of geopolitical tensions, national control over raw materials and primary products is becoming increasingly important. Since the best year, 2018, crude steel production in Germany has fallen from 42.4 million tons to 34.09 million tons in 2025, a decline of around 20 percent — a dramatic indication of the complete failure of Germany’s energy and industrial location policies.

The green transformation is crumbling before our eyes while Germany’s industrial base is being deindustrialized. Capital seeks better returns, regardless of how rosy the world of the green transformers surrounding former Economy Minister Robert Habeck, the spiritus rector of the ecological central planners, may have been.

For Habeck, green steel “Made in Germany and Europe” was indispensable. The Green politician was convinced that steel produced with coal would have no future on the world market. How wrong one can be!

Representatives of this transformation ideology are presumably looking on at developments in the industry in bewilderment. Where is the traitor? they will ask themselves. After all, limitless subsidies, credit assistance and artificially imposed cost disadvantages through the CO₂ mechanism were all made available to traditional competitors in order to push this artificial product forward.

ArcelorMittal is by no means the only corporation pulling back. Previously, thyssenkrupp and Salzgitter also abandoned the misguided notion that they would one day be able to produce green steel in Germany.

Ultimately, everyone has to ask themselves: What does it actually cost to produce one ton of green steel? And who will compensate for the loss-making operation in the face of substantially cheaper, considerably more cost-effective competition, for example from India or China? Will these companies have to remain dependent on the taxpayer forever?

The cost gap is enormous: Depending on the calculation and production conditions, green steel increases production costs by around $100 to $500 per ton. For the European steel industry, the conversion to low-carbon production methods is estimated to entail additional costs of 35 to 100 percent per ton. This simply cannot work.

Green steel was one of the political pet projects of the Green Deal. Companies that decided — or were politically encouraged — to convert their production were supposed to be supported through two subsidy channels.

On the one hand, there was the classic subsidy payment. In the case of ArcelorMittal, around €1.3 billion in funding was earmarked for converting the plants in Bremen and Eisenhüttenstadt; the overall project was estimated at around €2.5 billion. Direct reduction plants and electric arc furnaces were planned, with everything ultimately intended to run on hydrogen. Then came the surprise withdrawal: On June 19, 2025, ArcelorMittal announced the end of the projects. According to the Ministry of Economic Affairs, the €1.3 billion was never drawn down. What a blow to green ideology: Even massive public funding could not make the project profitable.

A second subsidy channel for green cronyism runs through the CO₂ emissions trading system. Energy-intensive producers such as the steel industry receive free certificates to protect them against international competitors with lower climate-related costs. If a company emits less CO₂ than permitted by its freely allocated certificates, it avoids purchasing additional allowances and can sell surplus pollution rights to other companies. Conventional steel production is made relatively more expensive by this allocation mechanism — everything possible is being done to keep the industrial homunculus of green steel somehow breathing.

Since January 1, 2026, the CBAM mechanism is supposed to provide additional protection for industry. It is not a formal tariff barrier, but it serves a similar function: CO₂-intensive imports such as steel are now subject to comparable regulatory costs imposed by the EU climate machine. Yet even this market barrier cannot change the fact that industrial production in Germany has simply become unprofitable.

Along the entire value chain — from conversion subsidies and free certificates to protection against foreign competition — the state is playing every card in its hand to impose its centrally planned environmentalism on the private sector.

Brussels and Berlin are thus providing an impressive demonstration of the internal contradictions and high costs of a centrally planned state economy. Everyone can now see what happens when the state interferes with price formation and dictates technology and the actions of individual companies: It becomes expensive for the taxpayer. Costs do not simply disappear; they are merely redistributed and concealed through subsidies. When the state repeatedly intervenes in the economy, scarce resources no longer flow to where competition would generate the greatest benefit. Instead, they flow into the pockets of those whose ingenuity lies in hunting for grants and subsidies. This is how the final chapter of the market economy begins.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 05:00

China's Oil Scramble Sends African, Canadian, Latin American Crude Prices Soaring

China, the world's largest oil importer, is bidding up crude prices across Africa, Canada, and Latin American markets as disruptions in the Hormuz chokepoint and limited Iranian supplies intensify competition for alternatives. The scramble is squeezing smaller Chinese refineries that once relied on heavily discounted Iranian barrels, according to a new Bloomberg report. 

The renewed Chinese buying marks a major shift from a period when subdued Chinese buying helped restrain crude oil prices. With Iranian exports almost entirely shut off by the US blockade and fighting flaring again, as seen Monday when Saudi Aramco's Jizan oil facilities were reportedly hit, the race to find replacement supplies around the world is becoming an increasingly expensive task for the Chinese. 

Traders spoke with Bloomberg. Here's what they had to say:

The turnaround is producing spikes in the price of various grades. Congo's Djeno crude was offered to Chinese buyers at premiums of as high as $20 a barrel over ICE Brent this week, up from around $15 a couple of weeks ago, according to traders who asked not to be named as they're not authorized to speak to the media.

Chinese buyers are also buying tanker loads of crude from Canada, Brazil, and Argentina, while stronger demand has lifted prices for Russia's ESPO crude. Asian buyers are also pushing Dubai crude futures toward $100 per barrel.  

Chinese seaborne crude imports aren't back to prewar levels and are currently trending toward 10 million barrels per day - still below pre-conflict levels. That means the race for alternative supplies may still intensify. 

Bloomberg pointed out that the rebound in crude imports comes as refinery math improves and inventories are being rebuilt in China. Improved processing margins, the resumption of fuel exports, and commercial restocking are encouraging refiners to ramp up purchases, according to GL Consulting founder Liao Na. 

Smaller independent refiners, known as teapots, face the greatest pressure because their traditional sourcing channels for Iranian and Venezuelan crude have eroded this year as access to those supplies has collapsed amid the Trump administration's push to rewire global energy markets. 

Liao said, "China's robust buying lately is largely driven by refiners taking advantage of decent margins," adding, "Active restocking by commercial players has also helped, but it’s not necessarily a sign of stronger underlying demand that’s supporting the recovery."

Separately, Goldman Sachs energy expert Daan Struyven expects China's ability to adjust purchases to prices to help moderate any spikes in crude prices.

Brent Crude 

Notably, China has a massive SPR against Brent crude prices in triple-digit territory. Its crude inventories are estimated at at least 1 billion barrels, giving buyers room to reduce purchases when prices become unattractive.

Tyler Durden Wed, 09/09/2026 - 04:15