Zero Rss

US To Deploy Anti-Ship Missile System To Japanese Island Near Taiwan

Authored by Dave DeCamp via AntiWar.com,

The US military will deploy an anti-ship missile system to Japan's westernmost island of Yonaguni, which lies just 68 miles east of Taiwan, an unprecedented move that will ratchet up tensions with China.

US Marines and a NMESIS system in Calayan, Philippines on June 25, 2026 (US Marine Corps photo)

US Marines will deploy with the Navy-Marine Expeditionary Ship Interdiction System, or NMESIS, as part of Keen Sword, the largest joint US-Japanese biennial military exercise.

The NMESIS has a range of about 115 miles, putting it within striking range of vessels patrolling the eastern coast of Taiwan. According to The South China Morning Post, China has stepped up coast guard and naval activity in the area in response to maritime boundary talks announced in May between Japan and the Philippines.

Song Zhongping, a Chinese military expert, told China's Global Times that the deployment increases the risk of miscalculation between the US and China and that Beijing may respond by conducting its own military drills in the area.

The Okinawa Defense Bureau first disclosed the deployment on October 1, and it will also include a Marine Air Defense Integrated System, or Maidas, a ground-based air defense system also used by the Marine Corps' littoral force.

The first Marine Littoral Regiment was established in 2022 as part of the Marine Corps' Force Design strategy, which is explicitly focused on preparing for a potential conflict with China. The idea was to create mobile Marine units equipped with anti-ship missiles and other weapons that can rapidly deploy along what is known as the First Island Chain, a string of archipelagos stretching from Japan's southern islands through Taiwan and the Philippines and into the southern South China Sea.

Tyler Durden Wed, 10/07/2026 - 11:25

Oil Drops Despite 3.1 Million Drop In Crude Inventories, Diesel Spikes

Oil prices were largely unchanged, trading near session lows, after today's DOE inventory data affirmed the latest downbeat API prints from Tuesday afternoon, showing that the crude draw in the last week was even bigger than what API reported (-2.1MM), and far worse than the +1.9MM expected increase, printing at -3.186MM, the biggest draw in 6 weeks.

API

•     Crude -2.1mm (vs +1.0mm last)
•     Gasoline -1.4mm (vs +3.0mm last)
•     Distillates +0.5mm (vs -0.3mm last)
•     Cushing +0.9mm, (vs +0.2mm last)

DOE

•     Crude -3.186mm, the biggest drain in 6 weeks, and far below the exp. +1.915MM
•     Gasoline +382k
•     Distillates -42k
•     Cushing +444K

And visually:

The decrease in commercial crude stockpiles was boosted by another 784,000 barrels withdrawn from the Strategic Petroleum Reserve.

That increased the overall nationwide crude draw to 3.97 million barrels in the week leading up to Oct. 2. A total of 132.5 million barrels of crude has been taken out of the SPR since late March under a program to release 172 million barrels as part of a relief plan from the International Energy Agency aimed at lowering energy costs.

Meanwhile, Cushing stockpiles rose for the third consecutive week to 24.7 million barrels. That has inventories at the hub at the highest since May and even further away from the 20-million barrel mark generally seen as “tank-bottoms.” 

Some more details from the report: distillate fuel stockpiles were down 42,000 barrels, while gasoline stockpiles rose around 380,000 barrels. Diesel futures are little changed, but gasoline futures appear to be selling off on the news, erasing most of the day’s gains to trade around $3.31 a gallon.

West Coast crude imports surged to the highest level since August 2025. There are a few potential reasons for that, but it’s likely tied to Middle East cargoes that loaded during a recent pause in hostilities. Imports into PADD 5 are now at about 1.6 million barrels a day and shipments last week rose by the most since April 2021.

With diesel spreads not too far from all time highs, and forcing refiners to pick between gasoline and diesel, the all important refinery crude runs rebounded following three weeks of drawdowns. Crude processing increased by 223,000 barrels a day and now are back to the highest on record for this time of the year. 

And speaking of gasoline, Bloomberg suggests that the 1.4mm drop was less bearish than it seems. The additions to stocks occurred exclusively on the East Coast. Meanwhile in a reversal of last week's drop to all time lows, Midwest gasoline stockpiles posted a modest recovery, rising by just over 600K.

On the Gulf Coast, where the bulk of gasoline production occurs, stockpiles are at their lowest since September 2017. 

Digging in a little further: The bulk of the gasoline stockpile additions occurred in the Central Atlantic, which encompasses Maryland, New York and Pennsylvania. The addition was considerably smaller in New England, and stockpiles actually fell in the Lower Atlantic states.

Also worth noting is that among all the talk of a diesel export ban, diesel exports surged 235,000 barrels a day to 1.76 million barrels a day. That’s the highest readout since August, and sets a new seasonal record. Meanwhile, diesel supplies on the East Coast ticked down once again last week. They’re now back where they were in early September and still sitting at the lowest they’ve ever been on record heading into the fall.

On the other side of the table, crude production rose to a new high of about 14 million barrels a day last week, up by 24,000 barrels a day from the previous week, and keeping pace with the recent surge in oil drilling rigs. Rebalancing the weekly numbers against the monthly figures published in the latest Short-Term Energy Outlook added “less than 50,000 barrels a day” to last week’s number. This increase came as one more rig was put into operation, according to Baker Hughes.

Summarizing today's data, via BBG:

• Total crude and products exports soared to the highest since late May, returning to a seasonal record. The increase was driven largely by crude shipments, which climbed to the highest since mid-September. October-loading volumes are expected to trend higher compared with September, as refiners in Asia and Europe sought to lock in US supplies following the mid-September shutdown of Saudi Arabia’s East-West pipeline. 
• Gasoline stockpiles rose around 380,000 barrels with much of that occurring in the Central Atlantic, which encompasses New York and Pennsylvania. But on the Gulf Coast, where the bulk of gasoline production occurs, stockpiles are at their lowest since September 2017. Gasoline imports remain well below seasonal norms, but they ticked up last week. Those imports are particularly important to the East and West coasts, which have less refining capacity overall. 
• Refinery crude runs rebounded following three weeks of drawdowns. Crude processing increased by 223,000 barrels a day and now are back to the highest on record for this time of the year. Midwest crude processing bounced back big time but is still below last year’s levels. It’s an indication that fall refinery maintenance is heavier than in previous years. 

WTI futures edged lower to trade near session lows of $89.50 even as the EIA data indicated that US crude stockpiles fell 3.2 million barrels. Still, stocks at the key hub in Cushing, Oklahoma, expanded slightly, easing some concerns of glaring physical market tightness. Gasoline stockpiles also rose, though as Will pointed out earlier, that may be less bearish than it appears. 

But while oil dropped, far more concerning is that diesel led the US energy complex higher, rising about 3% on the day to trade at $4.72 a gallon, while diesel crack spreads are now well above where they were when Trump announced the latest emergency release from the Diesel reserve. It’s the kind of futures price that creates serious headaches for anyone who needs to buy diesel for their truck or tractor. 

 

Tyler Durden Wed, 10/07/2026 - 11:18

Army Sets Dec. 3 Firing Squad Execution For Fort Hood Killer

Authored by Kimberly Hayek via The Epoch Times,

Nidal Hasan, the convicted terrorist who conducted the 2009 Fort Hood massacre, is scheduled to be executed by firing squad on Dec. 3.

In this photo released by the Bell County Sheriff's Office, U.S. Maj. Nidal Hasan, the Army psychiatrist convicted of multiple murders in the Fort Hood shootings, is seen in a booking photo after being moved to the Bell County Jail on April 9, 2010 in Belton, Texas. Bell County Sheriff's Office via Getty Images

Acting Secretary of the Army Adam Telle announced the execution in a memorandum posted on X on Tuesday.

The scene of Hasan's execution will take place at the same Army base in Texas where he committed his crime.

Hasan was a U.S.-born Army major and psychiatrist stationed at Fort Hood when he killed 13 people and an unborn child and wounded 32 others in the Islamist terror attack on Nov. 5, 2009.

Telle said that the execution will take place at 1 p.m. CT and the "execution officer will be the Commandant, United States Disciplinary Barracks."

A Pentagon official announced that President Donald Trump on Monday approved a firing squad for Hasan. A military jury in August 2013 convicted him on all 13 counts of premeditated murder and 32 counts of attempted premeditated murder.

Secretary of War Pete Hegseth recommended the death sentence, and that an Army firing squad would carry out the execution, Pentagon spokesperson Sean Parnell said in a statement on X, Monday. Parnell described the victims of the shooting as unarmed American soldiers.

"Judgement day for Hasan has finally come," Parnell said in his post.

In a post on X replying to Parnell's statement, Hegseth wrote "Justice."

Hasan has remained on military death row at the U.S. Disciplinary Barracks at Fort Leavenworth, Kansas. An execution would be the first by the military since 1961.

In April, the Department of Justice authorized firing squads, electrocution, and gassing as means of execution in federal cases.

Hasan is one of four men on the military's death row.

Tyler Durden Wed, 10/07/2026 - 10:55

Better Late Than Never? EU Prepares Import Cap On Chinese Hybrids As Germany's Industrial Base Burns

Some ten years after it should have, Europe is finally reaching for the brakes.

According to Bloomberg, the European Commission is preparing so-called safeguard measures to limit imports of Chinese hybrid vehicles, most likely via tariff-rate quotas that slap a levy on anything above a set volume. The cap would be time-limited, and Brussels plans to use hybrids as a "test case" which, if successful, could be replicated in other sectors where the bloc is drowning in Chinese imports.

Our reaction this morning was short and to the point:

EU PREPARES TEMPORARY IMPORT CAP ON CHINESE HYBRID CARS. Just 10 years too late

— zerohedge (@zerohedge) October 7, 2026

The market liked it anyway: Volkswagen jumped as much as 4.6%, Renault 6.1% and Mercedes 2%, while Goldman's European autos basket (GSXEAUTO) was up 90bps mid-morning, helped by a parallel headline that Germany and France want to water down the EU's combustion-engine rules.

The Loophole Was Always The Hybrids

Why hybrids? Because when Brussels slapped tariffs on Chinese EVs in late 2024, Beijing simply did what any exporter would do and drove around the wall. Chinese hybrids don't face the steep levies applied to EVs, and the result is exactly what you would expect: Chinese-made hybrids now account for a quarter of all hybrid sales in Europe, and one in three plug-in hybrids. Monthly imports of Chinese hybrids into the EU have exploded from 3,800 vehicles in October 2024 to 50,000 in July 2026, a roughly 13-fold surge (per FT data cited by Brussels Signal).

Overall, Chinese brands grabbed a record share of Europe's car market in August: 11.7% of all new-car registrations, up from 7.1% a year earlier (Dataforce), with BYD alone selling 26,007 cars, up 128% YoY. In Germany, where the pain is most acute, Chinese registrations jumped around 90% in August, lifting their share to a record 8% from 4.4% (EY analysis of KBA data).

Regular readers know we have been tracking this flood for a while, from "China Floods Europe With Cheap Cars, Grabs Record Market Share As Domestic Brands Buckle" two weeks ago, to "BYD's EU Invasion Deepens Germany's Auto Industry Crisis", and all the way back to June 2024, when Beijing dangled perks to German automakers to kill the EV tariffs (spoiler: Berlin duly voted against them, only to end up destroying its local manufacturing base).

Meanwhile, In Germany...

The timing of Brussels' epiphany is hardly a coincidence. Just yesterday, German factory orders plunged 10.6% MoM in August, ten times worse than the 1.0% drop expected and among the biggest monthly drops on record.

To be fair, much of the drop was a reversal of July's surge in large orders for aircraft, ships, trains and military vehicles, which tumbled 61.5% after more than doubling the prior month. In other words, the only thing that had been propping up German industrial demand was the debt-fueled arms spending boom (which has sent formerly frugal Germany's debt soaring), and when that took a breather, the floor fell out: domestic orders crashed 17.3% and capital goods orders 15.3%. On a less volatile three-month basis, orders ex-large contracts were down 2.6%, which is "underlying weakness" in Destatis-speak.

And while this morning's industrial production print was a pleasant surprise (+2.0% MoM vs +0.5% expected), it was all construction (+9.3%). Auto production fell 5.4%, after a 9.2% plunge in July, and manufacturing output is still down 0.4% YoY. Nothing says "industrial renaissance" like a factory economy where the only thing growing is cement and tanks.

As we put it last month, when the Bundesbank's Nagel blamed the AfD for scaring off investors:

Nagel Warns Rise of AfD May Deter Investors From Germany So it's not the fact that Germany obliterated its industrial complex by allowing cheap Chinese imports to destroy its manufacturing base? Got it.

— zerohedge (@zerohedge) September 10, 2026 "The Second China Shock"

Even Deutsche Bank, which has rarely been accused of anti-Beijing hysteria, now openly talks of "the second China shock hitting the European manufacturing sector." In a note published this morning ahead of Trade Commissioner Šefčovič's trip to Beijing ("Crunch time for EU-China trade relations", available to pro subs), DB's Marion Muehlberger writes that Germany is the most exposed of the large EU economies:

Back in 2013, China had a 5% market share in global car exports. This has moved to 11% as of 2023 and to 15%, on par with Germany, as of 2025.

And cars are actually the good news: in specialised industrial machinery, the crown jewel of the Mittelstand, China overtook Germany back in 2023, and in general industrial machinery China's share of global exports is now well above Germany's.

Meanwhile, the bilateral trade deficit with China has blown out again to around 2% of EU GDP. Or, as Bloomberg puts it, more than €1 billion... per day.

That said, DB is far from convinced Brussels will actually follow through on a hard stance. The bank expects this week's Šefčovič-Wang meeting to bring "no major breakthrough," with perhaps some Chinese concessions on market access but "little movement on the EU's demand to restrain exports to Europe." The likely next step after the October 15-16 EU summit is an anti-subsidy probe into Chinese plug-in hybrids, with tariffs taking effect "in early 2027 at the earliest." Overall, DB expects EU leaders "to continue their rather minimalist approach."

Translation: Brussels will do just enough to make a headline, and not enough to make Beijing angry. Indeed, per Bloomberg, a key aim is to "keep the cap on hybrids low enough to avoid a retaliatory response from Beijing", which kinda defeats the purpose. China, for its part, already dismissed earlier talk of voluntary export caps last month as a "serious violation" of WTO rules, which is rich coming from the world's champion of subsidized overcapacity.

Bottom Line

Goldman's European trading desk was similarly underwhelmed, noting that the hybrid levy headlines "are not new, repeating what we heard in recent months," and that "the hesitation is the likely backlash from China and the fact that these measures will only briefly limit China's market share gains."

We agree. A temporary, carefully calibrated quota designed not to upset the country flooding your market is certainly not a trade policy - it's just a press release pretending to show Beijing that Brussels can be a tough guy. By the time it takes effect, BYD's Hungarian plant will be churning out "European" cars, and Germany's auto industry, where 140,000 jobs are at risk at VW alone, will have shrunk some more. As we warned a year ago, Germany's industrial core is collapsing; Brussels just noticed.

Better late than never... but only just.

Much more in the full Deutsche Bank "Crunch time for EU-China trade relations" note, available to pro subs.

Tyler Durden Wed, 10/07/2026 - 10:40

DeSantis Declares Emergency In 25 Florida Counties Ahead Of Possible Hurricane

Authored by Jack Phillips via The Epoch Times,

Florida Gov. Ron DeSantis on Tuesday evening declared an emergency for 25 counties ahead of Tropical Storm Isaias, which could strengthen into a hurricane in the coming days.

This satellite image from the National Oceanic and Atmospheric Administration shows Tropical Depression Nine forming over the Gulf of Mexico on Oct. 6, 2026. NOAA via AP

DeSantis said the order would allow the state emergency agency "to stage critical preparedness resources and ensure Florida is ready to respond," adding that residents "should take this time to get disaster plans in place and ensure their hurricane supply kit is stocked."

The order was issued for Baker, Bay, Calhoun, Columbia, Dixie, Escambia, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Holmes, Jackson, Jefferson, Lafayette, Leon, Liberty, Madison, Okaloosa, Santa Rosa, Suwannee, Taylor, Walton, Wakulla, and Washington counties.

According to his office, Isaias could make landfall around the central U.S. Gulf Coast later in the week.

"Impacts are expected to extend beyond the point of landfall, with heavy rainfall, strong winds, coastal flooding and isolated tornadoes possible across North Florida," the governor's office also said.

"Additional precipitation could further saturate soils and increase the potential for flash flooding following the state's recent significant rainfall."

As of Wednesday morning, the U.S. National Hurricane Center (NHC) said that a tropical depression in the southern portion of the Gulf of Mexico, located to the west and north of Mexico, became Tropical Storm Isaias.

It's also forecast to "rapidly strengthen" over the coming days, the agency said, adding that hurricane watches will likely be issued in the northern part of the U.S. Gulf Coast later on Wednesday.

"A continued east-northeastward motion is expected today, followed by a turn toward the northeast and north on Thursday and Friday," the agency wrote in a 5 a.m. ET update.

"On the forecast track, Isaias is expected to pass to the north of the Yucatan Peninsula on Thursday and approach the U.S. northern Gulf Coast on Friday."

Isaias was centered about 285 miles west of Progreso, Mexico, and about 580 miles southwest of the Mississippi River's mouth, the center said. It had maximum sustained winds of 40 mph and was moving east-northeast at 8 mph.

A forecast released by the NHC shows that the storm is set to strengthen into a hurricane by 1 p.m. on Friday before likely making landfall as a hurricane on the Gulf Coast sometime around Friday night or early Saturday, near the border of Florida and Alabama.

"From Friday through the weekend, Isaias is expected to produce rainfall amounts of 3 to 6 inches, with localized totals up to 10 inches, across the northern U.S. Gulf Coast extending from far southeastern Louisiana to the Florida Panhandle," the NHC said.

Totals of 1 to 3 inches, with higher localized amounts of up to 5 inches, are also possible in the Carolinas and the Tennessee Valley as the storm moves inward, it added.

According to the forecast map, the storm is expected to remain a tropical depression by 1 a.m. ET on Sunday morning, and it will be located over southern Indiana, southern Illinois, and northwestern Kentucky.

If the storm strengthens into a hurricane, Isaias will become the first hurricane of the 2026 Atlantic hurricane season, which has been unusually quiet this year. Storm activity in the Pacific Ocean has been above average.

Tyler Durden Wed, 10/07/2026 - 10:25

After Iran's Rial, Hormuz Claims Its Second Currency: Iraq Devalues Dinar 13% To Keep Paying Salaries

Last weekend, we noted that the clearest scorecard of the US economic war on Iran is the rial, which cratered to a record 2.7 million per dollar (the slide that we first flagged in "Iran's Deadline Expires Today"... Rial Collapses, and which has only accelerated since). Turns out Tehran has company.

On Wednesday, Iraq devalued its currency by 13%, with the central bank raising the dollar-selling price for the public to 1,520 dinars from roughly 1,320. Per Reuters, the cabinet adopted the new structure on Tuesday, effective Wednesday: the Finance Ministry now sells its oil dollars to the CBI at 1,500, banks get them at 1,510 and the public pays 1,520.

That makes Iraq, as Bloomberg notes, the first Gulf Arab state to devalue since the US-Israel war on Iran began in late February. It probably won't be the last thing in the region to break, but it is the first currency peg to do so, which is a different kind of milestone.

The central bank's official explanation was a masterpiece of the genre: the decision was taken "in view of the current economic and financial conditions, and based on the recommendation of the cabinet," and, rest assured, foreign reserves are "sufficient to finance external trade, settle overseas bank-card transactions and provide cash to travelers." Translation: we have enough dollars, which is why we just made each one cost 15% more.

Below we look at why Baghdad blinked, why the street isn't buying it (yet), and why the timing is stranger than it looks given that Goldman says Gulf oil exports are already back to pre-war levels.

Salaries Or The Dinar: Pick One

Iraq is one of the most oil-dependent economies on the planet: crude sales generate around 90% of government revenue, and those sales go almost entirely out through the Strait of Hormuz. Which is why, from day one of the war, we flagged that Iraq would be the most exposed producer in the Gulf. Back on March 3, as storage filled with nowhere to ship, we tweeted this:

*IRAQ STARTS SHUTTING OIL OUTPUT AT RUMAILA AS STORAGE FILLS

— zerohedge (@zerohedge) March 3, 2026

A week later it was this:

*IRAQI OIL PRODUCTION REDUCED TO 1.2M B/D: MINISTRY SPOKESMAN *IRAQ ATTEMPTING TO RESUME KIRKUK OIL FLOW: MINISTRY SPOKESMAN

— zerohedge (@zerohedge) March 10, 2026

Seven months later, the bill has arrived. Bloomberg estimates Iraqi crude exports have averaged only about 1.25 million barrels a day since the start of March, compared with almost 3.5 million last year. SOMO, the state oil marketer, put the country's cumulative oil losses at around $80 billion last month. Even with a recovery, Reuters says exports were just 2.34mb/d in August, versus more than 3.6mb/d before the war.

Meanwhile, the one line item that never shrinks kept on growing. Bloomberg's chief EM economist Ziad Daoud summed it up:

"Every past oil shock has pushed Iraq into trouble. That happened in 2008, 2014, and 2020. The closure of the Strait of Hormuz and the drying up of oil revenues in 2026 marks another episode. Baghdad had to choose between paying its public-sector salaries and defending the dinar's value — it picked the former."

The math behind that choice is not complicated. Iraq had roughly $100 billion in FX reserves when the war began; by August that had dropped to $80 billion. Public-sector salaries alone cost about $5 billion a month, per Daoud.

Put differently, $20 billion of reserves went out the door in roughly six months, and what's left covers about 16 months of payroll with nothing else, ever, being imported. Hence the devaluation, which, as Iraqi analyst Mohammed al-Saffar told Reuters, is "essentially a fiscal response to the shock to Iraq's oil revenues": it "gives the government more dinars for each dollar of oil revenue, but raises import costs and reduces households' purchasing power."

Some napkin math (approximate): at 1,320, a 6.6 trillion dinar monthly wage bill eats about $5 billion of oil dollars. At 1,520, the same dinar payroll costs just $4.3 billion, a saving of roughly $650-700 million a month, or ~$8 billion a year. That is a 13% real pay cut for every public-sector worker in Iraq, delivered without anyone having to announce a pay cut. Diversification at its finest.

The Street Got There First

Of course, devaluations rarely happen to the market; they usually happen after it. According to Shafaq News, the dollar set six new parallel-market highs in Baghdad this year, from 150,400 dinars per $100 in January to roughly 160,000 in September, and 168,500 per $100 (1,685 per dollar) after the announcement. In other words, even at the new official rate, the black market still prices the dinar about 11% weaker, and local currency traders are already talking about a test of 180,000.

And the real economy is not taking it gracefully. Iraqi News reports Baghdad's Shorja wholesale market was "completely paralyzed" on Wednesday as merchants shuttered stores, distributors suspended deliveries, and food staples in Saladin jumped about 25% almost overnight. One MP has already demanded an emergency session of parliament to reverse the decision. (We'll take the under on that.)

Readers will also recall that Iraq's dollars aren't entirely Iraq's to begin with. As we discussed in "The Hidden Mechanism Behind Washington's Control Of Iraq's Oil Money" just last week, every barrel Iraq sells settles into a CBI account at the New York Fed, and Washington has not been shy about using that tap: in January it threatened to "starve" Iraq of its oil revenue if pro-Iran parties joined the government, and in April it blocked the regular $500 million cash pallets flown to Baghdad. Add the last US troops leaving Iraq on Sept 30 and Bessent's "frank discussion" with Iraq's foreign minister the very next day on "Iraq's progress in demilitarizing Iranian militias," and one can see why holding dinars has lately lost some of its appeal.

The Barrels Came Back... The Dollars Didn't

Here is the twist: the devaluation comes just as the physical oil picture is improving dramatically. In their latest Oil Comment, "Adaptation: Persian Gulf Exports Return to 2025 Level" (available to pro subs), Goldman's commodity team led by Daan Struyven writes:

"We estimate that Persian Gulf oil exports, including estimated "dark exports", have recovered to 23.3mb/d over the last week, in line with their 2025 average, as exports doubled in September. Increased Hormuz exports, including via ship-to-ship transfers, have driven this exports recovery despite the attack on the Saudi East-West pipeline, which disrupted oil flows to Yanbu for nearly two weeks, and the continuing Houthis blockade of Saudi exports via Bab-al-Mandab."

But the recovery is far from evenly shared. Saudi exports "more than doubled in September and rose above their 2025 average, reaching 11.6mb/d," and UAE exports are also above their 2025 levels. Iraq? Just 82% of its 2025 average as of Sep 28, even including Goldman's estimate of dark exports, and that's after a remarkable September. Kuwait and Qatar are stuck around 50%, while Iran shipped essentially nothing by sea.

Struyven repeated the message in the latest edition of Goldman's "Connecting You to GS" desk email (available to pro subs), with Gulf exports now at 23.6mb/d, and a breakdown that shows just how improvised the recovery is: only 7.5mb/d is going through the Strait of Hormuz in the conventional sense, with another 4.5mb/d via the Gulf of Oman, 4.6mb/d out of Saudi Arabia's Yanbu, 2.9mb/d via Fujairah (a bypass hub we said would become the focus back in March) and a token 0.2mb/d through Iraq's own Botas-Ceyhan pipeline to Turkey. The rest is Goldman's 4mb/d estimate of "dark" flows.

Which brings us to the problem for Baghdad: Saudi Arabia has a Red Sea pipeline and the UAE has Fujairah; Iraq has a 0.2mb/d trickle to Ceyhan and a Syria pipeline that is three to four years away, at best. It is reduced to chasing more tankers to get through Hormuz on Iran's terms. And with dated Brent near $120 and Goldman forecasting Brent "moderates to $85/bbl by year-end and to $80 in 2027," the window in which higher prices offset lower volumes is, according to Goldman at least, closing.

Put another way, the barrels are coming back, but the $80 billion in lost revenue and the $20 billion hole in reserves aren't, and the price of oil the draft budget assumes is $58 per barrel, so nobody in Baghdad is counting on a windfall.

A Budget Written In Wishful Thinking

Speaking of the draft budget, the numbers lawmakers shared with Reuters are a work of art. It projects spending of 217 trillion dinars, which Reuters converts to about $166 billion (implying the old ~1,300 rate). At the new 1,520 rate, that same dinar spending is just $143 billion, which is the point. The plan also forecasts a deficit of more than 40 trillion dinars and assumes crude exports of around 4 million barrels per day, including Kurdistan.

For context, that is above pre-war levels, about 70% more than Iraq actually exported in August, and more than three times the average since March. If the Strait doesn't cooperate, the devaluation is simply the plan B that is already in place: when the barrels don't show up, print more dinars per barrel.

And the pain doesn't stop at the Iraqi border. The IMF projects Iraq's $265 billion economy will shrink by almost 7% this year, and Bloomberg notes Saudi Arabia, Kuwait and Qatar are all expected to contract as well. In the bond market, Goldman's EM credit strategist Mikhail Galkin lists Bahrain among his relative dislikes "with a view of protracted Iran conflict" in his latest "EM Credit: The Big Picture... Heading into Q4" note (also available to pro subs), noting that BHRAIN bonds are down roughly 10% YTD, among the worst in EM.

Bottom Line

Iran's rial collapsed because Washington wanted it to. Iraq's dinar fell because Baghdad chose to let it, which in some ways is the more telling of the two. The Gulf's dollar pegs were built on an assumption that oil, and therefore dollars, would always flow. For seven months, for the most Hormuz-dependent producer in the region, they haven't.

Daoud's framing is the right one: every oil shock eventually lands on Iraq's currency. The question now is whether 1,520 is the new floor or just the first stop. With the parallel market already at 1,685, traders eyeing 1,800, food prices up a quarter overnight and a budget that only works with 4mb/d of exports, we'd bet on the latter, especially if the Monday de-escalation headlines keep reversing by Friday's close. Iraq picked salaries over the dinar this time. The next time, it may not get to pick.

Much more in the full Goldman "Persian Gulf Exports Return to 2025 Level" and the "EM Credit: The Big Picture... Heading into Q4" notes, both available to pro subs.

Tyler Durden Wed, 10/07/2026 - 10:10

Trump Says He Is Considering Suspending Federal Gas Tax

Authored by Tom Gantert via The Epoch Times,

President Donald Trump said he was thinking about suspending the federal gas tax as he spoke to reporters on Tuesday.

President Donald Trump speaks at Anduril Industries in Sparrow Point, Md., on Oct. 6, 2026. Madalina Kilroy/The Epoch Times

"We're thinking about that," Trump said when asked if the federal gas tax should be suspended. He didn't provide any more details.

The federal gasoline tax is 18.4 cents per gallon, according to the U.S. Energy Information Administration. The average price for a gallon of regular unleaded in the United States was $4.36 on Tuesday, up from $3.13 a year ago.

Trump also said at the press conference that the Strait of Hormuz was open and oil flows exceeded prewar levels.

"The Hormuz Strait, tremendous amounts, millions of barrels of oil has been delivered just over the last couple of days. We're getting it through at levels that were now even and sometimes exceeding prior to the war, and we've done very well," Trump said Oct. 6.

"What's driving up Gasoline is no longer the Strait of Hormuz, because Record Numbers of Barrels are coming out now on an almost daily basis, but the word, 'Refineries,' where Russia's are being blown up by Ukraine, and where ours are being closed up, in Blue States, like California," Trump said in an Oct. 5 post on Truth Social.

His comments contrasted with those of Iranian parliament speaker Mohammad Bagher Ghalibaf, who said Oct. 4 that the waterway would not reopen until Washington met conditions under an agreement made previously during the summer.

Trump signed an executive order Oct. 5 aimed at lowering diesel costs for farmers and truckers by expanding access to red-dyed diesel, normally reserved for off-road use.

The action directs federal penalty relief for highway use and a review of whether certain diesel tax payments can be deferred through Dec. 31. Trump said the relief could save truckers approximately $100 per fill-up.

The cost of gas has been a hot topic among politicians.

"There's no ifs, ands or buts about it. The war in Iran, the senseless, reckless war that Donald Trump brought us into with no plan, is the primary cause of skyrocketing gas prices and inflation," said U.S. Sen. Cory Booker (D-N.J.) in an Oct. 6 post on X. "The Constitution is clear. The power to declare war rests with Congress. But Congressional Republicans are too afraid of Trump to stand up to him."

The U.S. Energy Information Administration said in an Oct. 5 analysis that renewed military strikes in the Middle East and disruptions to oil shipments contributed to rising crude prices during the third quarter.

The agency cited U.S. and Iranian attacks on crude oil tankers, the U.S. blockade on Iranian oil exports, attacks on pumping stations along Saudi Arabia's East-West pipeline, attacks on Saudi Arabian oil tankers around the Bab el-Mandeb Strait and Ukraine's drone attacks on Novorossiysk, one of Russia's major oil terminals on the Black Sea, as reasons for a September increase in the price of oil.

The daily volatility of the price of oil from July 8 to Sept. 8 was due to market responses to public statements by U.S., Iranian, and other regional leaders on military plans and the likelihood of a peace deal as well as disruptions to flows through the Strait of Hormuz and attacks on oil infrastructure in Russia.

Tyler Durden Wed, 10/07/2026 - 09:55

Pakistan, Turkey & Saudi Arabia Trigger Mecca Defense Pact

In a historic first, the Mecca Defense Pact between Saudi Arabia, Pakistan and Turkey is now in force, according to the allies at an emergency meeting in Riyadh.

It was only signed in August, but soon after it was formalized an all-out war between the Houthis and Saudi coalition in Yemen erupted, with the Ansar Allah movement now increasingly targeting Saudi civilian infrastructure, including airports and energy infrastructure.

The Monday emergency meeting of foreign and defense ministers resulted in the top committee agreeing to deploy Pakistani and Turkish forces to Saudi territory. The pact is modeled on NATO's Article 5 and 'collective defense'. Saudi authorities have argued the kingdom is under direct attack from neighboring Yemen and its Houthi rebels, backed by Tehran.

via Anadolu Agency

It marks a quite a dramatic, though somewhat anticipated step, but it remains an open question the degree to which the external troops will directly support the ongoing anti-Houthi operation, which has focused on recapturing the Red Sea coast of late.

"The Committee decided to move immediately to the practical implementation of the collective defense commitments and to take the necessary measures to provide the agreed military forces and capabilities and ensure their rapid deployment in the Kingdom, in accordance with the approved arrangements and the national legislation of the Parties," said a joint statement made public by Pakistan's Foreign Office.

Pakistani Defense Minister Khawaja Asif sought to clarify in a statement to Geo News while speaking from Riyadh, "The forces of Turkiye and Pakistan are playing a supporting role. We are definitely involved in reconnaissance and such things, but the combat is practically being conducted by Saudi Arabia's own forces, and they are the ones retaking those areas."

Apparently the Mecca pact took on more urgency after claims that the Houthis targeted the Islamic holy site of Mecca last month - something which the Houthis vehemently denied. Pakistan has said when pressed by reporters for details: "The operational details of the actualization of the collective deterrence are a matter of operational confidentiality and may not be made subject of media speculation."

It should be noted that Pakistan has already long had a large and long-running contingent of troops inside the kingdom, and working with the Saudi armed forces. Pakistan's air force has also had fighter jets and support aircraft in the kingdom.

Turkey's role will be much less clear, and Turkish parliament must ultimately authorize sending troops abroad for any kind of large-scale deployment. Unlike Pakistan, the Turks do not have any level of an existent official military footprint in Saudi Arabia.

Emerging reports say the Turks preparing aircraft deployments along with troops...

EXCLUSIVE: Turkey is preparing to deploy troops, air defence systems, pilots, and aircraft to Saudi Arabia. · Turkish forces would defend infrastructure, Riyadh, and the holy cities while avoiding direct intervention in Yemen. With @ragipsoylu https://t.co/1zXwvaXeRo

— Levent Kemal (@leventkemaI) October 6, 2026

A big question remains, with the Mecca pact having been formally triggered, will the situation spiral into Pakistani and Turkish troops actually joining the fighting in Yemen? If so it would have serious implications for the broader region as the conflict spills over borders and into strategic waterways like the Bab al-Mandab Strait.

Tyler Durden Wed, 10/07/2026 - 09:45

CIA Officer Arrested With Gold Bars Admits Exposing Top-Secret Source To Foreign Government

Authored by Zachary Stieber via The Epoch Times,

A CIA officer arrested with gold bars and cash in his home has admitted to stealing from the government and exposing a top-secret source, according to court filings made public on Oct. 6.

During their search of David Rush's home, investigators seized about 300 gold bars, federal officials said, along with about $2 million in U.S. currency.Department of Justice

David Rush, who is no longer with the CIA, pleaded guilty during a hearing in federal court in Virginia on Tuesday to a count of wire fraud and faces up to 20 years in prison and a fine of $250,000 or twice the gross gain of his crime.

Rush admitted as part of a plea agreement to disclosing sensitive information while he was a CIA officer.

Rush in 2025 "revealed to a foreign government official the existence and certain descriptive information of a U.S. government clandestine human source," said one court filing, outlining facts Rush acknowledged were true.

The nature of the source's work and the government for whom the official works was not detailed.

Rush admitted during an April 28 interview that he disclosed information about the source.

Scheme Involving Real Estate

Rush also said he made up a highly classified program to justify spending tens of millions on luxury real estate, including nearly $49 million on homes in Palm Beach, and luxury vehicles, including a BMW that cost about $172,000, according to court documents.

Rush represented to several individuals, including a CIA official, two companies, and an independent subcontractor with whom he had worked for years, that the program was legitimate.

Rush fabricated funding requirements for the program, which caused CIA personnel to approve funding and an unidentified company to provide him $45 million to satisfy one of the requirements, even though the CIA had not yet authorized the company to disburse funds for that requirement, he acknowledged.

A senior executive with the company "approved the advance funding because he trusted Rush and believed Rush's representations that the expenditure reflected a legitimate government requirement for which Company 1 ultimately would be reimbursed," said the statement of facts that Rush admitted were true.

Rush ultimately caused the company to transfer about $145 million to a holding company between November 2025 and March 2026 and used that money to buy luxury real estate properties, including the residences in Palm Beach and parcels of land in Palm Beach and Hobe Sound.

Rush planned to renovate the properties and sell them for profit.

More Fabrications

Rush also fabricated a government activity that enabled the acquisition of 298 gold bars, the court documents say.

Rush represented that there was a highly sensitive government assignment that required buying valuable assets. He told a senior executive of another company that the activity permitted buying gold, diamonds, or cryptocurrency. He eventually directed the individual to buy gold.

The company, which was not named, bought the gold bars at the cost of about $46.7 million, which came from the government.

The bars were delivered to Rush's office in Loudoun County, Virginia, between late 2025 and early 2026.

Rush later told the executive that the gold had been delivered to purported recipients.

The FBI obtained a warrant and searched Rush's home in May. Agents found all of the bars along with $2.1 million in U.S. currency, approximately $139,000 in foreign currency, and more than 30 watches.

Rush used the purported nature of the programs to hide them from others, including a CIA contracting official who questioned money Rush approved in connection with the real estate scheme.

Rush also falsely represented his background, including a false claim that he was a military pilot. He was in the U.S. Navy, but was honorably discharged.

Officials React

"David Rush abused his position and betrayed the public trust and should be held fully accountable for his actions," CIA Director John Ratcliffe said in a statement. "We appreciate our law enforcement partners in the FBI and Department of Justice for securing this outcome."

Attorney General Todd Blanche said: "Federal employees are entrusted with serving the American people, not themselves. The Trump Administration is committed to rooting out waste, fraud, and abuse in the federal government, including by prosecuting those who foolishly defraud American taxpayers."

Assistant Attorney General for National Security John A. Eisenberg said in a statement that Rush betrayed the trust of the American people.

Rush's lawyer declined to comment in an email to The Epoch Times.

Tyler Durden Wed, 10/07/2026 - 09:25

US Reiterates "Do Not Travel" Warning For Russia After Lab Worker's Death Raises Plague Fears

The Trump administration formally asked Russia for details about the reported death of a laboratory worker at a facility studying pneumonic plague in Siberia's Irkutsk region. Russian authorities said they found no plague in the deceased worker or contacts.

*US PREPARING FORMAL REQUEST TO RUSSIA ON PLAGUE DEATH: WAPO

— zerohedge (@zerohedge) October 6, 2026

Overnight, the U.S. Embassy reiterated its "Do Not Travel" warning for Russia and urged Americans already in the country to leave immediately.

"The U.S. Embassy is aware of press reports from the Irkutsk region of suspected pneumonic plague resulting in the death of an individual and of associated quarantine measures in, and closures of, hospitals in Irkutsk," the U.S. Embassy in Moscow wrote in an advisory overnight. 

Irkutsk, Russia: The U.S. Embassy is aware of press reports from the Irkutsk region of suspected pneumonic plague resulting in the death of an individual and of associated quarantine measures in, and closures of, hospitals in Irkutsk. We continue to track the situation closely. The U.S. government has limited ability to help U.S. citizens in Russia, especially outside of Moscow. The State Department’s Level 4 Travel Advisory (Do Not Travel) for Russia remains in place and states U.S. citizens currently in Russia should depart immediately. U.S. citizens planning travel to Russia are again strongly advised not to travel to Russia due to risk of wrongful detention and security concerns. More at: https://t.co/rgpoFm6YhH

— TravelGov (@TravelGov) October 6, 2026

The embassy continued, "We continue to track the situation closely. The U.S. government has limited ability to help U.S. citizens in Russia, especially outside of Moscow. U.S. government personnel may face additional restrictions for personal and official travel to specific regions due to health and security concerns." 

Latest reporting:

• Kremlin Says Russians Should Ignore "Rumors" On Possible Plague Outbreak In Siberia
• Russian Lab Worker's Abrupt Death Sparks Plague Crisis Concerns; Trump Team "Monitoring Outbreak"
• Siberian Plague-Lab Death Draws FSB Escort For Ambulances

Russia's health watchdog, Rospotrebnadzor, said Tuesday that 60% of the lab worker's identified contacts had been tested. Officials reported no plague detected among those screened, but testing identified two Covid-19 cases and two rhinovirus infections.

"No other infectious disease pathogens were detected among the contacts," Rospotrebnadzor said in a statement that did not explicitly mention plague.

President Trump said Tuesday he had a call scheduled with Russian President Putin to discuss the health crisis matter. 

Separately, a State Department official told NBC News on Tuesday that the U.S. government spoke with Moscow health officials as early as Friday. 

The Centers for Disease Control and Prevention wrote on X yesterday that it was "working across the U.S. government to assess developments as additional information becomes available."

Dr. Peter McCullough, a Texas cardiologist, who created a "multi-drug protocol" aimed at early treatment of Covid-19, wrote on X: 

More Than 21 Plague Vaccines Are Already in Development: mRNA, saRNA, DNA, Viral Vector, Bacterial Vector, Subunit, and Live-Attenuated. 

Why were governments and military biodefense programs already investing so heavily in plague vaccines before the current plague hysteria erupted? by Nicolas Hulscher, MPH URL TheFocalPoints. 

More Than 21 Plague Vaccines Are Already in Development: mRNA, saRNA, DNA, Viral Vector, Bacterial Vector, Subunit, and Live-Attenuated Why were governments and military biodefense programs already investing so heavily in plague vaccines before the current plague hysteria erupted? by Nicolas Hulscher, MPH URL TheFocalPoints. @NicHulscher @McCulloughFund

— Peter A. McCullough, MD, MPH® (@P_McCulloughMD) October 7, 2026

More from Nicolas Hulscher: 

Israel has already developed an experimental mRNA PLAGUE vaccine. I will NOT be taking it. I’d rather take my chances with doxycycline and its 97% SURVIVAL RATE. https://t.co/UK4ErTyaTJ

— Nicolas Hulscher, MPH (@NicHulscher) October 6, 2026

A Wall Street Journal report on Tuesday evening said the U.S. warned Moscow that its failure to disclose details about the lab worker death violates international health obligations. 

Tyler Durden Wed, 10/07/2026 - 09:05

Blanche Says DOJ Is Using Fraud Laws To Combat Birth Tourism

Authored by Tom Gantert via The Epoch Times,

Despite a Supreme Court setback in June, the Justice Department (DOJ) is working with federal immigration agencies to combat birth tourism by using existing laws, U.S. Attorney General Todd Blanche said.

Attorney General Todd Blanche speaks during an interview in Washington on Oct. 5, 2026.Madalina Kilroy/The Epoch Times

Birth tourism remains a problem, but officials are taking steps to prevent people coming to this country just to have a baby for American citizenship, Blanche told Epoch Times senior editor Jan Jekielek in an interview airing at 9 p.m. ET on Oct. 6.

DOJ is also working with the Department of Homeland Security to strengthen questions asked of travelers about their reasons for entering the country, Blanche said in the interview.

On June 30, the Supreme Court struck down President Donald Trump's broad birthright citizenship order issued in January 2025, which excluded children of illegal immigrants and legal temporary visitors from automatic U.S. citizenship.

Blanche said the ruling still left room for the administration to act. He said he would use existing enforcement tools rather than wait for Congress to pass laws.

"Those cases can be difficult to prove, but it's not slowing us down," Blanche said.

Federal prosecutors have been told to prioritize investigations into birth tourism schemes.

Colin McDonald, the Justice Department's assistant attorney general for fraud, wrote a June 30 memo stating the U.S. immigration system is being exploited by foreign nationals who travel to the United States "under false pretenses" to give birth and secure U.S. citizenship for their children.

On Aug. 6, Trump signed two executive orders, one identifying categories of children the administration considers ineligible for birthright citizenship and another directing the State Department and Department of Homeland Security to halt birth tourism.

One of the measures banned birth tourism. Another barred citizenship for children whose parents fell under several categories, including being a foreign government employee and member of a designated foreign terrorist organization.

A federal judge blocked that order in September and suggested it conflicted with the Supreme Court's decision. "The 2026 Executive Order is almost certainly unconstitutional as applied to the certified class for the simple reason that the Supreme Court in Barbara already decided that the children in the class are citizens at birth," U.S. District Judge Deborah Boardman said in an opinion on Sept. 2.

The Justice Department has asked Boardman to dissolve the injunction, stating that the plaintiffs involved lacked standing or a legal basis to sue. More specifically, it said that the executive branch clarified Trump's order was prospective and therefore only applied to babies born after the order was signed. The babies of the plaintiff mothers were born before the order.

In September, the United States said it would deny visas to people who are involved in the practice.

The new policy targeted commercial network operators, visa "fixers" who coach applicants to commit fraud, and foreign medical providers who help arrange such travel and fraudulent Medicaid use, according to a State Department statement.

"The Trump Administration is using every tool at our disposal to defend the integrity of U.S. citizenship, protect American public benefits and U.S. taxpayers from exploitation, and safeguard our national security," Secretary of State Marco Rubio said in a Sept. 23 statement. "By restricting visa issuance of those who both engage in and profit from this fraud, we are sending a clear message: The United States will not allow foreigners to exploit our immigration system and violate the sanctity of U.S. citizenship."

The ACLU has fought Trump on restricting birthright citizenship.

"The 14th Amendment ensures that no politician can ever decide who among those born in our country is worthy of citizenship," the ACLU stated in a 2025 post. "In the face of the Trump administration's threats, the 14th Amendment's protections continue to safeguard the rights of every person born in this country."

Tyler Durden Wed, 10/07/2026 - 08:45

Isaias Forecast To Become Season's First Atlantic Hurricane, Threatening Gulf Coast Rigs, Major Refineries

Tropical Storm Isaias is forecast to strengthen into a Category 2 hurricane, with the northern US Gulf Coast in its crosshairs later this week. The cone of uncertainty includes critical energy assets, such as offshore oil rigs and major refineries.

Isaias was about 285 miles west of Progreso, Mexico, with maximum sustained winds of 40 miles per hour, the National Hurricane Center wrote in its latest advisory. It is expected to become a hurricane Thursday.

Dozens of offshore oil and natural gas rigs are in the storm's path. Chevron is evacuating nonessential personnel from its Gulf platforms as a precaution.

Isaias' projected landfall area currently spans Louisiana, Alabama, Mississippi, and the Florida Panhandle.

One notable refinery in thestorm'ss path is Chevron's Pascagoula refinery, located on Mississippi's Gulf Coast, which can process 369,000 barrels of crude a day. The refinery produces gasoline, diesel, jet fuel, and premium base oils.

List of major US refineries in the storm's path:

September ended without a hurricane for the first time in 32 years, as strong wind shear associated with El Niño disrupted tropical development. Isaias is expected to become the first Atlantic hurricane of the season.

Tyler Durden Wed, 10/07/2026 - 08:25

Futures Slide From Record As Oil Jumps On Hormuz Tanker Attacks, 30Y Yield Hits 2002 High

US equity futures are sliding from Tuesday's record close as oil climbs back above $100, global bond yields resume their ascent and the AI bubble debate makes an unwelcome comeback. As of 8:00am ET, S&P futures are 0.4% lower, trading around 7,844, while Nasdaq 100 and Dow futures drop 0.6%; small caps are also under pressure with Russell 2000 futures down 0.3-0.4% as usual. On Tuesday the S&P 500 rose 0.6% to close at a record high for the first time since August 13, its fourth consecutive advance and longest winning streak in about two months, with the Nasdaq 100 also closing at an all-time high. Premarket, the Mag 7 are mixed (Apple +0.4%, Tesla -0.8%) while Memory, Semis and Software are all lower as the AI theme sees some profit-taking following a slide in Korea's Kospi; Constellation Brands slides 4.7% after the Corona brewer reaffirmed guidance, Neogen jumps 11% on an earnings beat, and SpaceX falls 2% on a report it is seeking to raise $40 billion in a chip-backed SPV to buy Nvidia chips. The day's driver is once again oil: Iran has increased the pace of attacks on tankers in the Strait of Hormuz just as shipments through the chokepoint approach prewar levels, sending Brent up 1.4% to $101.94 and WTI up 0.7% to $90.02. That has pushed Treasuries lower, with the long end leading: the 30-year yield climbed 5bps to 5.70%, the highest since 2002, while the 10Y trades around 5.335%, up 5bps, and 2s10s is 4bps steeper. The Bloomberg Dollar Spot Index rose 0.3%, approaching its highest levels since June, as the euro slid to a 16-month low against the pound amid renewed French fiscal angst, with the OAT-Bund spread back out to 138bps. Gold dropped 1% to around $4,121 and silver fell 1.9% to $60.21, while copper is flat with Chinese buyers still away for Golden Week. Bitcoin is down 2.4% near $83,600. US economic data slate includes MBA mortgage applications (7am, -4.2%), September NY Fed 1-year inflation expectations (11am), FOMC minutes from the September 16 meeting (2pm) and August consumer credit (3pm). The Treasury sells $39 billion of 10-year notes in a reopening at 1pm.

In premarket trading, Magnificent Seven stocks are mixed: Apple (AAPL) +0.6%, Meta Platforms (META) -0.1%, Alphabet (GOOGL) -0.5%, Nvidia (NVDA) -0.6%, Amazon (AMZN) -0.6%, Microsoft (MSFT) -0.7%, Tesla (TSLA) -0.8%

• Constellation Brands (STZ) is down 3.6% after the maker of Modelo Especial and Corona Extra reaffirmed its comparable earnings per share forecast for the full year. The company also announced the acquisition of SpikedAde, a vodka-based drink brand.
• Enphase Energy Inc. (ENPH) and SolarEdge Technologies Inc. (SEDG) shares fall 3% and 3.4%, respectively, after Deutsche Bank issued sell catalyst calls on the solar stocks on expected lower growth.
• Flutter Entertainment shares (FLUT) rise 3% after Citi upgraded it to buy from neutral, saying recent share-price weakness on concerns over Brazil and September US sports results is overdone.
• Neogen shares (NEOG) climb 13% after the life sciences firm reported adjusted earnings per share for the first quarter that exceeded Wall Street’s expectations.
• NetApp Inc. shares (NTAP) are up 2.4% after Evercore ISI upgraded the computer hardware and storage company to outperform from inline, seeing a strong growth outlook.
• Penguin Solutions shares (PENG) are up 4.2% after the semiconductor device company reported fourth-quarter results that beat expectations and gave an outlook that is seen as strong.
• SailPoint Inc. shares (SAIL) are up 0.9% after Oppenheimer & Co. started coverage on the software company with an outperform rating and $30 price target, seeing strong growth potential related to AI.
• Sigma Lithium shares (SGML) gain 5.8% as the company said it has resumed operations after a Brazilian court of appeals upheld its environmental licenses.
• SpaceX (SPCX) shares fall 1.9% as it is in talks with banks and investors to raise $40 billion to buy chips from Nvidia Corp., people familiar with the matter said, in what would be among the biggest-ever debt financings for the AI buildout.
• Taiwan Semiconductor Manufacturing Co. ADRs (TSMC) fall 2.2% as Elon Musk said his business empire will build and operate Terafab independently, quashing speculation about industry TSMC swooping in to run his ambitious chipmaking venture.
• Vylor Inc. (VYLR -0.9%) was initiated with a sector weight rating, while Corteva Inc. (CTVA +0.7%) was upgraded to overweight as KeyBanc Capital Markets looks to earnings growth potential.
• Webull Corp. shares (BULL) fall 30% after CNBC reported that the US House Select Committee on China is set to release a report on Wednesday that Webull is tied structurally to the government in China, raising national security concerns.
• Zscaler shares (ZS) are up 0.5% with analysts positive on the security software company in the wake of an investor day event that increased confidence about its growth potential.

In other corporate news, Apple’s upcoming smart home devices will include a doorbell, thermostat, and other accessories developed through a partnership with LG Electronics. Shell expects to report strong results from oil trading in the third quarter as a squeeze on global fuel supplies drives refining margins to a record. HSBC is planning sweeping job cuts across its UK wealth management business as part of a broader push to use AI to serve affluent clients more efficiently, the FT reported. Frasers Group acquired an 8.8% stake in Under Armour. Affiliates of Energy Capital Partners are selling about $891 million of shares in Constellation Energy in an unregistered block trade, while Oaktree sold its remaining 6.2% stake in Torm. Black Hills will invest $1.8 billion serving a Google data center, CRH is buying aggregates operations in Denmark and Finland, and Porsche plans to raise prices of its top-end sports cars by an average of 20%.

A rally in stocks came to a halt and global bonds fell as mounting attacks on tankers in the Middle East pushed oil prices higher. "Stocks are taking a breather after closing at new record highs," Bloomberg's Neil Campling writes, noting that volumes, volatility and single stock dispersion remain low, with AI and earnings continuing to dominate the narrative. Meanwhile, the debate around an AI bubble is back: Temasek’s CIO said the unwinding of the AI trade is the biggest risk facing global markets along with inflation, Ray Dalio warned once more that AI is a “classic bubble” near bursting point, and the IMF sees the world facing risks from AI, a prolonged energy shock and record debt piles. Not that the market seems to care much: as we noted last night, stocks hit fresh record highs even as the 10Y hovers near its highest since 2002, and earnings concentration is getting absurd, with Micron and Nvidia alone set to deliver a third of Q3 earnings growth.

“Bond markets really worry about the outlook for fiscal policy, but the political reality is that the people on the ground are not ready to accept that,” she said.

“Extraordinary” AI-related earnings growth should keep certain major indexes relatively resilient despite rising yields, says Mark Cudmore of Bloomberg’s MLIV. Earnings growth expectations for the upcoming season have been ticking higher and are currently sitting at 24.5%. Barclays strategists agree that the AI boom remains a key earnings driver, but note that rising debt issuance and capital intensity are putting returns under greater scrutiny.

In other AI news, SpaceX is said to be in talks with banks and investors to raise $40 billion to buy chips from Nvidia (we covered the Apollo-led SPV debt here). Given that SpaceX is currently sitting on $100 billion of cash, the financing isn’t out of necessity, but speaks to the ongoing appetite for AI deals in credit markets. AMD is working with customers to optimize memory footprints as tight supplies persist, and Intel said it will continue to work with Elon Musk on Terafab.

For traders getting more nervous about AI names, BofA strategists recommend tapping equity derivatives both to benefit from the record rally and hedge against the fallout from a potential bubble. Traders are also looking to the upcoming earnings season to see whether profits can support valuations despite macro headwinds and whether the artificial-intelligence boom still has plenty of legs.

“It’s the period before earnings when there’s a bit of a lull, so markets can be pushed around easily,” said Guy Miller at Zurich Insurance. “The focus point is still around bond yields. There was relief yesterday but let’s be clear, nothing fundamental has changed.”

JPM's Market Intel desk under Andrew Tyler remains Tactically Bullish and thinks the market "may not be BULLISH enough into earnings": FactSet reports 26Q3 set a record for the largest number of positive pre-announcements, all 11 sectors are expected to show positive revenue and earnings growth, and consensus sees 12.3% revenue growth and 29.5% earnings growth with 15.0% margins (vs 52.3% EPS growth in Q2). The desk sees a broadening, but given where yields are, prefers a barbell with large-caps over small-caps and AI/Tech as the core. JPM also notes the bond market now prices a ~22% chance of an October hike and ~80% for December, down from 70% and 84% at the start of last week. JPM's Manish Sinha is less sanguine, flagging that the Equity Risk Premium is negative, which "effectively requires a meaningful earnings re-rating higher to justify taking equity risk," and that Momentum looks vulnerable either way.

Goldman's desk is turning more cautious. US derivatives MD Shawn Tuteja writes that "the Tech / AI asymmetry has shifted. The macro is unequivocally more difficult, and the positioning within AI and large-cap tech no longer seem to be tailwinds." Since Aug 27, the SPX is +1.28% while the S&P ex-AI names is down 5.19%, and Mag 7 net exposure on GS Prime is near 22% of total US exposure, the highest since the start of 2022. His left-tail scenario: one where "the Fed must hike an excessive number of times to maintain credibility in the backend of the bond curve." In London, Goldman Delta One head Rich Privorotsky says today's tape "feels less like generic risk off and more like higher oil + higher real rates increasingly biting the duration sensitive parts of the tape," adding that "more leverage in the AI ecosystem is not exactly what the market wants to hear right now." Meanwhile, the GS cash desk notes hedge fund nets are approaching a 5-year low with market breadth at the lowest level since 2000 (no wonder traders keep paying up for protection).

On the macro front, FOMC minutes come later but may offer less insight into current thinking given Warsh’s desire to trust the data and with PCE revisions and jobs data having been released since the Sept. meeting. Speaking of inflation, oil is ticking higher as traders weigh increased flows through the Strait of Hormuz against a pickup in Iranian attacks against vessels. Elsewhere, the EU is preparing safeguard measures to limit imports of Chinese hybrid vehicles into the bloc.

France is back on the tape: the spread between French and German 10-year yields widened as much as 10bps to 138bps, unwinding Tuesday's Le Pen relief rally, as investors continue to price in heightened fiscal pressure around budget negotiations (and as Goldman warned, the "Le Pen bounce" was not to be trusted). ECB's Moulin said the situation on France’s bond market is complicated and serious, but doesn’t warrant intervention from Frankfurt. Not everyone is panicking:

“Unlike previous episodes of severe sovereign stress in the euro area, we do not see evidence of broader financial contagion,” ABN Amro senior rates strategist Larissa de Barros Fritz wrote. “We do not expect OAT-Bund spreads to reach the 200bp+ levels seen during past Italian stress episodes.”

In Europe, the Stoxx 600 is down 0.4% at 633.64, ending a three-day run of gains as oil prices climbed and bond yields resumed their rise, with 351 members down and 233 up; Euro Stoxx 50 is down 1.1% and the DAX 0.9%. Telecoms, autos and retail lead, with carmakers rising as much as 1.75% on the EU's planned cap on Chinese hybrid imports, while banks, tech and utilities lag, with French lenders among the worst performers. Pennon plunged as much as 20% to the lowest since 2004 after a larger-than-expected £550m rights issue. Here are the biggest European movers:

• Remy Cointreau shares advance as much as 7.5%, the most since June, after the French beverages maker held a pre-earnings call that analysts said offered reassurance on the sales outlook and US trends.
• Europe’s carmakers advance as the European Union prepares a limit on imports of Chinese hybrid vehicles into the bloc. The Stoxx 600 Auto & Parts Index gained as much as 1.75%, leading gains among sectors.
• NCC shares gain as much as 7.7%, the most since Feb. 6, after the Swedish construction company agreed to sell its Industry business at an enterprise value of SEK8.2b.
• ALK-Abello shares gain as much as 3.4% as Nordea upgrades the Danish pharmaceutical firm to buy, arguing it has the potential to return to substantial sales growth from 2028 onward, following an expected dip in 2027 due to German medication rebate reform.
• Forvia climbs as much as 11% following a double-upgrade to buy at BofA, which removes the stock’s only negative analyst rating, with room seen for the auto-tech supplier to re-rate after weak performance in the shares year to date.
• Pennon shares fall as much as 20% to the lowest level since October 2004 after a £550m rights issue that was larger than analysts expected. Analysts also flag the rebased dividend and uncertainty over returns as limiting the potential for a re-rating of the South West Water owner.
• BE Semiconductor shares drop as much as 8.4% after UBS downgraded the stock to sell from buy, citing a slower adoption of hybrid bonding among memory chipmakers due to a supply crunch.

Asian stocks fell for the first time in three days, led by tech, as the earnings optimism that drove US stocks to records failed to carry over to the region. The MSCI Asia Pacific Index dropped as much as 0.9% with SK Hynix, TSMC and Alibaba among the biggest losers; SK Hynix slumped ahead of the expiry of a lockup in its ADRs on Oct. 8. South Korea's Kospi led declines, closing down 2.0% at 6,803.90, with Goldman's Korea desk noting foreigners sold $1.94 billion (net sellers for an 8th session) while retail bought $1.91 billion, and Samsung's preliminary results due tomorrow. Japan's Nikkei fell 0.9% to 70,035.71, just about holding the 70,000 level as investors booked profits, with beer makers lower after the Fair Trade Commission started investigating them over suspected price fixing; the Topix fell 0.5%. The Hang Seng slid 0.6%, Taiwan's Taiex fell 0.1% and Australia's ASX 200 was flat. Mainland China remains closed for Golden Week and reopens Thursday. Southeast Asian banks sold off after JPMorgan warned surging long bond yields will hurt third-quarter earnings, while India's RBI hiked rates by 25bps to 5.50%, its first hike in nearly four years.

“There’s a sense that Asian markets are starting to lose some of the relative momentum they enjoyed earlier,” said Tim Waterer, chief market analyst at KCM Trade. “After a period of outperformance, the lack of fresh catalysts combined with still-elevated oil and bond yields is leaving the region looking a little tired.”

In FX, the Bloomberg Dollar Spot Index rose 0.3%, approaching its highest since June, with the dollar stronger against all G10 peers and the DXY trading in a 101.88-102.32 range. EUR/USD fell to 1.1180, closing in on the 1.1161 low hit earlier in the week (the lowest since May 2025), as French fiscal angst pushed the euro to a 16-month low against the pound. USD/JPY edged up to around 158.5 after a report that Japan may be considering another supplementary budget, though PM Takaichi said the government will review policies, revenue and spending if rate moves diverge from expectations. GBP/USD slipped 0.2% to 1.3247 as gilts sold off.

“Markets are unlikely to welcome the prospect of a second supplementary budget, regardless of its size, given earlier guidance that they are no longer planned,” said Wei Liang Chang, macro strategist at DBS Bank. “The yen and JGBs may trade slightly weaker as investors await details.”

In rates, Treasuries' long end leads the selloff into the early US session, with 30-year yields cheaper by 5bps on the day at 5.70%, the highest since 2002, and peeking through Monday's highs. Yields are 1bp to 5bps higher across the curve, with 2s10s and 5s30s steeper by 4bps and 2bps; the 10-year trades around 5.325%. Gilts lag by an additional 4bps in the 10-year sector, with UK 30-year yields up 10bps to 6% (round number, nobody panic), while bunds slightly outperform and OATs give back all of Tuesday's gains; a new 2033 Bund auction drew a dire 1.42x cover with 52% retained. Duration supply is a factor: the $39 billion 10-year reopening at 1pm follows Tuesday's solid $58 billion 3-year sale, which stopped 0.2bp through, and the 10-year WI around 5.33% is ~50bps cheaper than the September reopening, which stopped 1.5bps through. The IG dollar issuance slate includes a couple of deals after four borrowers priced $4.25 billion on Tuesday. FOMC minutes from the September 16 hike land at 2pm.

“Instead of blaming bond vigilantes, deficits, Japan, fiscal dominance, erosion of central bank independence, the driver of higher rates is central banks delivering rate hikes,” wrote Bank of America rates strategist Ralf Preusser, adding that “term premium explains the entirety of the 10y yield move in US, UK, Japan, Australia and Canada” since the September central bank meetings.

In commodities, WTI for November delivery gained 0.7% to $90.02 and Brent for December rose 1.4% to $101.94 as of 6:52am, in choppy trading (WTI ranged $89.33-90.61, Brent $100.72-102.06) as traders weigh a pickup in Iranian attacks on vessels in Hormuz against resilient Middle East flows; UK maritime authorities logged nine attacks in the strait this month, already half of September's count. Vitol's CEO says the crisis has entered a new phase as buyers struggle to secure tankers (as we discussed here, every crude freight index is at a record), while EU states expect the G7 emergency release of up to 100 million barrels to merely enact prior commitments; the IEA holds an informal meeting on releasing oil and diesel reserves. Shell is evacuating non-essential workers from several US Gulf assets ahead of Tropical Storm Isaias. Dutch TTF rose to €77.37/MWh. Spot gold fell from $4,170 to a $4,117 low and silver from $61.50 to $60.34 as the dollar firmed, while 3M LME copper is stuck in a $14,339.60-14,445.85 range.

US economic data slate includes MBA mortgage applications (7am, -4.2%, 30-year rate 7.49%), September NY Fed 1-year inflation expectations (11am), FOMC minutes (2pm) and August consumer credit (3pm). Fed speaker slate: The Treasury sells $75 billion of 17-week bills (11:30am) and $39 billion of 10-year notes (1pm).

No significant earnings are expected before the open; Costco reports September sales later in the day and Levi Strauss and Applied Digital report after the close.

Market Snapshot

Top Overnight News

• Japan’s Sanae Takaichi said the government may review spending and revenue plans if bond yields move unexpectedly. BBG
• The EU’s preparing measures to limit imports of Chinese hybrid vehicles into the bloc, people familiar said. One option is to impose a levy on imports above a certain volume. BBG
• India’s central bank raised interest rates for the first time in more than three years as the Middle East conflict kept energy prices high, hurting the rupee and fueling inflation fears. The Reserve Bank of India’s monetary policy committee voted unanimously to raise its benchmark repo rate by 25 basis points to 5.50%, ending a pause spanning four consecutive meetings. WSJ
• According to the Saudi aviation authority, Saudi Arabia’s airports in Jazan and Najran were targeted in two attacks, as hostilities between Yemen’s Iran-backed Houthis and the kingdom grow. CNBC
• Leading oil executives warned that the world is running out of stopgaps to manage the impact of the Iran war as the conflict extends into an eighth month. Producers and consumers have pulled virtually every lever available to adjust to the diminished flows, including reductions in demand and large releases from strategic petroleum reserves. BBG
• The global energy crisis triggered by the Middle East conflict has entered a new phase because of a shortage of tankers to move crude around the world, according to the head of the world’s largest independent oil trader. Vitol chief executive Russell Hardy said that while more oil was now flowing out of the Gulf, there was a fresh bottleneck as buyers struggled to secure ships. FT
• The US is gearing up for another quarter of bumper corporate earnings spurred by lavish spending on the AI build-out. The robust growth should help Wall Street shrug off worries about the durability of the AI trade against the backdrop of rising borrowing costs but may do little to allay concerns about how reliant the record-high stock market has become on a small group of technology names. FT
• The French government desperately needs a return to strong growth if it is to contain its rapidly rising debts. But uncertainty about whether the country can fix its finances has itself started to weigh on economic activity. France only narrowly avoided a recession in the second quarter, as activity stagnated after extreme heat hit agricultural output and the energy price shock from the war in Iran continued to squeeze households and businesses. WSJ
• SpaceX is in talks to raise $40 billion to buy Nvidia chips, people familiar said, in one of the biggest-ever debt financings for AI buildout as the borrowing binge accelerates. BBG
• Iran has increased the pace of attacks on tankers in the Strait of Hormuz in recent days, just as oil shipments through the world’s most important energy chokepoint approach prewar levels. BBG
• US 30-year yields rose 5bps to 5.7%, the highest since 2002, while 10-year yields climbed 4bps to 5.3%; traders extended their short bets against US government bonds. BBG
• Germany’s industrial production for Aug came in ahead of expectations at +2% M/M (vs. the Street +0.5%). BBG
• Taiwan’s CPI overshoots the consensus at +2.73% headline (vs. the Street +2.4%) and +2.52% core (vs. the Street +2.45%). BBG
• Iraq devalued its currency by about 13% versus the dollar as Hormuz disruption hits oil exports. BBG
• The Dutch government plans to cut its stake in ABN Amro to 10.5% from 20.7%. BBG
• US VP Vance said that Iran must make a "meaningful" reduction in its nuclear enrichment capacity to satisfy US demands and end the war. RTRS
• US officials have formally requested additional information from Russia and are coordinating with governments around the world: State Department spokesperson
• France's government is willing to bypass parliament to pass billions in cuts. WSJ
• US equities have decoupled from the ex-AI market: since Aug 27, the SPX is +1.28% while SPX ex-AI is -5.19%, with the rolling 30-day gap near its widest since January 2023. GS
• FactSet reports 26Q3 set a record for the largest number of positive pre-announcements, led by Tech, Industrials and Healthcare. JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly negative, with the region failing to take inspiration from the gains on Wall St, where the S&P 500 and Nasdaq printed fresh all-time highs, while the sentiment soured overnight amid a rebound in oil and yields. ASX 200 struggled for direction and was flat for the session in the absence of any major catalysts and tier-1 data. Nikkei 225 retreated with investors booking profits following the recent rally in the index, which just about held on to the 70,000 status, with participants also reflecting on Labour Cash Earnings data, which decelerated but still topped forecasts. Elsewhere, there was pressure seen in brewers including Asahi on reports that Japan's FTC is probing Japan's four major breweries over suspected price fixing. KOSPI underperformed in choppy trade with the index weighed on by weakness in SK Hynix, while Samsung Electronics was indecisive ahead of its preliminary earnings results tomorrow. Hang Seng conformed to the downbeat mood amid tech-related weakness and continued absence of mainland participants, who will be returning from the week-long holiday closure tomorrow.

Top Asian News

• Japanese PM Takaichi said the government will review policies, revenue and spending if interest rate shifts diverge from expectations.

European bourses (STOXX 600 -0.6%) are broadly lower, giving back the gains seen earlier in the week, but have rebounded slightly in recent trade amid the recent downside in energy benchmarks. No clear driver has been seen to explain this reversal. Sectors lack a clear bias. Telecoms top the sector pile, with Autos and Retail rounding out the sector gainers. Banks reside at the bottom of the sector pile, with Tech and Utilities rounding out the sector laggards. European autos are finding some support this morning, after Bloomberg reported that the EU is preparing a temporary import cap on Chinese hybrid cars. The safeguards by the EU will be welcomed by domestic manufacturers, as Chinese hybrid sales make up 25% of total sales in the bloc. Further in the report, the source added that the Commission plans to use hybrids as a test case, and if successful, would replicate it in other sectors. US equity futures are lower, with the ES outperforming as it hovers around the unchanged mark. Constellation Brands, the Corona owner, fell after hours despite upbeat Q2 metrics as they highlight softer underlying beer demand and a reduced operating margin outlook.

Top European News

• UK Chancellor Healey held a scheduled meeting with economists from primary dealer firms in the Gilt market, with the purpose of the meeting being to share views on global and UK economic prospects.
• UK Chancellor Healey is considering a major intervention to cut energy bills for poorer households at this month’s budget, according to The Guardian.
• UK Labour Party is to shelve GBP 800mln of planned military housing repairs until at least 2029, according to The Times.
• France's government is willing to bypass parliament to pass billions in cuts, according to the WSJ.
• ECB's Moulin said the situation in the bond market is "complicated", but stated that France is not in an economic crisis yet. The French economic situation is serious but "we can act", while adding that the ECB is not there to respond to nations' budgetary problems.
• Germany’s foreign trade association raised its 2026 export growth forecast to 1%.

FX

• USD is stronger against most G10 peers this morning, with strength facilitated by higher energy prices and elevated yields. JPY holds towards the top of the pile, whilst the EUR underperforms.
• DXY is firmer this morning and trades within a 101.88 to 102.32 range; strength has been facilitated by higher energy prices and continued pressure in the EUR. US-specific news flow has been lacking, but attention later will be on the FOMC Minutes. It will be eyed to see how members view the future path of tightening. Elsewhere, geopolitical updates remain light. The usual rhetoric from Trump on continued oil flows through the Strait, and ongoing strikes between Saudi Arabia and the Houthis remain the key drivers.
• EUR is once again on the backfoot this morning, after finding some reprieve in the prior session. To remind, French fiscal woes appeared to ease as Le Pen provided markets with a friendly alternative budget, but failed at expressing how she would achieve it. Therefore, it was mentioned in yesterday’s FX “Market Analysis” that the EUR pressure would likely return – and it has come alongside a bout of USD strength. French fiscal concerns have re-emerged; for reference, OATs are underperforming today, and the OAT-Bund spread has widened back towards 138bps (vs yesterday’s close at 130bps).
• JPY outperforms vs peers, but still resides flat/slightly lower. Strength which comes despite widening yield differentials, and after Yomiuri reported that Japan is considering a second supplementary budget. Sticking with the fiscal side of things, PM Takaichi said that she would review policies and spending amidst elevated yields – which could help ease debt concerns within the region. Nonetheless, JGBs remained fairly unchanged overnight, which means that the JPY action may be subject to other factors. That could potentially be the region’s Labour Cash Earnings data, which showed a deceleration but still printed firmer-than-expected. Overall, a report which keeps BoJ hikes on the table by year-end.

Central Banks

• RBI hiked the Repurchase Rate by 25bps to 5.50% via unanimous decision, and adjusted its policy stance to calibrated tightening from neutral with four out of six MPC members in favour of stance change, with the RBI Governor saying it implies a "milder form" of a hiking cycle. The RBI said its FY27 inflation forecast while also lifting its real GDP growth.
• BoJ Board Member Sato said she agrees on the need for a gradual adjustment to interest rates and does not think there should be a pre-set pace of rate hikes, while she added the BoJ must decide monetary policy independently in a way that is consistent with the administration's proactive fiscal policy. Sato also noted risks to the price outlook are skewed to the upside due to rising oil costs from the Middle East conflict, according to Kyodo.
• ECB's Dolenc said that the current ECB rate level ensures flexibility for the central bank's upcoming rate decisions.

Fixed Income

• A bearish start to the day, as renewed energy upside lifted fixed income overnight. Magnitudes are in-fitting with Tuesday’s action, in the sense that OATs outperformed yesterday and currently underperform today.
• Within Europe, for today, the focus is more on Germany into the CDU/CSU-SPD coalition meeting at around 15:30BST today. A meeting that is in focus after Bild reported that the Grand Coalition is looking to get agreement from SPD to outline a deadline for pension reform.
• In general, EGBs are under pressure given the energy move. Bunds lower by about 10 ticks in 120.45-90 parameters, while OATs underperform at a 108.86 low, down by essentially a full point. A move for OATs that has unwound all of yesterday’s upside, and thus the OAT-Bund 10yr yield spread is wider today, at 138bps currently.
• It is worth noting that a new 2033 Bund auction was met with dire demand, with b/c at 1.42x; more pertinently was a massive retention of 52%, indicating a high amount of caution for EGBs.
• Ex-OATs, Gilts are underperforming. Hit by the mentioned energy move and the usual somewhat outsized reaction seen in Gilts to this. Additionally, fresh budget speculation regarding energy relief is factoring; while welcome for consumers, it adds to the funding pressure that Chancellor Healey is already under. Lower by 55 ticks at the time of writing.
• Finally, USTs conform to the energy-driven move, with US yields extending as energy picks up across the morning, to the benefit of the USD and detriment of the general risk tone. At the lower-end of 104-07+ to 104-15+ parameters, with the yield curve bear-steepening. Ahead, FOMC Minutes and a 10yr auction dominate the docket.
• Germany sells EUR 1.912bln vs Exp. 4bln 2033 Bund: b/c 1.42x, average yield 3.36%, retention 52.2%.
• UK sells GBP 1.0bln 0.25% 2031 Gilt via tender; b/c 4.39x (prev. 2.65x), average yield 4.842% (prev. 1.144%).
• Australia sells AUD 1.0bln 4.25% October 2026 bonds: b/c 4.51x, avg. yield 5.3802%.

Commodities

• WTI Nov and Brent Dec futures are mixed after paring overnight gains, with the complex caught between ongoing geopolitical risks and signs of improving supply. Overnight upside was driven by continued Saudi-Houthi attacks, reports of a vessel being attacked off Oman’s Musandam coast and missiles launched towards the Strait of Hormuz. However, gains were capped by yesterday’s Saudi Energy Minister supply comments, while Trump reiterated that millions of barrels have recently moved through Hormuz and expects oil prices to fall once the Iran war ends. US VP Vance also highlighted terms to end the Iran war, stating that Iran must cut its enrichment meaningfully. More recently, modest brief upside was seen after EU states said they expect no new oil-release obligations following the G7 agreement, alongside Zelensky saying Ukraine struck four targets supporting Russia’s war effort, including two oil facilities. WTI resides within a USD 89.33-90.61/bbl range, while Brent trades within a USD 100.72-102.06/bbl range.
• Dutch TTF is firmer, extending from a EUR 75.52/MWh low to EUR 77.37/MWh at the time of writing, as European energy-security concerns remain elevated amid continued Middle East disruption. Attention is also on the IEA’s informal meeting at 12:00 BST, where proposals to release oil and diesel reserves will be discussed.
• Precious metals are softer as the USD firms and yields rebound alongside energy prices. Spot gold has fallen from USD 4,170/oz to a USD 4,117/oz low, while spot silver has declined from USD 61.50/oz to USD 60.34/oz. The FOMC Minutes later today could provide impetus. As a reminder, The Fed unanimously hiked rates by 25bps in September, with the median participant projecting one more hike in 2026 and rates on hold through 2027. Since then, Williams and Jefferson have signalled no rush for further hikes, and Bowman sees none, while softer PCE data and a soft jobs report, with unemployment rising to 4.2%, may leave the minutes stale.
• Base metals are flat/mixed amid the firmer USD, higher yields and a generally lacklustre risk tone, with Chinese buyers still absent ahead of their return from the week-long holiday tomorrow. Copper remains capped, with the return of Chinese participation overall providing little support to the complex. 3M LME copper resides in a USD 14,339.60-14,445.85/t range.
• US Weekly Private Inventory Data (bbls): Crude -2.1mln (prev. +1.0mln), Gasoline -1.4mln (prev. +3.0mln), Distillate +0.5mln (prev. -0.3mln), Cushing +0.9mln.
• Shell (SHEL LN) is evacuating non-essential workers from Stones, Mars, Olympus, Ursa, Vito and Appomattox assets in the US Gulf, while Chevron (CVX) does not expect the approaching storm to affect offshore operations.
• EU diplomats said the IEA will hold an informal meeting at 12:00 BST to discuss proposals to release oil and diesel reserves.
• EU states expect no new oil release obligations following the G7 agreement.
• US Secretary of State Rubio said the current situation in the Strait of Hormuz and the Red Sea makes a strong partnership with Greece essential.

Trade/Tariffs

• Talks between the EU and China will focus in on autos, as the EU looks for a commitment from China on stemming exports of hybrid vehicles, Politico reported citing sources. Bloomberg earlier reported that the EU is preparing a temporary import cap on Chinese hybrid cars.

Geopolitics: Middle East

• US President Trump said they have to finish up regarding Iran and that the question is how, while he added that we will soon find out how they will finish up Iran and stated that Iran's drone-making capacity will soon be gone.
• US VP Vance told Reuters that Iran must make a "meaningful" reduction in its nuclear enrichment capacity to satisfy US demands and end the war. Vance added that the US remained open to an agreement but would require concrete Iranian nuclear concessions. Furthermore, the VP questioned who makes decisions in Tehran, following on from earlier comments by US President Trump saying that his biggest problem is that no one knows who is running Iran.
• US Secretary of State Rubio reiterated Iran cannot be allowed to have a nuclear programme.
• Yemen's Houthi forces said they used drones to attack King Khalid International Airport in Riyadh, while they targeted Abha Airport and Khamis Mushait using missiles and drones.
• Satellite imagery, cited by Sabereen, confirmed that there is still a fire at Saudi's Khurais oilfield.
• An Asharq reporter posted that Syria may join the war in Yemen, with the idea said to be under discussion, citing multiple sources, although no final decision has been made; it follows Syria's President visiting Saudi Arabia.

Geopolitics: Ukraine

• US President Trump said the Russia-Ukraine war is getting closer to ending, while he had a call scheduled with Russian President Putin regarding the plague and said he will probably be able to report on the pneumonic plague incident in Russia on Wednesday.
• Ukrainian President Zelensky said Russia launched one of the largest attacks on Ukraine, directly targeting the country’s energy sector. Zelensky added that Ukrainian forces struck four targets supporting Russia’s war effort, including two oil facilities and a training ground in the Perm, Samara and Astrakhan regions.

Geopolitics: Other

• North Korea warned South Korea not to cross the border by even a millimetre. It was separately reported that North Korea said the US should think twice before opposing China regarding Taiwan, according to KCNA.

Crypto

• Bitcoin slumped early in the Asian session before stabilising around the USD 84k mark.

US Event Calendar

• 7:00am: Oct 2 MBA Mortgage Applications -4.2%, prior -6.0%
• 11:00am: Sept. NY Fed 1-Yr Inflation Expectations, est. 3.64%, prior 3.58%
• 11:30am: US to sell $75bn 17-week bills
• 1:00pm: US to sell $39bn 10-year notes (reopening)
• 2:00pm: FOMC Meeting Minutes (Sept. 16 meeting)
• 3:00pm: Aug. Consumer Credit, est. $15.000b, prior $18.062b

DB's Jim Reid concludes the overnight wrap

Although we said on Monday that the French government bond sell-off looked overdone — likely driven largely by the unwinding of carry trades amid an aggressive repricing of ECB rates — there is also a longer-term fundamental story to tell about France. Last night, Henry and I published a chartbook on the Deutsche Bank Research Institute (link here), with a series of long-term charts on France, in some cases using data going back a couple of hundred years. One standout is an old favourite of ours: France hasn't run a budget surplus since 1974. One of the longest consecutive runs in the world. Italy hasn't had one since 1925, but it has mostly run primary surpluses over the last three decades or so, so there is an important difference. See the pack here for plenty more charts putting the current situation in French debt into a longer-term perspective. Also a reminder that our Q3 survey results can be found here.

For now the stress in France continues to ease with OATs staging a strong recovery yesterday, which came as RN leader Marine Le Pen vowed to continue cutting the French deficit in the years ahead, which offered some reassurance on the country’s fiscal risks. So that helped a big rebound for French OATs and we’ve now seen the biggest 2-day decline in the Franco-German 10yr spread (-13.7bps) since the initial pandemic turmoil in March 2020, so these aren’t everyday moves. The optimism also translated into a global cross-asset rally, as US Treasury yields also pulled back from their multi-year highs while the S&P 500 (+0.58%) reached its first record high since mid-August. Although US equity futures are flat overnight, the mood in Asia is weaker amid a rise in oil and bond yields.

Starting with Le Pen’s speech, markets were reassured by her pledge to cut the French deficit. She said that they’d get the deficit below 3% over the first 18 months if elected next spring, so in 2028. In addition, she also pledged to eliminate the primary deficit before end-2028, and called for spending as a share of GDP to fall beneath 50% by the end of her presidential term. Given Le Pen is currently leading in opinion polls, her fiscal plans are ones that markets are paying attention to. There are plenty of questions over both the feasibility of her radical headline fiscal target, which would far outpace any fiscal tightening France has delivered in recent history, as well as the credibility of some of the details in Le Pen’s proposals. Still, her public focus on delivering fiscal consolidation helped to ease the recent spike in investor concerns.

To be fair, much of the rally in OATs had also already played out before Le Pen’s speech, with a likely unwinding of some of the distortions that had emerged in the recent sell-off. Notably, at the front-end of the curve the 2yr Franco-German spread tightened by -15.4bps to 45bps. In absolute terms, there was also a sharp decline in French yields across the curve, with the 10yr yield (-10.9bps) falling to 4.74%, in contrast to the modest decline for 10yr bund yields (-1.4bps).

That recovery in French bonds also supported a relief rally across much of Europe, as it eased fears about contagion spreading to other countries. So the sovereign bonds of other countries with high debt levels also outperformed, with Italy’s 10yr BTP yields (-9.8bps) seeing a decent pullback to 4.53%. Moreover, several assets that struggled last week also stabilised, with the Euro (+0.32%) picking up from its recent low on Monday, whilst the STOXX Banks Index (+1.34%) was up for a second day running. That extended to credit as well, with European HY spreads (-15bps) seeing their biggest daily tightening since April.

Outside of Europe, the other big headline yesterday was that the S&P 500 (+0.58%) closed at a new record high for the first time since August 13, ahead of the Q3 earnings season. The move was a broad-based one, with the equal-weighted S&P 500 (+0.58%) rising by the same amount. And there were also new highs for the Mag 7 (+0.45%) and the NASDAQ (+0.45%). The moves were also part of a global equity rally, with Europe’s STOXX 600 (+0.48%) and France’s CAC 40 (+0.40%) also rising.

US Treasuries also rallied. The 10yr yield (-2.6bps) fell back from its post-2002 high on Monday to 5.28%, and the 2yr yield (-1.4bps) also fell to 4.80%. The move lower was led by real yields, with the 10yr real yield (-2.6bps) falling back from its post-2008 high to 2.91%.

All that came as yesterday saw a sizeable round trip in oil prices. Brent crude fell towards $97/bbl early in the US session amid optimism on oil flows coming out of the Middle East. However, this gave way to caution later on news of increased Iranian strikes against tankers passing through the Strait of Hormuz and as Iran’s IRNA reported that a blast was heard off Qeshm island near Hormuz. This brought Brent crude back up to $100.58/bbl by the close (+0.26% on the day), and it is another +1.01% higher this morning. Meanwhile, European natural gas prices rose yesterday, with front-month TTF rising +2.96% to €75.70/MWh, its highest level since mid-September.

With bonds selling off and oil rallying, the mood in Asia is softer this morning. 10yr US yields are +2.8bps, reversing yesterday's rally so far. In equities, the KOSPI (-1.18%) is leading declines, weighed down by losses in index heavyweight SK Hynix. The Nikkei (-0.81%) and the Hang Seng (-0.53%) are also trading lower, while the S&P/ASX 200 (-0.05%) is fairly flat. Mainland Chinese markets remain closed for the National Day holiday and will reopen tomorrow. European Stoxx futures are -0.64% lower, underperforming their flat US equivalents.

Elsewhere, the Japanese yen (-0.20%) is weakening for a third straight session, trading around 158.40 against the dollar, after newly appointed BOJ board member Ayano Sato signalled support for a gradual, multi-stage approach to further interest-rate hikes. In terms of data, real wages rose by 1.5% last month matching estimates with nominal up +3.8% and the seventh month above 3%, the longest run since 1992.

To the day ahead now, data releases include the NY Fed’s Survey of Consumer Expectations for September, US August consumer credit, Germany’s August industrial production, France’s August current account balance, and Sweden September CPI. We’ll also get the FOMC minutes and hear from the Fed's Logan, along with the ECB’s Cipollone and Vujcic.

Tyler Durden Wed, 10/07/2026 - 08:23

World Bank Warns Asia Is Running Out Of Money To Fight Energy Shock

Authored by Irina Slav via OilPrice.com,

Asian countries have responded more aggressively than others to the energy supply crunch caused by the U.S. and Israeli war on Iran and now they are running out of resources to continue their response, the World Bank warned in a new report.

The report actually focuses on the potential of artificial intelligence to help Asian economies grow but names energy import vulnerability as one major headwind to that growth.

"Subsidies have been by far the most common policy response [to the crisis] among emerging and developing economies," the World Bank said, adding that "Countries with substantial subsidies in place generally have had smaller increases in retail gasoline prices than non-subsidizers, but this relationship weakened considerably for headline inflation."

Energy remains a spot of weakness for Asian countries due to their overwhelming dependence on imports but, according to the World Bank, AI can change that by motivating a shift towards greater domestic electricity generation, which would in turn lead to lower demand for imported energy commodities.

Meanwhile, Asian countries' response to the energy crunch has led to lower prices at the cost of lower foreign exchange reserves, the lender also said. The longer the crisis continues, the greater the effect on their fiscal health would be, the World Bank warned, noting as examples Indonesia, Thailand, and Vietnam, which saw their dollar reserves decline by between 15% and 40% since the start of the war because of their crisis response actions.

These response actions, however, have had no effect on inflation anywhere in the world, and "headline inflation has sharply increased in many countries, even as core inflation has remained more subdued."

For Asia, however, there is hope for a reversal, driven by information technology generally and AI specifically, according to the World Bank.

"The region's dependence on AI-related industrial activity has been a source of strength, but it could become a weakness if global AI activity slows or reverses," the institution said in its report.

Tyler Durden Wed, 10/07/2026 - 08:05

Standard Chartered Says Hormuz Oil Flows Are Far From Normal

Authored by Alex Kimani via OilPrice.com,

• Gulf oil exports rebounded to roughly 16.5 million bpd in September, near pre-war levels, despite only 60% of those barrels crossing Hormuz versus 83% before the war.

• Exporters have adapted through pipelines, bypass ports and extensive ship-to-ship transfers, but the system is more expensive, inefficient and increasingly stretched, with elevated freight and security costs.

• Iran’s ability to choke off regional oil exports has weakened, while its own seaborne crude exports have fallen from around 1.7 million bpd to near zero.

Oil flows through the Middle East have staged an impressive rebound, with export volumes recovering to near pre-war levels even as traffic through the Strait of Hormuz remains well below normal. Standard Chartered estimates crude and condensate exports from the Gulf, excluding Iran and including bypass routes such as Fujairah and the Red Sea, reached roughly 16.5 million barrels per day (bpd) in September, broadly back to pre-war volumes. But only 60% of those barrels crossed the Strait of Hormuz, compared with 83% before the war. Standard Chartered says the numbers show resilience rather than normalization: exporters have found ways to move the oil, but they are doing it less efficiently and at considerably higher cost.

The system has been forced to use more complex workarounds, particularly a vessel-intensive chain of ship-to-ship (STS) transfers. Shuttle tankers are increasingly moving crude through Hormuz before transferring it to larger vessels in the Gulf of Oman, while exporters are also making greater use of pipelines and ports that bypass the strait. The southern route along the Omani coast has become an important route for shuttle vessels moving through Hormuz. Standard Chartered says STS capacity appears saturated, vessel utilization remains inefficient, voyage times have lengthened and both freight and security costs remain elevated.

Saudi Arabia perhaps best illustrates both the success and limits of this adaptation. Following the early-September damage to the East-West pipeline, exports shifted sharply to the east coast. Standard Chartered estimates total Saudi exports rebounded to roughly 6.9 million bpd in September from 2.45 million bpd in August, with 19 VLCCs transiting Hormuz in one week alone. The restart of the East-West pipeline and Yanbu loadings has restored another route to market and reduced the immediate risk of shutting in production, although pipeline throughput remains below nameplate capacity and exposed to further attacks. The workarounds are also expensive, with reports of discounts of up to $9 per barrel on cargoes loaded offshore Oman to compensate for the added logistical costs.

The recovery in physical flows has reduced the probability of the most extreme shortage scenarios and should gradually remove some of the scarcity premium in oil prices. But those barrels are moving at higher cost, with longer voyage times, heavier use of tankers and less spare capacity in the logistics system. Standard Chartered says the improvement is bearish compared with a market pricing a prolonged physical supply loss, but does not justify a return to pre-war risk premiums. Exporters have shown they can move far more crude than many expected, but the system has less room to absorb another major disruption.

The tactical success of Gulf exporters has also altered regional dynamics. Seaborne crude exports from Iran fell to near zero in September, down from roughly 1.7 million bpd before the war, after the U.S. naval blockade sharply curtailed Tehran's ability to move crude through Hormuz. Consequently, Iran's ability to weaponize its chokehold on the Strait of Hormuz is breaking down, though this increases the risk of unpredictable military escalation.

Iran remains defiant and reiterated Sunday that the Strait of Hormuz will remain closed until the United States fulfills seven conditions contained in the June interim agreement. Foreign Minister Abbas Araghchi said separately that Tehran's latest proposal could lead to the strait reopening within seven days if Washington accepts Iran's terms.

Tehran has denied reports that it offered international nuclear inspections in exchange for sanctions relief. Araghchi has said Iran hopes Washington will pursue diplomacy, but warned that the country is better prepared than before to respond if the U.S. opts for further military action.

Tyler Durden Wed, 10/07/2026 - 07:20

Germany's Former Spy Chief Arrested In Biggest Espionage Scandal Of The Century

August Hanning, former head of the German BND foreign intelligence agency, which is Germany's equivalent of the CIA, has been arrested on espionage charges in a shocking and unprecedented situation in which a country's top intelligence officer and head of a national spy agency was caught spying for another state.

The 80-year-old faces formal charges including "treasonous espionage, spying out state secrets, attempted treason, and espionage" - according to German media. While an official statement from the prosecutor's office has not yet identified the foreign service he's suspected of working for, Israel has been widely named, also given this past well-documented associations and links.

August Hanning, via Associated Press

Curiously, Hanning's arrest at his home in Nordwalde in western Germany comes a full two decades after he left the top intelligence post. He served as BND chief from December 1998 to November 2005 before moving to the Federal Interior Ministry.

In short, it appeared he not only illegally held on to thousands of classified documents, but used them over the years to peddle influence - including preparing a presentation for a foreign intelligence service based on the internal government docs. What's more is he was covertly obtaining new documents even many years out of office.

Israeli media itself is highlighting that the way Hanning was caught actually involves shady Israeli operatives:

The affair rocking Germany involves thousands of classified documents, suspected payments, contacts with foreign intelligence officials and a surprising connection to Israel: The investigation that led to its exposure actually began with the case involving the abduction of millionaire heiress Christina Block’s children, in which Israelis were also implicated.

International reports at the time: "According to prosecutors, August Hanning, who once headed Germany’s domestic intelligence service, allegedly approached Peri [ex-Shin Bet head], now owner of the Israeli consulting firm CGI Group, to organize a team of Israeli operatives for the abduction. The team allegedly assaulted Hänsel, kidnapped the children, smuggled them into Germany, and handed them over to Block. A Danish court later ordered her to return the children to their father."

According to a summary of the plot coming to light through the high profile Christina Block case via Channel 7 Israel National News:

Hanning had already come under scrutiny by authorities as part of an entirely separate case - the case of Christina Block, heiress to a German restaurant empire, who is standing trial over the abduction of two of her children from Denmark to Germany amid a bitter custody dispute with her former husband.

That case also attracted attention in Israel. The investigation implicated Israelis, including security personnel, and reports about the affair also mentioned former members of Israel’s security establishment.

Hanning’s name was linked to allegations concerning an earlier attempt to return the children to Germany, claims that he denied. As part of that investigation, investigators searched his home and office in September of last year and seized equipment for examination.

That, according to the German investigation, is where the case took a dramatic turn. Secret BND documents were discovered on an electronic storage device seized from Hanning. The problem was obvious: Hanning had left the intelligence service in November 2005 and therefore should not have had access to current intelligence material.

More insane details from the Block case and kidnapping plot via The Guardian:

A second former high-ranking BND official has also been arrested, and the person's home also searched. That official is accused of handing over to Hanning additional secret documents in exchange for payment.

Some of the alleged details of the Block case are wild. It was Hanning that set up Block with the brutal Israeli contractors who dragged the children into the forest and bound them up:

Ex BND chief August Hanning has more Israeli ties than a Tel Aviv haberdashery Hanning introduced German heiress Christina Block to the Israeli private spying firm CGI Group Block used the Israelis to abduct her own children from her ex and plant fake images of child abuse on his phone Hanning, who served on the board of another Israeli spying firm, arranged the operation through former Shin Bet chief Yaakov Peri

— Max Blumenthal (@MaxBlumenthal) October 6, 2026

That official has been identified only as Manfred D. - Hanning's own former chief of staff when he had been BND chief. Manfred D., who had continued on as chief of staff for Hanning's successors, was apparently from 2012 to March 2026 continuing to hand over a wealth of classified files to Hanning, despite his long having been out of government. Manfred D. is charged with "aiding and abetting attempted treason and espionage against the state."

German media is widely describing the espionage case as the "biggest espionage scandal of the century." Marc Henrichmann, who chairs the German parliament's intelligence oversight committee, declared in the wake of the high level arrests that "whoever allies themselves with the enemies of our liberal democracy will be found out."

    OCTOBER ONLY.$10 OFFYOUR NEXT ORDER.$30 min. Ends Oct 31. One per customer.GET MY $10 OFF →Signs you up for ZeroHedge Store emails. Can't be combined. Every order helps support ZeroHedge. Tyler Durden Wed, 10/07/2026 - 07:15

$240 Million Triton Spy Drone Stops Feet From Disaster After Apparent Florida Runway Overrun

A roughly $240 million MQ-4C Triton surveillance drone built by Northrop Grumman apparently overran a runway at Naval Station Mayport near Jacksonville, Florida, last week, stopping just dozens of feet from plunging into the water. 

Footage circulating on X appears to show the drone perched on shoreline riprap beyond the departure end of the base's 8,001-foot Runway 05, narrowly avoiding a plunge into the St. Johns River.

A US Navy MQ-4C TRITON got stuck trying to take a drink from the St. Johns River at the end of Runway 5 at Naval Station Mayport, FL. pic.twitter.com/eFAZNbCVGO

— TheIntelFrog (@TheIntelFrog) October 3, 2026

The US Navy operates the Triton for maritime intelligence, surveillance, and reconnaissance, using the high-altitude, long-endurance drone to monitor vast stretches of ocean.

Northrop Grumman said in June 2025 that it had produced 20 Tritons for the US Navy. A single drone represents 5% of that production total. Any loss of the aircraft would be a significant loss for the fleet. That figure does not represent the current operational fleet, as those figures are unknown. 

The Navy has not publicly explained what caused the drone to end up on the riprap. The footage suggests a possible runway overrun. 

 

 

 

Tyler Durden Wed, 10/07/2026 - 06:55

UK Makes 7th Arrest Over Security Incident Near RAF Fairford Airbase

Authored by Ryan Morgan via The Epoch Times,

Authorities in the United Kingdom have announced the arrest of another suspect in connection with a recent security incident near the RAF Fairford airbase used by U.S. forces.

On Oct. 6, the UK's Office for Counter Terrorism Policing announced the arrest of a 22-year-old male British national in the Westminster borough of London. Authorities detained the man on suspicion of preparing terrorist acts.

The 22-year-old is the seventh to be arrested after authorities were alerted to suspicious activity near the airbase in Gloucestershire on Sept. 27.

U.S. President Donald Trump and British Prime Minister Andy Burnham have both publicly indicated the Sept. 27 incident may be linked to an Iranian plot.

Authorities initially arrested five British nationals on Sept. 27, on suspicion of committing offenses under the UK's Explosives Act. These five men were subsequently released on police bail.

On Oct. 1, authorities announced the arrest of a sixth individual, whom they identified as a 25-year-old British-Iranian national. Authorities have since released this sixth individual on police bail.

"This remains a live investigation, and our specialist teams continue to pursue multiple lines of inquiry into the circumstances surrounding events near RAF Fairford," senior national coordinator for Counter Terrorism Policing Vicki Evans said on Tuesday.

Evans thanked the public for their patience as police continue their work.

"We're acutely aware of the public interest in this investigation, and we are working around the clock, and at pace, to identify the motivation behind events in Gloucestershire," Evans said. "We remain committed to investigating all possible angles."

Over the weekend, the U.S. Air Force withdrew its B-1B Lancer long-range bombers from their forward positions at RAF Fairford.

Addressing the decision to pull U.S. bombers away from the airbase, Trump expressed concerns about a lingering threat.

"We had an idea that there might be a threat," the president told reporters on Oct. 5.

Separately, Vice President JD Vance said the decision to remove the bombers from RAF Fairford was taken out of an abundance of caution.

When asked if Iran-linked actors may have brought armed drones into the UK to carry out attacks, Trump said, "I can't tell you that. But if they did, they'll suffer greatly."

During the initial set of arrests on Sept. 27, authorities searched multiple vehicles deemed suspicious. They said they found no explosive devices, but did recover some quantity of gasoline.

While British and American officials have suggested Iran may be behind the Sept. 27 security scare at RAF Fairford, Iranian officials have denied Tehran's involvement.

"You're barking up the wrong tree," Iranian Foreign Minister Abbas Araghchi said on Sept. 30.

Though Tehran has denied any connection to the recent security alert near RAF Fairford, Iran's Islamic Revolutionary Guard Corps previously said it would treat any bases used to launch strikes on Iranian territory as legitimate targets for retaliation.

The British government has authorized U.S. forces to use some of its bases, including RAF Fairford, to launch strikes on Iranian missile sites that have targeted international shipping.

Last year, Ukrainian forces snuck more than 100 explosive-laden drones deep inside Russia's border to carry out extensive attacks on bases hosting Russian strategic bomber forces.

Tyler Durden Wed, 10/07/2026 - 06:30

Lithuanian Parliament Advances Measure To Reverse Nuclear Weapons Ban

Back in July, Lithuanian President Gitanas Nauseda declared that his country must be part of the NATO alliance's nuclear sharing program: "We would like to be the integral part of this nuclear deterrence," he had said at the time.

He was addressing a big hurdle written into Lithuanian law, namely the existent constitutional ban on nuclear weapons from Lithuanian territory.

But on Tuesday the effort to overturn the ban passed its first big test, with the Lithuanian parliament, the Seimas, having voted 106-18 to advance a constitutional amendment that would reverse the ban.

Source: LRT nuotr.

But there will be more procedural rounds yet to go in the coming months before the change can become a reality:

The change still requires a second vote after a constitutionally mandated three-month waiting period. At least 94 of the Seimas’ 141 members must back it on both occasions. The final vote is expected on January 12.

“This constitutional amendment would enable Lithuania’s armed forces to participate fully in the planning and exercises of all of NATO’s deterrence measures,” said Viktorija Čmilytė-Nielsen, leader of the Liberal Movement parliamentary group.

The effort is obviously hugely provocative to Russia, given the end result could be NATO nukes stationed right on Russia's Baltic doorstep.

But Lithuania's political establishment is looking fully onboard: "Our neighboring countries, such as Latvia, Estonia and Poland, have no such restrictions either," Remigijus Motuzas, chairman of the Seimas Foreign Affairs Committee, has told parliament. "We cannot be less protected than other NATO countries. We must send a signal that Lithuania is a full part of NATO’s nuclear deterrence."

As for the current constitutional prohibition in question: 

Article 137 of Lithuania’s Constitution currently states that weapons of mass destruction and foreign military bases may not be located on Lithuanian territory.

Finland's parliament has already voted on its own reversal this summer, after which Russia moved to secure more border areas with NATO countries.

Since the Ukraine war began, and in context of ratcheting tensions with NATO over its military support to Kiev, Moscow has steadily militarized its border regions with Baltic and Scandinavian states.

The most significant source of NATO's nuclear-sharing program remains the United States. But lately France has expressed a desire to station some of its atomic arsenal in partner countries, and this could include in Finland, Sweden, Denmark and others.

Tyler Durden Wed, 10/07/2026 - 05:45

Ballot Box Jihad: The Non-Violent Conquest Of The West

Authored by Robert Williams via Gatestone Institute,

"This could be the first election in Sweden where the Muslim immigration that we have had is decisive in a parliamentary election," predicted the leader of the Sweden Democrats, Jimmie Åkesson, days before Sweden's election on September 13.

He was right. Sweden's center-right Sweden Democrats government indeed lost the elections by a razor-thin margin - reportedly just 50,000 votes - corresponding to just three seats in parliament.

The next government will almost certainly be a socialist one.

"Voters who, or whose parents, grew up outside Europe overwhelmingly favoured the Left," Brussels Signal wrote in its analysis of an exit poll by SVT, Sweden's national public broadcaster:

"The Social Democrats received 38 per cent of their votes, the Left Party 21 per cent, the Greens 7 per cent and the Centre Party 4 per cent. Together, these parties accounted for 70 per cent, against 27 per cent for the four parties of the outgoing right-wing bloc."

The tiny socialist majority was won through heavy voter mobilization within immigrant communities, which tipped the balance. Turnout rose around 3 points to 67.5% in the almost exclusively urban districts, where mainly Muslim immigrants live.

"This election has in part been about voter mobilisation, which is unusual in Sweden," noted to Gustav Karreskog Rehbinder, founder of AI analysis firm Vera Policy, which broke down the election results for Reuters.

According to Fredrik Karrholm, a member of the Swedish parliament and the author of Gangster Violence:

"A poll by the respected Novus institute before the election found that of Muslim respondents, around 80 per cent intended to vote for either the Social Democrats or the Left party.

"In some districts with large immigrant populations, the results are striking. For example, in Rosengård Centrum in Malmö, the Social Democrats and Left Party together received, according to the preliminary count, 95.2 per cent of the vote...

"This pattern predates the present government...

"During the last parliamentary term, around 200,000 people were given citizenship under rules that imposed very few demands on applicants - not even a requirement to speak or write Swedish. The majority of those granted citizenship were from outside Europe....

"Immigration to Sweden has not only brought crime, social problems and unemployment - now the government that was successfully starting to solve these problems has been voted out because of immigration itself."

For a brief moment, it had seemed as if Sweden was finally beginning to turn things around. In 2022, Sweden voted in a center-right government that ruled with the parliamentary backing of the Sweden Democrats - a first in Swedish politics. This government sought to implement the most restrictive overhauls of Swedish asylum and immigration policies in Swedish history with crackdowns on asylum and migrant flows, while making it harder for immigrants to acquire permanent residence and Swedish citizenship.

After decades of lawlessness, the center-right government, now voted out, had also sought to crack down on crime by finally openly linking migration to gang violence, parallel societies, and integration failures.

The results were dramatic: In December 2025, Reuters reported:

"The number of shootings in Sweden has more than halved since hitting a peak in 2022, reflecting new policing approaches introduced by the right-wing government, which is readying for parliamentary elections next year. Shooting incidents fell to 147 so far this year, a 63% decrease compared to 2022 when there were 390 shootings and a 49% decrease compared to 2024, according to a Reuters analysis of official figures."

The government also began to scrutinize the detrimental effects of Islam in Sweden, including the launch of a government investigation into the Islamist infiltration of Swedish society. This past spring, the government announced that it would be dropping the entire concept of "Islamophobia."

Sweden, in short, had been on the road to becoming Swedish again - but if the election results lead to a new socialist government, that will no longer happen: The Left Party alone is deeply infiltrated by Islamists and terrorist supporters, with several of its politicians caught celebrating the October 7, 2023 Hamas invasion of Israel, with some handing out candy on the streets to mark their joy at the massacres of Israelis. In addition, several candidates were found to have shared content praising or expressing support for designated terrorist organizations, including Hamas, Hezbollah, the PFLP and Al-Qaeda, while multiple candidates shared classic antisemitic tropes, Holocaust denial and homophobia.

These revelations, all dug up by the Swedish press, forced the Left Party to remove at least 33 of its most extremist candidates, an astounding number.

Many other radicals within the party kept their parliamentary seats, including MPs Ilona Szatmári Waldau and Samuel Gonzalez Westling, who sent open letters of support to Palestinian terrorists held in Israeli prisons for serious offenses, such as ordering suicide bombings and torturing and murdering an Israeli soldier. In October 2025, the party's top leadership, including party leader Nooshi Dadgostar, hosted two visiting Palestinians from the Fatah Revolutionary Council inside the Swedish Parliament. The two guests were known for having publicly praised terrorist acts and spreading Jew-hatred.

If you think any of this harmed the party, you would be wrong: The scandals actually served to boost it: they gained the party six new seats in the election.

There is a name for what just happened in Sweden: Ballot box jihad. It is an Islamist tactic, favored by the Muslim Brotherhood.

"In the Middle East, democracy and elections are various means to one end: the establishment of a decidedly undemocratic form of law - Islamic, or Sharia Law," Raymond Ibrahim wrote about the Egyptian elections in 2012, which, for a brief moment, brought the Muslim Brotherhood to power.

"An Egyptian cleric, Dr. Talat Zahran, proclaimed that it is 'obligatory to cheat at elections, a beautiful thing' -- meaning that voting is a tool, an instrument, the only value of which is to empower Sharia. Another cleric, Hazim Shuman... issued a fatwa that likened voting for Islamist candidates to a 'jihad,' or a holy war, adding that paradise awaits whoever is 'martyred' during the electoral campaign."

The same tactic applies to the Islamist project of nonviolent conquest of the West. The late spiritual leader of the Muslim Brotherhood, Yusuf al-Qaradawi, speaking in Qatar in 2007, said that "Islam will conquer Europe without resorting to the sword or fighting. The conquest will be through da'wah [proselytizing] and ideology."

Ballot box jihad is part of achieving this conquest. Sameh Egyptson, an Egyptian-Swedish academic, writer and expert on political Islam, has been warning about Islamist infiltration of the political system for years. He has recently cautioned, among other things, against clan voting as an erosion of democracy. Clan voting is when extended families and even entire ethnic communities vote collectively as a bloc for the same candidate or party. Although clan voting as such is not illegal in Sweden, two newly elected Muslim candidates from the Left Party are already suspected of electoral fraud, including bribing or unduly influencing voters to vote for them and pre-marking their own names on ballots.

This outcome is possibly what many socialists have been planning all along: To stay in power forever by importing new voters from the Third World.

Sweden is a warning, not only to the rest of Europe but to the Western world at large.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Tyler Durden Wed, 10/07/2026 - 05:00