GGMA Markets Briefing: Oil Climbs on Iran Strike Report as Fed Minutes Point to Another Rise

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Here is a brief summary of today’s Markets Briefing: Oil Climbs on Iran Strike Report as Fed Minutes Point to Another Rise

·       Oil climbed after a report that the White House asked the Pentagon for Iran strike options before the midterms, as a hurricane shut in US Gulf output and tanker attacks spread across the Gulf.

·       Fed minutes showed every official backed September's rise and most expect another by year-end, and US households' near-term inflation expectations rose.

·       Japan's 30-year bond auction drew firm demand and Japanese stocks fell for a second day, as the BoJ raised its view of two regions and Tokyo readied new BoJ rate futures.

·       Chinese stocks slipped as markets reopened after a soft Golden Week, and the EU opened tougher trade talks in Beijing.

·       France said its bond issuance strategy is unchanged after its finance minister floated more short-term debt, and Marine Le Pen unveiled a blueprint pairing deficit cuts with a lower retirement age.

·       Samsung flagged a record quarterly profit on AI memory demand, and Broadcom, Oracle and SpaceX lined up blockbuster debt deals to pay for AI chips.

Today's Macro Roadmap: US jobless claims at 14:30 CET, the ECB's account of its September meeting, and Bailey, Lane and Waller among the central-bank speakers.

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GGMA Markets Briefing: Oil Climbs on Iran Strike Report as Fed Minutes Point to Another Rise

Oil climbed and Asian stocks slipped after a report that the White House has asked the Pentagon for strike options against Iran that could be used before next month's midterm elections (The Atlantic) (BBG). Brent rose 2.2% to 102.38 dollars as a hurricane shut in about a quarter of US Gulf crude output and the Houthis struck two Saudi airports (BBG) (Japan Times). Treasuries fell, and US equity-index futures were little changed after Wall Street slipped yesterday from Tuesday's records (BBG). Minutes of the Fed's September meeting, released yesterday evening, showed that all officials backed the rise and that most expect another by year-end (BBG).

In stocks, Nikkei futures fell 1.1% to 69,600 as Japanese shares dropped for a second day, with changes to Topix weightings prompting selling (BBG). ASX 200 futures fell 0.8% to 8,691 and MSCI emerging-markets futures 0.4% to 1,716. Chinese stocks fell as mainland markets reopened after the Golden Week holiday, and the chip-heavy STAR 50 index slid to a near six-month low as early data showed muted holiday spending (BBG). S&P 500 futures fell 0.3% yesterday, Nasdaq 100 futures 0.3% and Dow futures 0.7%, and they were little changed this morning at 7,850, 31,396 and 51,388. Samsung Electronics estimated third-quarter operating profit at a record 107.4 trillion won, the first above 100 trillion won for any technology company (Reuters), but its shares slipped (BBG) and remain about 25% below June's record (Reuters). Galaxy Digital founder Michael Novogratz called AI "the biggest bubble of our lifetime" yet told investors to buy anyway (BBG).

Regarding the Fed, the minutes showed that all participants supported September's quarter-point rise and that most assessed another increase would likely be appropriate by year-end (Federal Reserve). Many said a higher path would be prudent on risk-management grounds, several viewed policy as not restrictive or only mildly restrictive, and several said the scale and pace of the AI build-out had continued to surprise to the upside (Federal Reserve). A few suggested strengthening the Fed's strategy, communications and tools for addressing dysfunction in the Treasury market (Federal Reserve) (LS). Investors' odds of an October rise have since fallen to around a fifth from about 70% after the decision, following remarks by New York Fed President John Williams and Vice Chair Philip Jefferson (BBG). The New York Fed's consumer survey showed one-year inflation expectations rising to 3.9% in September from 3.58%, above the 3.64% consensus and the highest since May 2023 (New York Fed) (CNBC) (Reuters).

In the euro area, Governing Council member Primož Dolenc said current interest rates give the ECB enough flexibility to respond to future shocks, and that the Transmission Protection Instrument has precisely defined conditions and has never been used (BBG).

In Japan, the Bank of Japan's quarterly regional economic report raised its assessment for two of the nine regions, Tohoku and Shikoku, and left the other seven unchanged, with all regions recovering or picking up (BoJ). It said firms in many regions are passing on costs from the Middle East conflict and the weak yen (LS). Prime Minister Sanae Takaichi said Japan is no longer in deflation and that a consumption-tax cut would reduce revenue by 4.3 trillion yen (LS). The Tokyo Financial Exchange will launch futures tied to the BoJ's overnight call rate this month so traders can position for moves between policy meetings (Reuters).

In Peru, the central bank unexpectedly held its key rate at 4.25%, against a 4.50% consensus, as it sees the recent jump in inflation as temporary (BBG).

Currently, STIR traders price 5 basis points of tightening for the Fed's October meeting, a 19% probability of a rate rise, and 25 basis points cumulatively by December. For the ECB, markets price 3 basis points for the October meeting, a 12% probability, and 20 basis points by December. For the Bank of Japan, markets price 3 basis points for the October meeting, an 11% probability, and 23 basis points by December. For the Bank of England, markets price 21 basis points for the November meeting, an 82% probability of a rate rise, and 34 basis points by December. For the Reserve Bank of Australia, markets price 7 basis points for the November meeting, a 28% probability, and 11 basis points by December.

In currencies, the dollar held Wednesday's gains (BBG), with the dollar index little changed at 102.24. The yen weakened 0.1% against the dollar to 158.22. The minutes confirmed that the New York Fed intervened to support the yen in late July as fiscal agent for the US Treasury, using Treasury funds rather than the Fed's own portfolio, and Japan spent a record 15.4 trillion yen on intervention in the month to 26 August (BBG). The euro rose 0.1% against the dollar to 1.1206 as traders watched France's fiscal strains (BBG), and sterling was little changed at 1.321 against the dollar. The Australian dollar eased 0.1% against the US dollar to 0.6956, and the won firmed 0.1% to 1,337.76 per dollar. The People's Bank of China set a slightly weaker daily reference rate for the yuan (LS).

In bonds, Treasuries fell as oil climbed (BBG). The ten-year yield rose 2.1 basis points to 5.31% and the 30-year 2.6 basis points to 5.70%, and the two-year was little changed at 4.78%, up 0.8 basis point. In Japan, the ten-year yield fell 2.2 basis points to 3.08% and the two-year 0.8 basis point to 1.94%, after a 30-year auction drew a bid-to-cover ratio of 3.88, up from 3.79 at the previous sale, at a high yield of 4.12% (BBG). Australia's ten-year yield fell 2.3 basis points to 5.38% and the two-year 3.4 basis points to 4.91%. In France, the finance ministry said it is not changing its bond-issuance strategy (BBG), after Finance Minister Roland Lescure said France is considering issuing more short-term debt as demand for long bonds weakens (WSJ). The French ten-year spread over Germany closed 12 basis points wider on Wednesday (BBG), and Marine Le Pen, who leads the presidential polls, unveiled a blueprint that pairs deficit cuts with a lower retirement age and higher taxes on multinationals (BBG). Chinese government bond yields have fallen this year, against the global trend, as the People's Bank of China has been a net buyer (WSJ). A Move proxy rose 1.0 point to 103.7.

In commodities, Brent rose 2.2% to 102.38 dollars and WTI 1.9% to 89.93 dollars, as attacks on tankers in the Gulf and the Strait of Hormuz ran at their highest weekly pace since the war began (Reuters). A tanker was struck by several projectiles about 90 kilometres north of Qatar, with casualties reported, the first reported attack in the western half of the Gulf in weeks (Dpa). US Central Command said 20 million barrels of crude were flowing through Hormuz, roughly the pre-war daily volume (BBG), and hiring a supertanker to carry US crude to Asia now costs $77 million, against a 2025 average of $9.2 million (BBG). Hurricane Isaias, the Atlantic season's first, has shut in about 25% of US Gulf crude output and 16% of gas production, with landfall expected east of the main energy assets late Friday or early Saturday (BBG), and Shell and Chevron curtailed operations (Reuters). US crude stocks fell 3.2 million barrels last week against expectations of a build, and distillate stocks are 12% below their five-year average (WSJ). US crude production rose to a record for a second week (LS). The International Energy Agency agreed to speed up the release of stocks pledged in March and to prioritise diesel, with about 100 million barrels still to reach the market (Reuters), but EU governments will release fresh stocks only after an IEA assessment (Politico). Gold rose 0.6% to 4,134 dollars as the dollar's rally stalled (Reuters), and China's central bank extended its gold buying to a 23rd month (BBG). Copper rose 1.1% as Chinese traders returned from the holiday and a strike at Antofagasta's Centinela mine threatened output (BBG). Bitcoin fell 1.0% to 82,571 dollars and Ethereum 0.4% to 2,562 dollars. Ethereum Foundation researcher Justin Drake warned that AI could break the cryptography that secures crypto wallets before quantum computers do (Decrypt).

In geopolitics, the Houthis said they attacked King Khalid International Airport in Riyadh again on Thursday with a ballistic missile, without Saudi confirmation, after strikes on the Riyadh and Abha airports killed three people (LS) (Japan Times). US forces have been ordered to prepare for a possible resumption of major combat operations in Iran as President Donald Trump weighs the timing, and Trump said he does not think he wants to make a deal with Iran (LS). The naval arm of Iran's Revolutionary Guards claimed full control of shipping in the Gulf and the Strait of Hormuz (LS). EU trade chief Maroš Šefčovič opens talks in Beijing as the Commission prepares safeguards on imports of Chinese hybrid cars, and France and Germany have proposed powers that could cut China off from the single market (BBG).

In corporate news, Broadcom is working to arrange more than $50bn of financing for OpenAI's custom chips, with Apollo and Blackstone among the lenders approached, and Oracle and SpaceX are seeking chip financings of their own (WSJ). One person familiar with the talks put Broadcom's likely debt at around $30bn (BBG). Amazon cut fewer than 1,000 corporate jobs, mainly in its Stores business, as it plans record spending of $220bn on AI infrastructure (NDTV Profit). SK Hynix's Solidigm has picked lead banks for a US initial public offering next year (BBG).

In other news, this article caught my eye: Young bankers will manage AI agents from day one, Goldman's Sneader says (BBG). Goldman Sachs's Asia Pacific head Kevin Sneader told the Milken Institute Asia Summit that new hires now oversee AI agents from the start, which leaves the future of middle managers open.

Data and the day ahead: Japan's current-account surplus widened to 4.06 trillion yen in August from 2.99 trillion, above the 3.17 trillion consensus, and foreign investors bought a net 2.19 trillion yen of Japanese stocks last week after selling 354.2 billion yen the week before. The Economy Watchers current-conditions index rose to 47.0 in September from 46.4, above the 46.7 consensus, but the outlook index fell to 47.4 from 48.3, below the 48.5 consensus. Australian consumers' inflation expectations rose to 5.3% in October from 4.9% (Trading Economics). In the UK, the RICS house-price balance fell to -32 in September from -28, below the -30 consensus, as higher rate expectations weighed on buyers (RICS), and permanent staff placements rose at their fastest pace in four years, with the KPMG/REC index at 50.9 from 50.5 (Reuters). Still to come: US initial jobless claims at 14:30 CET, where consensus looks for 200k from 197k, with continuing claims seen at 1.70 million from 1.701 million. The ECB publishes the account of its September meeting at 13:30 CET and the Treasury sells $22bn of 30-year bonds at 19:00 CET. Speakers include the SNB's Martin at 10:05 CET, the Fed's Waller at 10:30, Kashkari at 16:40 and Musalem at 19:40 CET, the ECB's Lane at 12:00 CET, the BoE's Pill at 11:00, Greene at 11:15, Governor Bailey at 14:15 and Lombardelli at 15:00 CET, and the Riksbank's Thedéen at 15:35 CET.

Time Stamp: 8 October 2026, 07:08 CET