Geopolitical risks in the Gulf pushed Brent crude futures toward $100 a barrel overnight as Yemen’s Iranian-backed Houthi rebels launched new attacks on Saudi cities and economic infrastructure.

At 7:45 a.m. ET, the US diesel crack spread remained above $101 a barrel as severe tightness across the world’s refined-product markets continued, with a late-summer squeeze threatening to extend into fall and winter (twin crisis for Europe). 

Notably, the global industrial economy runs on usable fuels, particularly diesel, making refinery output and product availability super critical. Persistent disruptions through the Strait of Hormuz, Russian energy export restrictions, and Ukrainian drone strikes on Russian refineries have compounded the squeeze into crisis territory, leaving fuel markets vulnerable to further supply shocks.

Vitol CEO Russell Hardy was quoted by Bloomberg earlier today as saying the refined-product market is in turmoil.

Hardy, who runs one of the world’s largest energy traders, said that even as recovering tanker shipments through the Hormuz chokepoint ease pressure on crude supply, limited refining capacity leaves little room for further disruptions.

“It’s pretty, pretty tight and inflexible out there as far as the market is concerned,” Hardy told an industry conference in Singapore on Tuesday. He noted that product stockpiles are near their lows and continue to slide. 

Hardy warned that global oil-product stockpiles are “still drawing,” adding, “We’re still not running enough refining capacity to prevent those draws, and we keep eating into the surplus that exists around the world.”

The strain is particularly visible in the US. Just go to any gas station, and you can see the wide gap between 87-octane gasoline and diesel prices. Last week, diesel prices hit a record high nationwide.

Also in the US, distillate inventories, including diesel, are at their lowest seasonal level in at least 25 years despite high refinery utilization.

In Europe, gasoil futures have more than doubled this year, while Brent rose as much as 2.3% on Tuesday to $99.20 a barrel.

Vitol estimates Hormuz tanker flows stand around 10 million barrels a day, but Hardy cautioned that this volume “isn’t guaranteed to get out every day.” He said, “It depends on ships, it depends on insurance, it depends on captains and crew being in to do that difficult job.”

However, Goldman commodities strategist Yulia Zhestkova Grigsby and her team wrote in a note last week (read here) that Hormuz tanker flows were between 15 million and 16 million barrels per day, accounting for ships that switch off their Automatic Identification Systems to avoid detection by Iran.

Also at the conference, Mark Senn, senior vice president of global trading at US processor Phillips 66, warned, “We came into this shock with very little flex” in the refining system, adding that the US system is running at full capacity.

US futures fell as Brent crude approached $100 a barrel, chasing Shanghai crude which is now trading above $102, reinforcing expectations that central banks will have to raise interest rates to contain inflation while a key CPI print looms on Friday. As of 8:15am, S&P 500 futures were 0.3% lower while Nasdaq futures were fractionally negative after reversing an earlier rise. In premarket trading, Mag 7 stocks are mostly lower:

Stocks in Europe and Asia were also weaker. Brent traded around $99 after Saudi Arabia said operations at facilities in the kingdom’s south were halted by attacks. As discussed here, strong Chinese purchases added to tightness in oil markets. The dollar gained as the yen erased gains of as much as 1% deriving support from expectations of more restrictive Bank of Japan policy, which had pushed the USDJPY as low as 152, levels last seen in February.  Treasuries slipped ahead of a $58 billion auction of three-year notes. Today’s US economic data slate includes August NY Fed 1-year inflation expectations (11 a.m.) and July consumer credit (3 p.m.). Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting.

In premarket trading, Mag 7 stocks are mostly lower: Nvidia +0.3%, Tesla +0.2%, Alphabet -0.7%, Apple -0.4%, Amazon -0.9%, Microsoft -0.8%, Meta Platforms -0.5%

• Best Buy (BBY) slips 2% after DA Davidson cut the recommendation on the consumer electronics retailer to neutral, citing the stock’s valuation following a 35% year-to-date gain.
• Bloom Energy (BE) rises 6% and Everpure (P) gains 2% after S&P Dow Jones Indices said the companies will join the S&P 500 Index.
• Boston Scientific (BSX) slips 2% after the company said that the cyber attack that recently affected operations is likely to have a material impact on third quarter and fiscal 2026 results.
• Herbalife (HLF) rises 7% after the maker of dietary supplements announced a $250 million share buyback.
• Ionis Pharmaceuticals (IONS) falls 10% and Amgen (AMGN) slumps 5% after Novartis AG said its heart medication, pelacarsen, failed in a final-stage study.
• Pharvaris (PHVS) soars 25% after a Phase 3 trial of its deucrictibant extended-release tablet for the prevention of hereditary angioedema attacks met its primary and secondary endpoints.
• Rigetti Computing (RGTI) rises 5% after the quantum computing firm signed a $100 million pact with the US Department of Commerce to accelerate superconducting quantum computing R&D.
• Roivant (ROIV) gains 20% after the drugmaker said a mid-stage study of its inhaled drug, mosliciguat, met its primary endpoint in the treatment for a lung disease.
• Sigma Lithium (SGML) drops 16% after a Brazilian court ordered the suspension of all environmental permits for an operating subsidiary of the company and the complete halt of mining activities for the firm’s Grota do Cirilo lithium project.
• Sweetgreen (SG) is up 5% after KeyBanc raised its recommendation on the salad restaurant chain to overweight, calling it a compelling turnaround opportunity.

In other corporate news, Brookfield landed a $1 billion commitment from the UK’s Nuclear Liabilities Fund to invest across several strategies, as the New York-based firm builds a new division that packages and sells multi-asset portfolios. Volkswagen is considering offloading motorcycle manufacturer Ducati as part of a sweeping overhaul of its portfolio. Novartis shares plunged after its del-desiran treatment for a muscle-wasting disease failed to meet the primary endpoint in a phase 3 trial; it’s the third drug setback in a week for the Swiss drugmaker.

Fear of upheaval in the Middle East is driving markets in the early part of a week that builds toward Friday’s US inflation print, data that may be decisive in whether the Federal Reserve raises rates or holds them steady this month. September hikes by the European Central Bank and BOJ are largely priced in.

“We are likely to be in some sort of period of digestion, because we are going through a pretty meaningful adjustment in terms of central bank policy around the world,” Anastasia Amoroso at Partners Group told Bloomberg TV. “So we might give a little bit of those gains back or at least some consolidation here.”

Stock futures are lower as traders return to their desks after the Labor Day holiday, with markets facing multiple tests including PPI and CPI prints, Oracle earnings and a conference season that includes tech events on both coasts. On top of that, a flare-up in Middle East hostilities and an escalating trade war between the US and Canada are adding risk.

As BBG notes, stocks have been trading sideways for a month, caught between strong earnings and mounting macro risks. Events like next week’s Fed decision carry binary outcomes that argue for some protection, according to today’s Taking Stock column. Fed officials have made it clear that Friday’s inflation print will be key for rates. While the bond market sees a 60% chance of a hike next week, such a move isn’t fully priced in until December. In fact, Fed funds futures signal the most uncertainty in years.

The tech trade is also in focus, with traders looking to Oracle earnings and conference comments for clues on current dynamics within the sector. Of note, software implied volatility has firmed up recently versus other areas of the tech complex. The implied volatility ratio of software vs semiconductors has been unstable this year as option volumes and open interest have exploded in both groups.

In AI, there’s been a rapid change in narrative around AGI, or Artificial General Intelligence. OpenAI’s rollout of GPT-6 on Thursday prompted Nvidia’s Jensen Huang to proclaim that “AGI has arrived,” sparking a renewed melt-up in Asian tech stocks and especially SoftBank which is a big backer of OpenAi. Still, the definition of AGI is nebulous, and not everyone is convinced. JonesTrading chief strategist Mike O’Rourke noted that the whole AGI conversation “was started by self-interested promotional individuals,” which damages credibility.

Elsewhere, ByteDance is readying an AI model geared for real-time spatial video generation, taking on Meta and Alphabet. An experimental lung disease drug developed using AI showed promise in reversing biological signs of aging. Anthropic is said to have walked away from $6 billion Decart purchase.

Global stocks may now be poised for a period of consolidation given the outlook for tightening, said Anastasia Amoroso, chief investment strategist at Partners Group. “We are likely to be in some sort of period of digestion, because we are going through a pretty meaningful adjustment in terms of central bank policy around the world,” Anastasia Amoroso at Partners Group told Bloomberg TV. “So we might give a little bit of those gains back or at least some consolidation here.”

Other assets have been active, with Yen strength triggering stop-loss orders, volatility gauges ticking up and copper hitting all-time highs. Oil prices are rising and Brent is grinding closer to $100/bbl after attacks halted several facilities in Saudi Arabia. That sent global bonds, European stocks, US futures and gold lower. German 10-year yields hit the highest since 2011, a UK 30-year sale is set for the highest borrowing costs since at least 1998, and Amazon has mandated banks for a four-part sterling-denominated sale.

Copper’s rally added to the inflationary pressure from commodities. The metal hit a record for a second straight session, with constrained near-term supplies and expectations of US tariffs on imports of refined metal buoying prices.

In geopolitics, Canada imposed tariffs of 15% to 50% on hundreds of products from the US, risking a wider trade war.  Trump threatened to bar Bombardier Jets, while the manufacturer noted it creates tens of thousands of US jobs.

The Stoxx 600 is falling by 0.4%, with health care the underperformer owing to a big drop for Swiss pharma group Novartis. Banks, insurance and tech stocks are weaker too. 

Asian stocks fell, reversing earlier gains, as inflationary concerns reemerged after oil prices neared the $100 a barrel level. The MSCI Asia Pacific Index retreated 0.9% after climbing as much as 0.6% earlier in the session. Japan’s Topix led declines as a sharp rally in the yen put downward pressure on exporters. South Korea’s Kospi closed lower, erasing gains of as much as 2.5% led by the tech sector. Stocks also fell in Hong Kong, Singapore, India and Australia.

“The catalyst for the turnaround is the news coming out of the Middle East that the Houthis have targeted more Saudi oil infrastructure,” said Tony Sycamore, analyst at IG Australia. “It’s all about oil being back in the driver’s seat.” There’s also fear of a “potential rate hike in America that’s kind of really pushing these Asian stocks,” said Sycamore.

In FX, the Bloomberg Dollar Spot Index is little changed while the yen has continued its rally to put its 2026 high in sight. USDJPY last traded around 154, erasing earlier gains having hit a session low of 152.89.

In rates, Treasuries hold small losses led by long-end tenors as US trading resumes after Monday’s holiday, pressured by Brent crude oil approaching $100 a barrel after Saudi Arabia said operations at several energy facilities were halted by fresh attacks. Supply considerations also are in play, including the 3-year note auction and anticipated seasonal rebound in corporate new-issue activity. Also, details of Thursday’s expanded Treasury buyback in the 10- to 20-year bucket are slated to be announced Wednesday, US long-end yields are about 2bp higher on the day with 2s10s and 5s30s spreads wider by around half a basis point. 10-year, higher by 1.6bp near 4.8%, lags bunds and gilts in the sector by 3bp and 2bp. Treasury issuance resumes with $58 billion 3-year new-issue auction at 1 p.m. New York time; $39 billion 10-year note and $22 billion 30-year bond reopenings follow on Wednesday and Thursday. WI 3-year yield near 4.47% is ~18bp cheaper than last month’s sale, which stopped through by half a basis point, and exceeds 3-year auction results since June 2024. IG dollar issuance slate already includes a handful of offerings; dealers expect a cumulative $70 billion this week and $215 billion this month, including at least one jumbo and capital-raising for AI data infrastructure.

Stretched positioning in bonds means that a short-term pullback in yields may be on the cards soon, noted Mohit Kumar at Jefferies International. A trigger could come from Friday’s inflation data or next week’s Fed decision, he said.

“If we do get a benign CPI print, which is our view, we could see a round of position covering, which would lead to a rates rally,” Kumar said. “Any pullback in rates is likely to support risky assets.”

In commodities, oil prices are rising and Brent is grinding closer to $100/bbl after attacks halted several facilities in Saudi Arabia. That sent global bonds, European stocks, US futures and gold lower. German 10-year yields hit the highest since 2011, a UK 30-year sale is set for the highest borrowing costs since at least 1998, and Amazon has mandated banks for a four-part sterling-denominated sale. WTI crude oil futures trade are up 2.5%, near session highs. Gold erased its rise too as oil prices rallied, falling below $4,400/oz.

Today’s US economic data slate includes August NY Fed 1-year inflation expectations (11 a.m.) and July consumer credit (3 p.m.). Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting

Market Snapshot

Top Overnight News

• The war in Iran has now cost U.S. consumers $100 billion in higher energy prices, and the bill is rising another $1 million about every two minutes, per a real-time estimate from Brown University as of Monday morning. Inflation shows up across the entire economy, and the recent surge in diesel prices threatens to have a dramatic impact on freight and travel in the weeks and months to come. Axios
• Yemen’s Tehran-backed Houthis attacked four cities in the south of U.S. ally Saudi Arabia on Tuesday, wounding more than 70 people and setting oil installations ablaze in what appeared to be a major expansion of the six-month-old Middle East war. They used ‌drones and missiles to strike a Saudi airbase in the southern city of Khamis Mushait, and targets belonging to Saudi Arabia’s state oil company in nearby Abha, Najran on the Yemeni border and Jazan, a major Red Sea port city that houses a large refinery and power plant. Reuters
• In offices across the military and in the intelligence community, there have been recent quiet discussions about cutting the number of people and facilities typically stationed in the Middle East if the Trump administration succeeds in ending the Iran conflict. CNN
• New Canadian tariffs targeting roughly $20 billion in U.S. imports officially snapped into place on Tuesday, the latest escalation in an increasingly costly trade war that has ensnarled two longtime allies. NYT
• Japanese workers’ nominal wages rose at the fastest pace in nearly three decades on the back of strong corporate earnings and a tight labor market, in data likely to keep the Bank of Japan on course for further monetary tightening. BBG
• Two hawks on the Bank of Japan’s monetary policy board are calling more strongly for the central bank to accelerate its interest rate increases, pushing it to do more to rein in inflation before their terms end next July. Nikkei
• China’s export growth accelerated in August, swelling its trade surplus near $806 billion for the year. Its surplus with the US surged almost 44% to more than $29 billion. BBG
• China’s car exports stayed robust in August as BYD and ‌other automakers shipped a record number of vehicles overseas, in sharp contrast to a sluggish domestic market where their sales fell for the 11th month in a row. Passenger vehicle exports jumped 77.5% from a year earlier to 894,000 units in August, easing from an increase of 88.2% a month earlier. Reuters.
• Goldman raised its oil price outlook by $5 a barrel, forecasting Brent at $85 by December and $80 in 2027 on expectations Middle East shipping disruptions will persist. BBG

Labor Day Recap

• On the geopolitical front, the US launched strikes against three Iranian crude oil tankers on Saturday in retaliation for the IRGC targeting US Navy warships with ballistic missiles. Iran’s navy also said it targeted three oil tankers that were travelling through unauthorised routes in the Strait of Hormuz and three additional US vessels in other areas. Since the weekend, the Iranian Foreign Ministry Spokesperson said a deal with Oman regarding the Strait of Hormuz will be registered soon, while the FT reported that Saudi Aramco’s oil facilities in Jizan were hit, which caused upside in energy benchmarks.
• European bourses were lower across the board, given the upside seen in energy benchmarks.
• In the FX space, G10s were firmer against the greenback, with the JPY the clear outperformer, while the EUR was steady despite the AfD victory in Saxony-Anholt.
• In the metals space, spot gold was choppy but was helped amid data from China that the PBoC boosted its gold reserves for a 22nd straight month.

A more detailed look at global markets coutesy of Newsquawk

APAC stocks traded mixed in the absence of a lead from Wall Street and as attention turned to several data releases from the region, including Japanese GDP and Chinese trade data. ASX 200 underperformed with sentiment not helped by a deterioration in the Westpac Consumer Sentiment and NAB Business Confidence surveys. Nikkei 225 was choppy amid recent currency strength and as the latest data, including upward GDP revisions and hot Labour Cash Earnings, solidified the case for a BoJ rate hike next week.
KOSPI outperformed on tech momentum and after South Korean GDP matched initial estimates. Hang Seng and Shanghai Comp were mixed as the Hong Kong benchmark was dragged lower by weakness in the local tech and biopharma stocks, while the mainland was kept afloat as participants digested the ultimately mixed Chinese trade data, in which Exports and Imports accelerated and continued to show strong double-digit percentage growth, but missed estimates.

Top Asian News

• Japanese Finance Minister Katayama said they will bolster efforts to secure funding for a consumption tax cut on food and will communicate fully with markets and the public to gain credibility in their fiscal policy. Furthermore, she said they won’t comment on specific FX levels and there is no change to their forex stance since the Japan-US joint intervention, while they will closely communicate with the US to achieve orderly forex markets.
• Japan LDP policy chief Kobayashi will retain post and Japan’s Ishin party seeks a special mission post in reshuffle, according to Japanese press.

European bourses are softer across the board, Euro Stoxx 50 -0.4%, with clear underperformance in the SMI, -1.4% (see Novartis below). The disappointing risk tone comes amid upside in energy prices. The Saudi Energy Minister said a number of energy facilities and utilities were hit, resulting in operations being temporarily halted. This was later confirmed in a Yemeni Houthis statement.
Sectors point to a mixed picture. Food, Beverages & Tobacco is the clear outperformer, with Optimised Personal Care and Chemicals rounding out the top 3 sector gainers. On the other hand, Health Care is the laggard, with Banks and Insurance completing the underperformers. Another setback for Novartis (-8.9%) this morning, after it announced that its del-desiran failed to meet the primary endpoints in its late-stage trial. Other key movers: Computacenter (-0.2%), strong H1 metrics and raises its FY26 outlook; Sandoz (+1.8%), confirms its 2028 outlook and set out new 2030 guidance and targets 100 biosimilars by 2040; Infineon (-3.6%), downgraded to equal weight at Morgan Stanley; Schneider Electric (-0.2%), downgraded to neutral at Santander.

Top European News

• German Trade Balance (Jul) 21.3B vs. Exp. 16B (Prev. 15.4B).
• German Exports (Jul MM) -0.8% vs. Exp. 0% (Prev. 0.9%).
• German Imports (Jul MM) -5.7% (Prev. 4.4%).
• French Trade Balance (Jul) -6.7B vs. Exp. -6B (Prev. -5.8B).
• UK BRC Retail Sales Monitor (Aug YY) 0.5% vs. Exp. 1.2% (Prev. 1.0%).

FX

• Snapshot: G10s are mixed against the USD. JPY continues to extend on recent strength, whilst the Kiwi is the clear underperformer this morning amidst the downbeat risk tone. Also factoring in is the mixed Chinese Trade data, which rose from the prior, albeit less than consensus.
• DXY is incrementally firmer this morning, and holds within a 98.71-99.00 range. Overnight, the USD was mildly pressured, but then picked up in early European trade alongside a pick-up in yields. US-specific news flow has been lacking as participants return from holiday, but focus will be on trade updates between the US and Canada. On that note, Canada’s retaliatory tariffs against US goods took effect, as scheduled. The Loonie is a touch firmer vs USD this morning, but likely benefiting from the surge in energy prices rather than any trade-related optimism.
• The Yen story remains much more pertinent for the USD. Recent thin liquidity (due to Labor Day) has allowed the JPY to take more ground against the USD, with USD/JPY briefly dipping below the 153.00 mark. The pair is now trading at levels not seen since early February of this year. As mentioned in Monday’s FX update, the recent hawkish BoJ repricing, potential intervention/rate check, and increased possibility of larger GPIF purchases have lifted the JPY over the past couple of weeks.
• Also helping the outperformance today is the firmer-than-expected Labour Cash Earnings and an upward Q2 GDP revision. There were also comments from Japanese Finance Minister Katayama, who stated there was no change to their forex stance since the Japan-US joint intervention and that they will closely communicate with the US to achieve orderly forex markets.
• EUR is a touch lower this morning, pressured by the ongoing strength in the energy space. The ECB will hike rates by 25bps this Thursday, though the outlook beyond September remains more uncertain. If oil prices continue to lift energy prices, and second-round effects begin to filter through into the Eurozone economy, another hike in December could be likely. The single currency currently holds around 1.1611, with the high of the day a couple pips above its 200-DMA (1.1633).

Fixed Income

• Despite some slight respite being found overnight, fixed income is back in the red as energy extends to fresh highs and Brent surpasses the USD 99.0/bbl handle, bringing a return back to USD 100/bbl into view. As such, yields are bid across the globe and the curve, with the UK feeling this most keenly given its energy sensitivity and after AMZN filing for GBP-denominated issuance.
• Continuing with Gilts, the benchmark opened higher by around 13 ticks, taking initial respite from the brief overnight pause and potentially reports that PM Burnham is set to meet with businesses next week to reassure them into the budget. However, that swiftly faded with Gilts now down by over 10 ticks and at an 85.56 base following the Amazon update. For the curve, the 2yr is 4bps higher at 4.61%, but off the 4.69% recent peak from last week. While the 10yr is c. 3bps higher, and similarly off last week’s 5.29% near 20yr peak.
• Bunds lower, by about 10 ticks at the time of writing and just off worst in 121.65-95 confines. Pressure a function of the discussed energy upside on Saudi and Houthi updates this morning (see Commodities/headline feed). For Germany, the docket features Green supply which should pass without issue. More pertinently, we continue to await a concrete response from Chancellor Merz on the strength of AfD, something that will become increasingly acute into more regional elections this month. Before that though, the ECB looms on Thursday, and while a 25bps hike is all but priced, the market will be keenly attentive to any dovish/hawkish signal from the statement/forecasts/presser, particularly at the short-end of the curve.
• USTs are also under pressure on the resumption of cash trade after the US holiday on Monday. Currently, it finds itself lower by a handful of ticks and at a 107-09+ base, approaching Monday’s 107-08 trough. The docket today features supply and updates from President Trump as the scheduled highlights; though, geopolitics may well dominate.
• Amazon (AMZN) to sell GBP-denominated bonds; 3yr, 6yr, 12yr & 19yr.
• Germany sells EUR 1.374bln vs exp. 1.5bln 2.30% 2033 and 2.60% 2041 Green Bund.
• Japan sells JPY 1.9tln 5-year JGBs; b/c 3.42x (prev. 4.15x), average yield 2.239% (prev. 2.020%), Tail in price 0.04 (prev. 0.02).
• The Netherlands sells EUR 3bln vs exp. 2.5-3bln 2.75% 2036 DSL: Avg. yield 3.463% (prev. 3.206%).
• Australia sells AUD 400mln in 5.00% June 2036 Bonds: b/c 5.76x, avg. yield 5.1874%.

Commodities

• Firmer trade across energy once again as geopolitical tensions remain high, and with hardly any signs of peace between the US and Iran (more details below). WTI Oct resides towards the top of a USD 90.87-94.73/bbl range (vs Friday’s USD 88.72-92.17/bbl band), while Brent Nov sits towards the upper end of a USD 96.78-99.46/bbl range (vs yesterday’s USD 95.97-98.06/bbl band). Dutch TTF front-month resides just above the EUR 74/MWh mark after finding earlier support at EUR 73/MWh and then resistance at EUR 74.50/MWh.
• Precious metals are subdued as higher energy prices keep the USD underpinned. Spot gold resides towards the bottom of a USD 4,388-4,443/oz range (vs yesterday’s USD 4,381-4,435/oz band), while spot silver sits towards the lower end of a USD 65.69-67.19/oz range (vs yesterday’s USD 65.40-66.74/oz band).
• Base metals are mostly firmer despite the aforementioned crude prices and effect on the USD, with supply concerns and tariff fears cited by desks, alongside ongoing hopes of Chinese stimulus. 3M LME copper resides near record highs in a current USD 14.51k-14.64k/t range.
• In terms of the main geopolitical updates, Iran warned that economic warfare will be met with a maritime exclusion zone from the Persian Gulf to the blockade perimeter, and said it has the ability to strike ships participating in the US blockade. Further, Yemeni forces launched ballistic missile and drone attacks on targets in Saudi Arabia, including around Khamis Mushait, Abha airport and King Khalid Airbase. Houthi spokesperson warned that further attacks on Yemen will be met with broader strikes on Saudi Arabia. Saudi Energy Minister confirmed that several energy facilities and utilities were hit; are temporarily halting some operations. Further, Tasnim analysis suggests that recent Iranian commentary indicates that Iran is considering expanding the geographic scope of its maritime confrontation into the northern Indian Ocean.
• Iraqi Oil Minister said they will soon announce refinery development and construction opportunities for investors.
• Russia’s Kremlin spokesperson said cooperation between India and Russia on rare earth explorations are being discussed.

Trade/Tariffs

• Canada’s retaliatory tariffs against US goods took effect, as scheduled.
• US President Trump called for a stop to US sales of Canada’s Bombardier aircraft.
• Japanese Chief Cabinet Secretary Kihara said China’s anti-dumping move targeting Japan defies practice and they will act to prevent an undue impact from China’s actions.

Central Banks

• RBA’s Hauser said that the RBA stands ready to raise rates again if needed, the question is whether more is needed on interest rates.
• RBA’s Assistant Governor Hunter said the board is concerned about inflation and has low tolerance, adding the board may have to raise rates if there is a sense inflation will be stronger.

Geopolitics: Middle East

• US President Trump posted, “Oil prices will drop precipitously, like everything else is dropping (but more!), when we WIN the war with Iran. Three Dollars a gallon, but ultimately, below Two Dollars a gallon. It will all happen quickly, and Iran will never have a Nuclear Weapon. MAGA!”
• Iranian President Pezeshkian said Iran has always opposed war but will continue to resist aggression with full force until the aggressors are made to regret their actions.
• Iran’s top national security official Rezaei said Washington has received a clear warning from Iran’s new missiles and that economic warfare will be met with a maritime exclusion zone across the Persian Gulf to the blockade perimeter, while he added that the operational posture toward US warships and bases has been fundamentally recalibrated.
• Tasnim analysis suggests that commentary from Iranian official Rezaei signals that Iran is considering expanding the geographic scope of its maritime confrontation into the northern Indian Ocean.
• Saudi Energy Minister said a number of energy facilities and utilities were hit and that some operations have been temporarily halted. This was later confirmed by the Houthis, in which they added that they struck the Khamis Mushait Air Base in retaliation to recent Saudi airstrikes. The group warned that further attacks on Yemen will be met with broader strikes on Saudi.

Geopolitics: Russia-Ukraine

• Russia’s Defence Ministry said Russian forces struck energy infrastructure and drone-manufacturing facilities in Odessa and the Odessa region.
• Russian Foreign Minister Lavrov rejected a proposal to halt strikes on civilian supply vessels in the Black Sea, Interfax reported.
• Ukrainian President Zelensky said he hopes to meet US President Trump later in September to discuss the winter air defence package.

Crypto

• Bitcoin has extended on Monday’s losses and currently trades at the lower end of its USD 78.2k-USD79.5k range.
• Republican senators have suggested that the bipartisan crypto regulatory bill is likely to fail next week, Semafor reported.

US Event Calendar

• 6:00 am: United States Aug NFIB Small Business Optimism, est. 99.3, prior 99.8
• 11:00am: NY Fed 1-Yr Inflation Expectations, est 3.60%
• 3:00pm: Consumer Credit

DB’s Jim Reid concludes the overnight wrap

Today kicks off the “home straight” to the end of the year after yesterday’s Labor Day holiday where markets were understandably quiet with what focus there was on oil and German politics. Brent (+0.75%) continued to edge higher which helped the 10yr bund (+4.8bps) close at another post-2011 high of 3.39% with equities fairly subdued. US equity futures have just ticked very slightly into positive territory this morning after being slightly below for most of the session yesterday when the cash market was closed. Elsewhere the Yen is up half a percent to 153.52 and to the highest level since February.

This has likely been helped by Japan’s real wages increasing by +2.4% year-on-year in July, exceeding expectations of +1.8% and marking the strongest growth since May 2021. This also represents the seventh consecutive month of wage gains, indicating a gradual improvement in income trends. Meanwhile, total cash earnings rose +4.7%, the largest increase since January 1997, accelerating from a revised +4.0% increase in June. The stronger-than-expected wage data reinforces the overwhelming case for the Bank of Japan (BOJ) to raise interest rates at next week’s policy meeting, following its previous hike three months ago, and supports the prospect of further monetary policy tightening in the months ahead. Q2 GDP has also been revised up overnight, moving from 1.1% annualised to 1.4%. However, expectations were at 1.8%.

In the rest of Asia, the KOSPI (+1.54%) is being driven by the tech rebound again, while the Nikkei is close to flat. The Hang Seng (-0.27%) and Shanghai Comp (+0.32%) are moving in different directions with the ASX (-0.84%) the largest decliner. 

In a low energy 24 hours the Middle East story has rumbled on as concerns about fresh US-Iran hostilities pushed oil prices higher still. In part, that followed the tanker attacks over the weekend, but it was also reported that the Houthi rebels had hit Saudi Arabian oil infrastructure yesterday. So that helped push Brent crude (+0.75%) to a 6-week high of $97.00/bbl, with WTI also up +1.33% to $92.70/bbl. Brent is up another +0.62% this morning. And there was no sign of respite on the gas front either, with European natural gas futures (+1.93%) also rising back to €73.34/MWh. So that exacerbated fears about European inflation, with the 1yr Euro inflation swap (+10.6bps) up to its highest level since May 2026, at 3.37%. 

With inflation fears mounting, that lifted European bond yields across the continent. So by the close, the German 2yr yield (+5.6bps) was back up to 3.00%, which is its highest level since June 2024. And further out the curve, the 10yr yield (+4.8bps) was up to a post-2011 high of 3.39%. Moreover, those moves were echoed elsewhere, with yields on 10yr OATs (+5.5bps), BTPs (+5.6bps) and gilts (+4.2bps) all rising as well. 

That rise in yields came as traders grew increasingly confident in future ECB rate hikes this year. In fact, investors were pricing 48bps of further hikes by the ECB’s December meeting at the close, up +2bps on the day. And as a reminder, our own European economics team also revised their ECB forecasts last week, so they expect the ECB to hike this week, and follow that up with another hike at the December meeting. See here for more on their view.  

Amidst all that, European equities were fairly steady, despite the rise in energy prices and the slightly hawkish rates repricing. The STOXX 600 ultimately closed up a whisker (+0.003%), with gains for France’s CAC 40 (+0.33%), alongside declines for the FTSE 100 (-0.08%) and the DAX (-0.15%). Sentiment was bolstered by positive revisions to the Q2 GDP numbers in the Eurozone, which were revised up to a +0.6% print from +0.4% at the preliminary reading. However, there was some weakness in Germany, where data showed industrial production fell -1.1% on the month (vs. +0.2% expected). 

Staying on Europe, German politics remained front and centre yesterday after the AfD came first in Saxony-Anhalt’s state election, winning 43.8% of the total votes, and just a few seats short of an absolute majority. Following the result, Chancellor Merz said in a press conference that he would double down on the reform course, with no indication of planned changes despite Merz saying he was “deeply shocked” by his CDU’s weak performance.

Early morning data from China indicated continued strength in trade activity, providing support for economic growth despite uneven domestic demand. Exports surged +25.0% y/y in August (v/s +25.9% expected), accelerating from +23.9% in the previous month. Imports also remained robust, rising +28.2%, up from a revised +27.6% previously, although slightly below forecasts for a +31.0% increase. As a result, China’s trade surplus expanded to $119.09 billion, compared with $112.34 billion in the prior month and broadly in line with market expectations of $119.10 billion.

Finally on the inflation theme, copper hit an all-time high (+0.57%) on the London Metal Exchange yesterday, rising above $14,415 per ton. That comes amidst ongoing supply concerns, and the prospect of potential US tariffs on copper. So one to watch going forward.
Finally in another research advert, Henry published his latest market dislocations report yesterday. This month, he looked at why the current cross-asset equilibrium remains unsustainable, and how several asset classes are vulnerable to the impact of building inflationary pressures and a faster tightening cycle from central banks. See the full report here.

Looking at the day ahead, US markets are back open with the NFIB’s small business optimism index for August, the NY Fed’s Survey of Consumer Expectations, and July consumer credit data releases. In Europe, we’ll also get Germany’s July trade balance and France’s July current account. Finally, Canada’s counter-tariffs on US imports are set to enter force today

Submitted by Thomas Kolbe

How will we deal with private property in Europe in the future?

A highly complex debate follows from this question, one that European Commission President Ursula von der Leyen interpreted in her own very particular way on Friday. In a speech to French business leaders at the MEDEF’s La Rencontre des Entrepreneurs de France in Paris, the former defense minister talked about using EU citizens’ bank deposits to get the ailing eurozone, the European economy, back on its feet.

An unmistakable message: In the view of the EU’s chief Eurocrat, private property as a protective wall shielding citizens from an overreaching state has served its purpose as a pillar of civilization.

Central planning, subsidy madness – this is Brussels under the magnifying glass.

Certainly: In the face of towering government debt and capital flight from the old continent, in whose wake thousands of patents and tens of thousands of highly qualified professionals are being swept away, citizens’ wealth is bound to awaken political appetites. A ruthless expropriation or the decreed redirection of cash, as the finest bureaucratic German puts it, is supposed to solve the problems Brussels itself has caused through its stubborn climate policy, its overregulation and its continuing insanity of interventionism.

Von der Leyen was explicit before the business leaders: Europe has savings, she said, but unfortunately those savings are sitting on the sidelines. Ten trillion euros are sitting as cash savings in the hands of private households in bank accounts, lectures von der Leyen in the manner of a classic central planner who can no longer take her eyes off citizens’ wealth. The European economy must now put this capital to work for its companies, the chief bureaucrat decreed.

None of this merely sounds like Erich Honecker. Von der Leyen is increasingly turning into a socialist sister in spirit to this disastrous regime.

Von der Leyen is following the path of the German chancellor. Friedrich Merz, too, discovered the cash holdings of Germans as political capital for himself more than a year ago – thoroughly socialist, indeed almost dictatorial, the chancellor also pointed to the possibilities opened up by what he called an activation of this money.

Ursula von der Leyen and Friedrich Merz reveal not merely an ethical and ideological abyss; they are contemplating dictatorial control over the private wealth of citizens who are still sovereign.

Almost tragically comical is the economic ignorance of these two political protagonists of an EU that is now openly turning toward an illiberal ideology.

Bank deposits are by no means useless cash. From the perspective of the banking sector, customer deposits are a central source of refinancing and liquidity, embedded in the money and credit cycle and enabling the provision of loans. Bank credit in the modern monetary system does not simply arise from passing on existing deposits. Commercial banks create new bank money through lending, although this process cannot simply be understood as a mechanical “leveraging” of existing deposits. Customer deposits thus fulfill numerous functions, from private liquidity planning and cash holdings to the financing and management of banking processes.

Such a massive intervention in the highly complex and fragile liquidity and credit structure of the banking sector would not merely be a barbaric act of socialism – it would be a frontal assault on the functionality of the banking system as such.

Nevertheless, the EU will resort to massive interventions – financially, after all, they have run into a wall.

Starting in 2028, repayment of the €800 billion Eurobond “NextGenerationEU” will come due. Von der Leyen’s speech before business leaders was ostensibly directed at the private sector, but in reality it concerned the financing of the European debt club, which is now moving toward tapping every financial source that can help keep the Ponzi scheme of European credit alive – the activation of cash appears to be one of those sources.

France is caught in a debt spiral, with new borrowing amounting to 5.7% of GDP this year and a parliamentary deadlock that rules out any form of fiscal consolidation.

Germany, too, will post new borrowing of more than 5 percent next year if the municipal deficit, the special funds and the social insurance funds are included – making common financing through Eurobonds, the consolidation of the mountain of debt under the roof of the European Commission and under the active liquidity assistance of the ECB increasingly likely.

And here the circle closes.

While capital is leaving the old continent through every remaining, every still-open channel, the financial needs of the EU’s ideological grand experiment and its nation-states are growing beyond measure.

The green subsidy machine alone destroys billions year after year. The final push over the economic cliff, however, will come from Europe’s rediscovered appetite for militarism. Military Keynesianism is not, however, an economic alternative to the free market. It is merely another fiscal grave that the political leadership is digging in its panic in these months.

The following final chapter is essentially known: Brussels will opt for massive capital controls.

The framework for this is already taking shape: In two years, the digital euro is to be introduced, initially as a pilot phase and, almost certainly at a later stage, as a monetary standard that will allow Brussels to exercise complete control over transfers abroad.

A ban on foreign bank accounts for EU citizens is also on the table and is being introduced step by step, just like the digital ID and the harsh regulation of the crypto sector. Slowly but steadily, the gates are closing.

Basically, this is how it always works in socialism: One day, the central planners will run out of other people’s money. Only then does the grinding machinery of repression by the powerful central authority begin.

* * * 

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

At 10:12pm local time on Saturday, a 92-foot rocket built by Munich startup Isar Aerospace lifted off from a windswept island above the Arctic Circle and reached orbit,  where it deployed five small satellites into a roughly 500-km orbit on what was only its second flight, making it the first commercial European company to deliver payloads to orbit and the first successful commercial orbital launch from continental Europe. 

Readers may recall how the first attempt went. As we noted in March 2025, Spectrum’s maiden flight lasted about 30 seconds before the rocket flipped over and dropped into the sea in a fireball. The post-mortem, per NASASpaceflight: a vent valve popped open at T+25 seconds during the pitch-over maneuver, the vehicle lost attitude control, and the flight termination system cut all nine engines at T+30. Isar went back to the drawing board, rewrote the software, and widened the vehicle’s margins.

🚀 LAUNCH!
Isar Aerospace’s Spectrum rocket has lifted off on its second flight from Andøya Spaceport in Norway.

Europe’s commercial space industry is moving fast.

Another rocket. Another step toward independent access to space. pic.twitter.com/uivGRp7Gsu

— Cosmos Europa (@CosmosEuropa) September 6, 2026

According o European Spaceflight, the 2026 campaign was not a smooth affair: January, scrubbed for a pressurization valve. March, delayed by weather, then scrubbed when an unauthorized boat wandered into the maritime exclusion zone. April, a leak in a composite pressure vessel. June, “off-nominal behaviour” in the fluid systems. September 4, called off hours after the road closures went into effect. September 5, orbit.

On Sunday their Spectrum rocket finally reached orbit. 

That was awesome to see live! pic.twitter.com/YT39A7rhfO

— fiveten (@fiveten_at) September 5, 2026

CEO Daniel Metzler said in a statement that Europe now has sovereign access to space, and that vehicle launches remain “the largest bottleneck for the global space industry.”

Welcome To The Big Leagues

In response to the launch, Berlin, Brussels, Paris and Oslo all rushed out excited statements on Saturday night – which come after a series of dismal European ‘failures to launch’ (both literal and figurative).

Between 2022 and 2024, Europe lost access to Russian Soyuz after the Ukraine invasion, grounded the medium-lift capable Vega-C after a December 2022 failure, retired Ariane 5, and watched Ariane 6 slip four years past its planned 2020 debut. The upshot: Galileo, the navigation constellation Europe built specifically so it wouldn’t have to depend on America’s GPS, went up on a Falcon 9 in April 2024 under a €180 million contract with SpaceX, alongside ESA’s Euclid telescope, the EarthCARE climate satellite and the Hera asteroid mission. European officials “studiously avoided” mentioning which rocket had carried them.

In 2025, Europe managed seven orbital launches: four Ariane 6 and three Vega-C, all from French Guiana. The United States did 193. China did 93. SpaceX alone flew 165 Falcon 9 missions, roughly one every 2.2 days, with individual boosters now on their 32nd flight.

My pictures of the launch taken from Grøtavær, 31 km from pad at Andøya! pic.twitter.com/4OajwBKTIM

— Knottjogg (@knottjogg) September 5, 2026

ESA’s answer was the European Launcher Challenge: rather than build yet another agency rocket, pay commercial upstarts to prove they can reach orbit by the end of 2027, then buy launches from the survivors through 2030. Member states were so keen that at last November’s ministerial in Bremen they more than doubled the €420 million ESA had asked for, subscribing €902 million inside a record €22.07 billion three-year budget. Isar signed its €197.8 million contract on August 27, nine days before clearing the first milestone more than a year ahead of the deadline. Rocket Factory Augsburg (€186.9 million) and Spain’s PLD Space (€158.9 million) got the other two contracts; ArianeGroup’s own MaiaSpace was conspicuously left waiting, and Britain’s Orbex went into administration in February, leaving the UK’s contribution unassigned.

Timing… 

The launch landed four days before Emmanuel Macron opens his international space summit in Paris on Wednesday, a two-day affair whose stated theme is European sovereignty in space, and which SpaceX, Blue Origin, Stoke Space and Starcloud pulled out of last Thursday after a White House Office of Science and Technology Policy official told U.S. companies on a private call, per Politico, that attending “could look like tacit support for EU policy positions.”

The policies in question: the EU Space Act, which would require any operator serving EU users to obtain prior authorization and appoint an EU legal representative, and a Franco-German push to carve out more satellite spectrum for European operators, including the €10-billion-plus IRIS² constellation. That is to say, for someone other than Starlink.

The French research ministry said it was “difficult not to link” the cancellations to the reports of pressure; an Élysée official shrugged that it was the absentees’ loss. Chinese delegations are expected to fill the empty chairs. And in a detail that undercuts the drama somewhat, the same American companies are due back in Paris a week later for World Space Business Week, where they will presumably be happy to sell to the Europeans they declined to meet.

So: Washington leans on its rocket companies to boycott a summit about Europe not depending on American rocket companies, and 96 hours before it opens, a German rocket reaches orbit from Norway. You could not script it.

Funding Fuels Flight

In the 17 months between fireball and orbit, Isar says its demand flipped from almost entirely civil to roughly 60% defense, with the manifest now booked through 2028. German Defense Minister Boris Pistorius toured the Ottobrunn factory in July to reiterate the €35 billion Germany intends to pour into space over the coming years, calling it “an indispensable security domain that cannot be replaced.” Chancellor Friedrich Merz visited the Andøya pad in March and on Saturday called the launch “the beginning of a new era.” EU defense and space commissioner Andrius Kubilius chimed in from Brussels along the same lines. Norway’s trade minister cast it as a matter of Norwegian and European security; Oslo has already contracted Spectrum to launch two Arctic Ocean surveillance satellites by 2028.

The NATO Innovation Fund made Isar its first-ever investment in a launch provider in 2024. State-owned KfW Capital co-invested in June’s €270 million Series D, which valued the company at roughly €2 billion and took total funding to about €870 million alongside Lakestar, HV Capital, UVC Partners, Molten Ventures, Island Green Capital, Airbus Ventures, Porsche SE and Eldridge. And on the day NATO leaders gathered in Ankara in July, Isar signed a 10-year, roughly $112 million deal for a dedicated pad at Spaceport Nova Scotia, pitched explicitly as sovereign access for Canada, with first launches targeted for 2028.

Chief commercial officer Stella Guillen told CNBC on Monday that the industry is “desperate” for launch capacity and that Isar’s pipeline now exceeds €10 billion ($11.6 billion). CNBC noted the company did not immediately clarify how much of that is actually under contract. Metzler, for his part, told reporters an IPO is not being considered.

Spectrum lifts up to 1,000 kg to low Earth orbit (700 kg to sun-synchronous), roughly a twentieth of a Falcon 9, and it is fully expendable; Isar has signaled reusability only for later versions. Its long-advertised target of about €10,000 per kilogram sits above the $5,000 to $7,000 per kilogram SpaceX charges on Transporter rideshares, though those prices have been climbing and the slots are getting scarcer as Kuiper, Chinese constellations and military customers eat the manifest. Isar’s pitch is that governments will pay a premium for a dedicated ride to a specific orbit on a rocket built and launched inside NATO territory. Saturday’s payloads, for what it’s worth, were DLR competition winners flying on ESA’s dime, not paying customers.

Picture of your launch from Tromsø… pic.twitter.com/dEVymGWzYB

— Stefan Christensen (@stefanchrist) September 5, 2026

Right now, Spectrum vehicles 3 through 7 are in production, and the new 40,000 m² factory at Parsdorf is meant to eventually turn out 40 rockets a year, a figure that would put a company that has flown twice at roughly a quarter of SpaceX’s 2025 cadence.

Summary:

• “Explosive Surge” in iShares MSCI Brazil ETF (EWZ) call open interest
• BTG Pactual/Nexus Survey Shows Bolsonaro Leads Over Socialist Lula 
• UBS Calls Brazil Election “Extremely Close” – Bolsonaro Win Would Cement LatAm’s Political Shift

The BTG Pactual/Nexus survey released earlier today puts right-wing Senator Flávio Bolsonaro narrowly ahead of socialist President Luiz Inácio Lula da Silva, though within the margin of error, as a deepening Supreme Court scandal strengthens the conservative challenger’s campaign.

🇧🇷‼️ | El Candidato Presidencial, Flávio Bolsonaro, lideró una masiva concentración de personas durante las celebraciones por el día de la independencia de Brasil. Bolsonaro afirmó que la voz del pueblo es la voluntad divina y aseguró que en las elecciones de octubre desplazará a… pic.twitter.com/UQkdjNQDyh

— UHN Plus (@UHN_Plus) September 7, 2026

At the center of the political turmoil is Justice Alexandre de Moraes, who oversaw the case that sent former President Jair Bolsonaro to prison for plotting a coup. Newly published private messages, according to Bloomberg, suggest closer ties between Moraes and Daniel Vorcaro, the former owner of failed lender Banco Master, which is under investigation for fraud.

“Anyone who votes for Lula is voting for Alexandre de Moraes,” Bolsonaro recently told supporters.

Polymarket odds for next month’s Brazilian election show the gap between Bolsonaro and Lula narrowing dramatically.

Overnight, we ​​​​​​showed an “explosive surge” in iShares MSCI Brazil ETF (EWZ) call open interest.

And someone appears to be making a huge bet on just that: explosive surge in EWZ call OI https://t.co/nqFaGgms4R pic.twitter.com/uen9bXmqBw

— zerohedge (@zerohedge) September 8, 2026

“The Brazil FOMO is real,” The Market Ear wrote on X. 

EWZ call open interest just hit record highs. The Brazil FOMO is real.https://t.co/23lNn352mk

— The Market Ear (@themarketear) September 7, 2026

A Bolsonaro victory would reinforce South America’s broader shift from unhinged left-wing regimes toward the common sense right.

UBS Calls Brazil Election “Extremely Close” – Bolsonaro Win Would Cement LatAm’s Political Shift 

Socialist Brazilian President Luiz Inácio Lula da Silva’s polling lead over right-wing Senator Flávio Bolsonaro has eroded in recent weeks, leaving both statistically tied in UBS’ latest runoff polling average. 

Arend Kapteyn, UBS’ global head of economics and strategy research, described the upcoming election in early October as “extremely close” in a note to clients on Monday.

Kapteyn’s note today puts Bolsonaro at 50.4% in a hypothetical runoff, against 49.6% for Lula, adding that the narrowing spread leaves the candidates statistically tied. 

Kapteyn continued:

On 4 October, Brazilians will vote for a president, the entire Chamber of Deputies and two-thirds of the Senate. Brazil currently has one of the highest real interest rates in the world, contributing to increasingly adverse debt dynamics. In our view, an election outcome that delivers a credible fiscal consolidation program could significantly improve the macroeconomic outlook. Relative to our baseline, real interest rates could fall by at least 2.5 percentage points (to around 5% from 7.5%), potential growth could be 1pp higher (2.5% rather than 1.5%), and inflation could be around 1pp lower (3.5% rather than 4.5%).

Our poll aggregator currently shows first-round voting intentions of 42.5% for Lula and 36.0% for Flávio Bolsonaro. Given the historical polling error of approximately 3 percentage points, the candidates’ confidence intervals overlap. Rejection rates are elevated for both candidates, while other contenders collectively attract 21.5% of voting intentions. If no candidate secures an outright majority in the first round, a runoff will be held on 25 October.

The second round appears even tighter. Lula currently polls at 49.6% of voting intentions versus 50.4% for Flávio. Compared with our poll update a week ago, the lead has effectively changed hands. Importantly, these surveys were conducted before the latest controversy involving a Supreme Court justice, who is alleged to have advised an individual under fraud investigation, a case that could potentially implicate key allies within Lula’s inner circle.

Historically, incumbent presidents have generally secured re-election when their “good or great” approval rating exceeded 40%. Lula currently stands at 37% on this measure. Conversations with two political consultants also suggest that momentum may be shifting in Flávio’s favor. Nevertheless, prediction markets continue to assign Lula a modest advantage. Polymarket implies odds of roughly 55%-43% in Lula’s ffavor while Kalshi places the race at approximately 55%-44%.

Polymarket Odds:

Read:

• Brazil’s Socialist President Sees Lead Disappear As Bolsonaro Heir Turns Presidential Election Into Coin Toss
• Brazil’s Socialist President Sees Lead Evaporating, New Poll Shows

The election may determine whether Brazil moves further left or right politically. Across the continent, the latest country to shift right was Colombia. Many others have followed:

By mid-2026, South America had already flipped. Argentina (Milei), Chile (Kast), Colombia (de la Espriella), Peru (Keiko Fujimori), Ecuador (Noboa), Bolivia (Paz), and Paraguay (Peña) sit on the right.

The remaining large left-wing governments are Brazil and Uruguay. Brazil accounts for about half of South America’s GDP and population. If Brazil goes right, the region would be entirely aligned with the Trump administration and would be on track to rid itself of nation-killing socialism and other failed progressive experiments.

In Germany on Sunday, right-wing Alternative für Deutschland delivered its strongest election result ever in Saxony-Anhalt, dealing a sharp blow to the political establishment. Nomura analysts indicate that Europe may be in the early stages of “lurching right” (read the report).

Putting this all together, Western voters are rejecting nation-killing left-wing regimes that have done nothing more than allow mass migration, pursue progressive experiments, and neuter the West’s industrial and power grids with climate change policies, which has only given China a leg up in the AI and weapons race. 

Authored by Jim Reid, Deutsche Bank global head of macro research,

The latest global bond sell-off has revived the idea that markets are fretting over unsustainable public finances. As concerned as I am by this issue in the longer term, the recent bond market weakness at the moment should be seen more as a continuation of the long normalisation from the historic anomaly of the 2010s.

That was a decade of financial repression with central banks buying trillions in government debt, benchmark policy rates sitting near zero, and sovereign borrowing costs held down for years. Had you been on a desert island for a couple of decades, the level of yields today would look perfectly normal at the end of your sabbatical from the world, not at crisis levels.

At Deutsche Bank, our house view has consistently been in recent years that yields would rise due to heavy government issuance, the retreat of quantitative easing programmes of bond buying by central banks and inflation levels that have been persistently higher and more volatile than the pre-pandemic period. In the US, inflation has now been above the Federal Reserve’s 2 per cent target for more than five years.

There is also some positive news that has supported higher yields. Global growth has held up better than most expected since the conflict with Iran began. US nominal GDP growth in the second quarter was 6.6 per cent year on year, which, outside the Covid-19 bounceback period, was the highest level since 2005. Clearly, part of this reflects higher energy prices and inflation, but there is no doubt that real growth is also holding up, partly thanks to the continuing AI boom. This has also increased corporate debt supply, which has competed with government bonds for investor demand in recent months. European growth, meanwhile, is also performing better than many thought possible in the face of an all-too-familiar energy shock for the continent.

And make no mistake, fiscal concerns are real and higher borrowing costs potentially worsen debt arithmetic, especially if growth fades.

The big shift, though, is that the equilibrium rate for bond yields is higher than markets became accustomed to in the ultra-loose era.

This has raised understandable concern, but one thing has been under-reported: returns for investors are starting to stabilise and, in many cases, have been positive over recent months and years.

This has been a welcome change from the early 2020s, when low starting yields offered no protection from the bear market. Rolling five- and 10-year total returns are still around their lowest on record across many government bond markets. However, the worst of the negative-return period is probably behind us.

Over the past year, the Bloomberg US Treasury Total Return index delivered a positive return even as 10-year yields rose by about 0.60 percentage points. From current levels, the 10-year yield would need to rise to roughly 5.5 per cent over the next year, or 6.4 per cent over two years, before total returns turned negative. An investor who bought 10-year Treasuries at the October 2023 yield peak of 4.99 per cent would now have a total return of more than 16 per cent. It is a useful reminder of how much starting yield now matters.

The UK provides an even clearer example, given the constant negative headlines. Ten-year gilt yields are now about 0.65 percentage points above the peaks reached during the 2022 mini-Budget crisis. Yet the broad gilt index has returned roughly 12 per cent since those crisis highs. There hasn’t been any prolonged period of negative returns in gilts over those four years.

This does not mean the secular adjustment is complete. Outside of a material downgrade to growth expectations or an external shock, the forces encouraging yields to move upwards are unlikely to disappear, but at least we’re in the ballpark of normal again. Over the past 100 years, a period with regular and large swings in prices, inflation has averaged 3 per cent in the US and 4 per cent in the UK — a higher level than that seen since 1990 but lower than current long-dated yields.

After years in which returns depended heavily on capital gains, more normal levels of yields are again providing income that can compound over time, which is helping to cushion volatility and steadily reward patience. The pressures will remain, and it’s hard to see spectacular returns, especially in real terms, but at least bonds have become bonds again, and investors should bear this in mind when the next inevitable bad headline comes through.

Britain’s highest taxpayers have been drifting offshore since the non-dom regime was scrapped in April 2025 and inheritance tax was extended to worldwide assets.

This shift is already visible on the Sunday Times lists: six of the 2026 Tax List’s top 100 (including Revolut’s Nik Storonsky) had left in the previous year, the compiler noted that one in nine names on that list were no longer UK-resident, and the companion Rich List dropped dozens of foreign billionaires while recording a sharp rise in British nationals now based in Dubai, Switzerland and Monaco.

But, the latest news is likely the most disturbing to the increasingly socialist government as the UK’s 3rd largest taxpayer – hedge fund founder Chris Rokos – is set to leave.

 The star trader paid a stunning £330 million ($447 million) in taxes last year…

That’s one hell of a hole for Burnham and his buddies to fill.

As Bloomberg reports, Rokos is the latest in a string of high-profile financiers and business leaders that have opted to leave.

Since winning the general election in 2024, Labour has targeted wealth with taxes on non-domiciled residents, inheritance on family farms and businesses, private equity and private school fees.

At her last budget, former chancellor Rachel Reeves introduced a tax on homes worth more than £2 million.

With a net worth of about $4 billion according to the Bloomberg Billionaires Index, Rokos is among the UK’s most prominent figures in finance.

The Rokos Capital Management founder is switching his residency to Greece, people with knowledge of the arrangement said.

Rokos will also open an office in Athens as part of the move, one of the people said, asking not to be identified because the details are private.

Greece offers a 15-year high-net-worth investor regime.

Italy operates a similar 15-year system, but after recent increases, it has set the flat tax at €300,000 on foreign-sourced income.

Greece has also sought to lure fund managers and private equity executives, adopting new tax rules this summer designed to prevent double taxation.

If the highest taxpayers keep leaving – as Rokos’s reported move to Greece underlines – Labour’s bet that abolishing non-doms and tightening inheritance tax would raise more money starts to look fragile, because a thin slice of people already supplies a large share of income-tax receipts.

The government then faces an awkward choice: accept a smaller tax base and tighter budgets, or raise rates on the mobile and immobile alike and risk accelerating the outflow it is trying to tax.

Authored by Andrew Korybko via Substack,

Indefinitely perpetuating the Ukrainian Conflict through these means indefinitely delays the full implementation of the US’ planned “Pivot (back) to (East) Asia”, can lead to Russia selling its natural resource wealth to China at bargain-basement prices, and maintains China’s “active neutrality”.

Radio Free Europe/Radio Liberty (RFE/RL) referenced the EU’s summertime disbursement of the first €1 billion to Ukraine for drone procurement out of the €6 billion promised for this program in an article late last month about how “Ukraine’s Drone War Exposes An Uncomfortable Reliance On China“. They drew attention to the carve-out allowing Ukraine to purchase Chinese parts with these funds, ergo the politically incorrect observation back then that “The EU Plans To Pay China To Help Ukraine Kill Russians“.

RFE/RL reported that “While Kyiv has cut back on the purchase of ready-made drones from China, components such as motors, lithium batteries, and fiberoptics are still in high demand.” Additionally, “In the first six months of 2026, imports of Chinese parts had already reached around 76 percent of the total recorded for the previous year.” They also cited a Ukrainian report which claimed that “38 percent of the value of drone components imported by Ukraine in the first half of 2025 came from China.”

The purpose of their piece appears to be to instill a sense of urgency in Ukraine and the West alike to radically ramp up domestic drone production in order to reduce what one of their cited experts described as Ukraine’s “hostile interdependence” on China. They explained that “Beijing remains Kyiv’s largest trading partner, while Ukraine is a key supplier of agricultural goods to China.” That’s true, and it’s one of the reasons why China won’t cut Ukraine off from drone-related sales, but there’s more to it.

While Sino-Russo ties are better than at anytime in history, it was suspected as far back as early 2023 that “China Doesn’t Want Anyone To Win In Ukraine“, the reason being that a supposedly manageable forever war would indefinitely delay the full implementation of the US’ planned “Pivot (back) to (East) Asia“. Moreover, resource-rich Russia could become disproportionately dependent on China, thus leading to Moscow selling its natural wealth to Beijing at bargain-basement prices.

In pursuit of this cynical end, China has simultaneously played an irreplaceable role in providing Ukraine with drones, parts, and fiber optics (even if only indirectly through intermediaries like apologists have speculated) while serving as an irreplaceable valve from sanctions pressure for Russia. Ukraine is therefore able to keep pace with Russia’s military-technical advancements, the Russian economy avoids the crisis that the West sought to catalyze through sanctions, and China maintains its “active neutrality”.

The last point refers to China actively helping Ukraine and Russia, thus making it neutral in the sense of not taking either side. China financially profits from Ukraine’s drone-related purchases, its economy continues growing due to the large-scale import of heavily discounted Russian energy, and it relatively reduces the overall Western pressure upon it by proving that it’s not secretly “allied” with Russia. This policy, for whatever one might think about its merits, indisputably contributed to prolonging the conflict.

Had China cut Ukraine off from its drone-related sales in the spirit of its “no-limits” partnership with Russia that was declared several weeks before the start of special operation, then Russia might have attained more of its stated objectives in the conflict by now, if not outright achieved maximum victory. The US’ military and intelligence support for Ukraine is more important than China’s drone-related sales, but since there’s no end to US support in sight, Russia should try to get China to finally cut Ukraine off.

Europe’s industrial base faces yet another setback, with Bloomberg reporting that Jaguar Land Rover plans to cut 4,000 jobs over the next two years. Britain’s largest carmaker is confronting intensifying Chinese competition and adding to the broadening wave of planned and ongoing layoffs across European automakers.

The job cuts represent about 10% of Jaguar Land Rover’s global workforce and is part of a $2.3 billion savings plan, Chief Executive Officer P B Balaji said Monday. The layoffs are not expected to begin immediately.

The workforce restructuring comes as the struggling automaker faces a sharp deterioration in earnings. Revenue fell 10% in the latest quarter, while pretax profit plunged 69% to 109 million pound sterling. 

On Monday, CEO P B Balaji said, “The automotive industry faces significant challenges, with technological change amidst intense competition and ongoing geopolitical uncertainty.”

It’s not just a BYD Motors invasion of Europe that is pressuring Jaguar Land Rover. As the Tata-owned automaker warned, pressures are developing from several directions. Higher tariffs have complicated business in the US, its largest market. A fire at a key parts supplier and disruption from the Middle East conflict have compounded the damage caused by the cyberattack.

In recent weeks, Europe’s automotive industry has continued its death spiral, with news that Volkswagen pushed ahead with its plan to eliminate another 50,000 jobs, adding to soaring job losses across the industry.

A sustained downturn in Europe’s automotive industry raises risks across the broader industrial base. Lower vehicle output would weaken demand for steel, aluminum, glass, chemicals, semiconductors, batteries, and other components, putting pressure on supplier margins and investment. If prolonged, that weakness could trigger additional production line closures and worker losses. That spiral appears to be already underway, eroding manufacturing capabilities that also support defense production.

Authored by Paul Homewood via The Daily Sceptic,

Greenland’s icecap is melting away thanks to global warming, at least that is what we are told. According to the EU’s European State of the Climate 2025 Report, the ice sheet lost 139 Gt last year. They say that is equivalent to about 1.5 times the amount of ice stored in all the glaciers in the European Alps, and raised global mean sea level by 0.4 mm. (A gigatonne is one billion tonnes.) Since 1972, losses have amounted to 5,747 Gt. The rate of ice loss has increased by around five times since the 1980s and is expected to continue increasing beyond the end of the century.

These amounts sound terrifying, which is of course the object of the exercise – at least until you realise that at present rates it would take Greenland 27,000 years to melt away.

I am always suspicious when ‘scientists’ present trends since the 1970s, a time when the Earth had gone through three decades of cooling and there were genuine fears among both scientists and world leaders about the return of the Little Ice Age. I am even more suspicious when I discover that official data about the Greenland ice sheet is publicly available back to 1840.

In 2021, a peer-reviewed study calculated the annual changes in the ice sheet mass balance since 1840. (The heavy black line represents the net changes, which is of relevance to this discussion):

The graph confirms that the ice sheet has been losing mass since the 1980s. But crucially, we can see that the melting began around 1900. During the period 1920 to 1970, ice loss was running at similar levels to the last three decades – this is hardly surprising, as temperature records across Greenland show that it was just as ‘warm’ then as now. In between times, there was a sharp decline in temperatures in the 1970s and 80s.

In other words, this is not a new phenomenon, as we are expected to believe. It is part of a much longer process, which began long before so-called man-made global warming began.

Scientists have long established, with the help of ice cores and other evidence, that the 19th Century was probably the coldest era in Greenland since the Ice Age. During warm eras, such as the Middle Ages, Roman times and earlier millennia, the ice cap was smaller than it is now. Any reduction in the ice cap in the last century must be viewed as part of these longer-term cycles.

Ice mass data is still regularly published and provisional data is now available for the year ending August 2026 – Greenland ice data is normally presented by “hydro-year”, September to August.

Since the 2021 study, ice loss has continued to slow down and is back to 1920s levels. The 2025/26 season actually saw a small increase of 6 Gt in ice mass. Greenland never really had a summer this year. Whereas the summer melt usually begins in early June, cold, snowy weather persisted well into July. As a result, summer melt was around 200 Gt less than normal.

It is worth noting that the poor summer in Greenland was part of the wider jet stream setup, which brought our hot summer. While we had a summer dominated by high-pressure systems, the rainy weather stayed out in the Atlantic, battering Greenland.

6 Gt is of course a tiny amount, given the massive uncertainty in how these things are calculated. There is no way to directly measure ice cap changes; instead, the numbers are calculated from computer models fed with data such as precipitation and temperature. The experts accept that they can often be wrong by as much as 100 Gt.

Nevertheless, it is abundantly clear that Greenland’s icecap is doing just fine. It is still much larger than it has been for most of the last 10,000 years and, if it is shrinking at all, it is doing so no faster than a century ago.