The new CBB website has the Latest Z.1 Analysis with charts, along with a full library of updated Z.1 charts on the Charts page.
The rates market ended the week pricing 2.0 hikes by yearend, up from the 1.35 at Monday’s close. CPI up 3.4% y-o-y and PPI 4.6% higher are a problem. University of Michigan one-year inflation expectations jumped a stronger-than-expected 0.6 during September to 4.6%.
Things were just as bad – for some even worse – overseas. French 10-year yields spiked 26 bps to 4.45% - the high back to August 2008. Italian yields rose 20 bps to 4.35% (3-yr high), while Greek yields jumped 22 bps to 4.22% (3-yr high). German yields gained 17 bps to 3.50% (high since August 2009). UK yields surged 21 bps to 5.34% - the high back to July 2007.
Australian 10-year yields jumped 17 bps to 5.37%, with New Zealand yields 24 bps higher at 5.02%. South Korean yields rose 14 bps to 4.52%.
EM bonds could not escape. Ten-year (dollar) yields jumped 23 bps in the Philippines (5.83%), 20 bps in Indonesia (5.88%), 20 bps in Turkey (7.42%), 18 bps in Chile (5.59%), 15 bps in Mexico (6.62%), and 14 bps in Colombia (7.08%). Local currency yields surged 22 bps in Colombia (12.51%), 19 bps in Mexico (9.44%), 18 bps in Slovakia (4.17%), 17 bps in Hungary (5.58%), and 16 bps in South Africa (8.88%).
With the yen rallying 1.7% this week, pressure is building in the beloved “carry trade” universe.
September 11 – New York Times (Adam Rasgon, Shuaib Almosawa, Saeed Al-Batati and Pranav Baskar): “The militia captured the island in the Bab al-Mandab Strait, a choke point for trade. Saudi Arabia also announced it had shut down a critical oil pipeline after a drone attack launched from Iraq. The Iranian-backed Houthi militia seized an island in a choke point of the Red Sea after days of fierce fighting, two Yemeni government officials said Friday, giving Iran and its allies sway over the two main routes for shipping oil out of the Middle East. The capture of Perim Island came as Saudi Arabia announced that it had shut down a critical oil pipeline, a day after Houthi forces swept into the strategic port city of Mokha in Yemen. Both were major setbacks for the Saudi kingdom, which exports most of its oil through the Red Sea. The kingdom’s foreign ministry said the pipeline was hit on Thursday by drones launched from Iraq.”
Bond markets recognize the likelihood of a prolonged conflict in the Middle East, with potentially dire inflation ramifications. Crude oil (WTI) surged 9.4% this week to surpass $100. Diesel prices jumped to $6 a gallon.
The Trump administration, facing potential war escalation through the midterms, appears increasingly desperate. The Treasury Secretary’s fading market credibility is visible to all.
September 10 – Financial Times (George Steer, Kate Duguid and Ian Smith): “Scott Bessent’s bid to steady the $32tn US government debt market has backfired, with investors warning that the Treasury secretary’s opening shot was too timid to halt a surge in yields and instead dented his credibility… The intervention has instead stirred fears that America — the anchor of global finance — is acting in a way more commonly associated with weaker borrowers. ‘We can’t ignore the fact that there are emerging-market-type risks in some of the actions the US has been taking,’ said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. ‘We typically haven’t seen interventionist policies coming out of the US. Or when we have, it has been a formal, institutionalised process.’”
September 9 – Financial Times (Emily Herbert, Ian Smith and Ramsay Hodgson): “US Treasury Secretary Scott Bessent has warned traders not to bet against the yen, saying ‘I am the house now’ following his recent intervention to support the Japanese currency. ‘When we intervene with the Japanese yen, I have pretty good insight into what the Bank of Japan is going to do, what Japanese policymakers are going to do,’ Bessent said… ‘I have asymmetric information. I am the house now,’ Bessent said. ‘You can bet against me if you want.’”
September 11 – Bloomberg (Erica Yokoyama): “Japanese Finance Minister Satsuki Katayama said US Treasury Secretary Scott Bessent’s recent reference to himself as ‘the house’ sounded a little frightening when translated into Japanese, while saying she understood the expression reflected the secretary’s former role as a hedge-fund manager. Bessent described himself earlier this week as ‘the house,’ as he has access to ‘asymmetric information’ regarding the Bank of Japan’s next policy steps. ‘Given the nuances of the Japanese language, it does sound a bit scary, doesn’t it?’ Katayama told reporters... Japanese media translated Bessent’s reference to the house as ‘domoto,’ a term associated with illegal gambling. The secretary clarified his ‘house’ remark on Thursday. ‘Where I said I am the house, I didn’t challenge people to come to me,’ he said. ‘I’m not saying ‘I am always right, don’t challenge me.’ But I am trying to say I have superior information and that I am trying to give the market good framing so that they don’t panic.’”
September 9 – Bloomberg (Enda Curran, Greg Ritchie, Michael MacKenzie and VinÃcius Andrade): “Over and over again, Treasury Secretary Scott Bessent keeps warning investors that he’s going to burn them. Whether they’re bidding up the price of oil, pushing down the Japanese yen or, most importantly, driving up US Treasury yields, they’re making a big mistake, he insists, because he’s on the other side of the trade, armed with valuable information on government policy plans they don’t possess. In the jargon of game theory, it’s called asymmetric information, as the former hedge-fund trader is fond of pointing out. He’s uttered it publicly at least four times in the past three weeks alone, including Tuesday, when he dared currency traders to ‘bet against me if you want.’ They’re starting to — at least in the bond and oil markets…”
September 8 – Bloomberg (Yash Roy): “Treasury Secretary Scott Bessent said his move last month to expand a buyback program for older US government securities was aimed at quelling a ‘fever’ in the bond market. ‘My job is to try to push things back towards equilibrium,’ Bessent said... ‘I don’t believe that I can change the equilibrium price. But nothing’s ever in equilibrium… There was like this fever that was building… Having been in the financial markets, like when you’re speculating, you want to speed things up,’ he said, alluding to his career as a hedge fund executive.”
A feverish bond market is taking charge - and will surely have low tolerance for nonsense. The administration is tone deaf.
September 10 – Associated Press (Jonathan J. Cooper): “President Donald Trump pledged… to send every American adult $5,000 if Republicans retain control of the House and Senate in the midterm elections, an extraordinary gambit to reverse his party’s sagging fortunes in November. The dubious promise would most likely cost more than $1 trillion and require congressional approval, and would further exacerbate the country’s nearly $1.8 trillion annual budget deficit and concerns about inflation. ‘If the Republicans win, you win with us and you get $5,000,’ Trump said... ‘It will be called the Trump Dividend.’”
Less than two months until the midterms, a timeline of utmost significance in Tehran (and elsewhere). These days, the President’s bluster and threats fall on deaf ears – in Tehran, Beijing, Ottawa, Brussels, London and elsewhere, including Wall Street. Market sentiment is shifting from “the fix is in until the midterms” to something urgently needs to be fixed in this administration before the wheels come flying off. Bessent’s tough guy act may play well in the Oval Office, but it will not suffice in the unfolding market backdrop. And it’s difficult to envisage the President adopting the type of responsible behavior necessary to calm increasingly unstable financial markets. It’s going to be a wild couple of months.
Another fascinating Federal Reserve (Q2) Z.1 report – ongoing ballooning in Treasuries and Agency debt, “repo,” Wall Street assets and lending, money funds, securities, household assets and net worth…
Non-financial debt (NFD) expanded during Q2 at a seasonally-adjusted and annualized (SAAR) rate of $4.289 TN, down from Q1’s booming SAAR $4.851 TN – but up significantly from Q2 ‘25’s SAAR $2.682 TN – to a record $84.093 TN. NFD inflated $5.073 TN y-o-y, the strongest annual expansion excluding the pandemic (2020’s $6.778 TN).
Foreign U.S. borrowings increased $449 billion during Q2 (22% annualized) to a record $8.611 TN, second only to Q1 ’25 ($480bn), with one-year growth of $1.036 TN, or 13.7%. Foreign debt was up $2.063 TN, or 31.5% over two years.
Total Financial Sector borrowings rose $657 billion (9.7% annualized) to a record $27.662 TN – the strongest quarterly expansion in five years.
Outstanding Treasury Securities rose $237 billion during the quarter to a record $30.878 TN, the weakest expansion in a year. Still, Treasuries inflated $2.360 TN over four quarters, with two-year growth of $3.975 TN. Outstanding Treasuries rose $14.249 TN, or 86%, over 26 quarters and $26.385 TN, or almost six-fold, since 2007. The ratio of Treasuries-to-GDP ended Q2 at 95%, up from 2019’s 76%, 2007’s 31%, and 1999’s 33%.
Agency (MBS/bonds) Securities increased $201 billion (6.4% annualized) during Q2 (up from Q1’s $74bn) to a record $12.763 TN – the strongest quarterly expansion since Q1 ’23 (Silicon Valley Bank/bank run Crisis). At $43.641 TN, combined Treasury and Agency Securities ended June at 134% of GDP.
Government-Sponsored Enterprise (GSE) assets surged $176 billion during Q2 – the largest growth back to Q1 ’23 – to a record $9.869 TN. The FHLB banks expanded $78 billion to $802 billion, also the strongest since Q1 ’23.
Corporate Bonds expanded $307 billion (7.0% annualized) during the quarter to a record $17.705 TN – the strongest growth in five quarters. Corporate Bonds expanded $901 billion y-o-y, the largest one-year growth since Q3 ’24. Non-Financial corporate bonds increased $82 billion, with Financial Sector bonds up $108 billion during Q2. Broker/Dealers expanded bond borrowings by $51 billion – the strongest increase since Q3 ’24.
Total Debt Securities expanded $843 billion during Q2 to a record $67.338 TN, down from Q1’s $1.009 TN, while up from Q2 ‘25’s $504 billion. Total Securities expanded $3.863 TN over four quarters, second only to 2020’s record expansion ($6.227 TN) and above the five-year annual average of $3.00 TN.
Notably, Equities surged a record $17.644 TN during the quarter to an all-time high of $123.687 TN – with one-year growth of an incredible $25.448 TN, or 25.9%. For perspective, Equities’ Q2 expansion surpassed the annual record set last year ($16.355 TN). Equities ended June at record 353% of GDP, up from 2019’s 248%, and compared to previous cycle peaks, Q3 ‘07’s 188% and Q1 2000’s 210%.
Illuminating a key Bubble Dynamic, Total (Debt and Equities) Securities ended Q2 at a record $191.025 TN, or a record 588% of GDP. Previous cycle peaks had Total Securities at $54.761 TN, or 376% of GDP, during Q3 2007 and $35.713 TN, or 357% of GDP, for Q1 2000.
Playing second fiddle to booming securities markets, the banking system nonetheless posted another solid quarter. Bank Assets expanded $298 billion to a record $30.031 TN, slowing from exceptional Q1 growth ($585bn), but little changed from Q2 ’25. Total Loans expanded $291 billion, or 6.9% annualized, to a record $17.200 TN – with one-year growth of $1.018 TN (6.3%). This was double that $530 billion annual average over the past 16 years. Business loans expanded $165 billion, or 10.8% annualized, with one-year growth of $713 billion, or 12.9%. Mortgage loans expanded $70 billion (3.8% ann.) and Consumer Credit $53 billion (7.7% ann.)
Growth in Bank Debt Securities holdings slowed to $43 billion, posting small declines in both Treasury and Agency holdings. Meanwhile, holdings of Corporate Bonds rose $60 billion to a record $1.018 TN – the strongest expansion since Q1 ’21. On the liability side, Total Deposits expanded $245 billion to a record $22.421 TN, with one-year growth of $1.162 TN (5.5%). Repo Liabilities gained $58 billion to $822 billion.
The historic Broker/Dealer boom ran unabated during Q2, with total assets expanding a record $553 billion, or 33% annualized, to a record $7.242 TN. The Asset “Loans” jumped $167 billion, or 22% annualized, to a record $3.178 TN. One-year growth of $520 billion (19.6% ann.) was an annual record. It's worth noting that loans had never posted annual growth above $365 billion prior to 2025's record $488 billion. Debt Securities holdings declined $29 billion, led by a $54 billion drop in Treasuries.
For the most part, there’s little transparency to explain the surge in Broker/Dealer assets. Miscellaneous Assets jumped $441 billion to a record $2.353 TN (35% one-year growth), with Miscellaneous Liabilities up $306 billion (32% one-year growth) to a record $1.678 TN. Repo Liabilities gained $75 billion (9.9% ann.) to a record $3.116 TN, with one-year growth of $403 billion, or 14.9%. A key Bubble data point: Repo Liabilities ballooned $1.502 TN, or 93%, over the past 15 quarters.
At the epicenter of Bubble excess, Total System Repo Assets expanded $221 billion, or 10.5%, during the quarter to a record $8.669 TN – with nine-month growth of $683 billion, or 11.4% annualized. System Repo Liabilities surged $343 billion, or 20% annualized, to a record $7.165 TN. Curiously, Rest of World (ROW) Repo Liabilities jumped $169 billion, or 31% annualized, to a record $2.350 TN – with one-year growth of $342 billion, or 17.0%.
Money Market Fund Assets (MMFA) expanded another $152 billion to a record $8.441 TN – with one-year growth of $960 billion, or 12.8%. Over 15 quarters of historic monetary inflation, MMFA ballooned $3.357 TN, or 66%. Money Fund Repos holdings jumped $142 billion (19.5% ann.) during Q2 to $3.075 TN. Treasury holdings declined $145 billion to $3.282 TN, though one-year growth remained a blistering $668 billion, or 26%. Agency holdings gained $107 billion to a record $1.208 TN, with one-year growth of $215 billion, or 22%.
Rest of World (ROW) remains a key Bubble manifestation. ROW holdings of U.S. financial assets inflated a record $4.490 TN (30% annualized) during Q2 to a record $63.891 TN – with one-year growth of $7.904 TN, or 14.1%. ROW assets surged a staggering $20.692, or 48%, over the past 11 quarters – with assets up a crazy three-fold since 2008. Debt Securities holdings increased $105 billion, the slowest quarterly growth in six quarters. Interestingly, Treasury holdings declined $79 billion to $9.269 TN – reducing 11-quarter growth to $1.760 TN. Equities holdings inflated $3.273 TN during the quarter to a record $22.211 TN. More curious, ROW Repo Liabilities surged $169 billion during the quarter (31% ann.) to a record $2.350 TN – with 11-quarter growth of $876 billion, or 59%. It’s reminiscent of the then unprecedented $300 billion increase in ROW repo liabilities in 2006/07.
For the Week:
The S&P500 declined 0.8% (up 11.9% y-t-d), and the Dow fell 1.6% (up 9.4%). The Utilities slumped 1.7% (up 0.4%). The Banks dipped 0.8% (up 14.5%), and the Broker/Dealers declined 1.2% (up 22.6%). The Transports fell 1.8% (up 18.8%). The S&P 400 Midcaps lost 1.9% (up 12.4%), and the small cap Russell 2000 dropped 2.4% (up 17.0%). The Nasdaq100 slipped 0.6% (up 16.3%). The Semiconductors added 0.8% (up 66.9%). The Biotechs dropped 3.4% (up 27.4%). With bullion retreating $81, the HUI gold index fell 2.2% (up 16.0%).
Three-month Treasury bill rates ended the week at 3.9081%. Two-year government yields surged 26 bps to 4.63% (up 115bps y-t-d). Five-year T-note yields jumped 24 bps to 4.78% (up 106bps). Ten-year Treasury yields rose 18 bps to 4.97% (up 80bps). Long bond yields gained 11 bps to 5.35% (up 51bps). Benchmark Fannie Mae MBS yields surged 26 bps to 6.04% (up 99bps).
Italian 10-year yields surged 20 bps to 4.35% (up 80bps y-t-d). Greek 10-year yields jumped 22 bps to 4.22% (up 78bps). Spain's 10-year yields gained 19 bps to 3.96% (up 67bps). German bund yields jumped 17 bps to 3.50% (up 65bps). French yields surged 26 bps to 4.45% (up 89bps). The French to German 10-year bond spread widened nine bps to 95 bps. U.K. 10-year gilt yields jumped 21 bps to 5.34% (up 86bps). U.K.’s FTSE equities index dropped 1.7% (up 7.1% y-t-d).
Japan’s Nikkei 225 Equities Index slumped 1.6% (up 27.2% y-t-d). Japan’s 10-year “JGB” yields rose seven bps to 2.99% (up 92bps y-t-d). France’s CAC40 declined 1.2% (up 0.4%). The German DAX equities index fell 1.8% (up 4.4%). Spain’s IBEX 35 equities index dipped 1.1% (up 14.6%). Italy’s FTSE MIB index added 0.8% (up 16.8%). EM equities were mixed. Brazil’s Bovespa index increased 1.1% (up 16.2%), while Mexico’s Bolsa index fell 1.5% (down 0.7%). South Korea’s Kospi rallied 3.3% (up 64.0%). India’s Sensex equities index lost 2.3% (down 12.2%). China’s Shanghai Exchange Index declined 1.1% (down 2.0%). Turkey’s Borsa Istanbul National 100 index rose 3.2% (up 28.5%).
Federal Reserve Credit increased $4.4 billion last week to $6.692 TN, with a 39-week expansion of $201 billion. Fed Credit was down $2.198 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.965 TN, or 80%. Fed Credit inflated $3.881 TN, or 138%, since November 7, 2012 (722 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt dropped $11 billion last week to $2.874 TN - just off the low back to August 2010. “Custody holdings” were down $267 billion y-o-y, or 8.%.
Total money market fund assets (MMFA) slipped $6.1 billion from last week's record to $7.973 TN. MMFA were up $670 billion, or 9.2%, y-o-y - having ballooned a historic $3.389 TN, or 74%, since October 26, 2022.
Total Commercial Paper dipped $4.5 billion to $1.437 TN. CP increased $36 billion, or 2.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates rose five bps to a 13-month high 6.76% (up 41bps y-o-y). Fifteen-year rates gained five bps to 6.09% (up 59bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up two bps to 6.84% (up 24bps).
Currency Watch:
For the week, the U.S. Dollar Index was about unchanged at 99.122 (up 0.8% y-t-d). On the upside, the Japanese yen increased 1.7%, the South Korean won 0.7%, the Norwegian krone 0.2%, the Brazilian real 0.2%, and the British pound 0.1%. On the downside, the Swedish krona declined 1.3%, the New Zealand dollar 1.1%, the South African rand 1.1%, the Swiss franc 0.8%, the Mexican peso 0.5%, the Australian dollar 0.5%, the Canadian dollar 0.3%, and the euro 0.1%. China's (onshore) renminbi increased 0.06% versus the dollar (up 4.18% y-t-d).
Commodities Watch:
September 7 – Bloomberg (Jessica Zhou and Jack Ryan): “China added the most gold to its reserves since 2023, accelerating purchases in August even as bullion prices surged. Holdings at the People’s Bank of China, one of the world’s biggest official-sector buyers, rose by 650,000 ounces… That extends the PBOC’s buying streak to 22 months.”
The Bloomberg Commodities Index gained 1.6% (up 32.4% y-t-d). Spot Gold fell 1.8% to $4,349 (up 0.7%). Silver dropped 2.6% to $64.4889 (down 10.0%). WTI Crude surged $8.57, or 9.4%, to $100.05 (up 74%). Gasoline rose 2.9% (up 93%), while Natural Gas fell 4.8% to $2.831 (down 23%). Copper retreated 2.0% (up 15%). Wheat declined 1.3% (up 39%), and Corn slipped 0.3% (up 16%). Bitcoin dropped $2,500, or 3.2%, to $77,300 (down 11.8%).
Market Instability Watch:
September 7 – Financial Times (Ian Smith, Sam Fleming and Emily Herbert): “The world’s governments have created a $2tn monster — a debt-servicing burden that gobbles up tax revenues and has the power to overwhelm elected leaders. More money is now spent on servicing the national debt than on defence in the UK, France and the US; the same is true for more than a dozen states in the 38-member OECD rich countries’ club. Their problem is that borrowing costs have climbed to the highest in almost two decades just as governments are taking on record debt. The total owed by the US government reached a record $40tn last month. This year, OECD nations are expected to borrow $18tn between them, another all-time high. In 2025, the group’s total debt-servicing bill exceeded $2tn, or 3% of GDP.”
September 9 – New York Times (Joe Rennison and Alan Rappeport): “The bond market issued a swift rebuke on Wednesday to the Trump administration’s latest attempt to lower borrowing costs, as the 10-year Treasury yield rose to its highest level in roughly three years. The Treasury Department said… morning that it would repurchase up to $6 billion of its own long-dated debt, fulfilling a promise to at least double its regular debt buybacks as it seeks to tame borrowing costs that have drifted steadily higher in recent months.”
September 10 – Axios (Matt Phillips): “The Treasury Department failed to cow the bond market Wednesday with its amped-up buyback announcement, as rates still rose. The reaction suggests that Treasury Secretary Scott Bessent’s unusual showdown with the markets could itself add to upward pressure on interest rates — precisely the opposite of what most think he’s trying to achieve. The Treasury announced… it would buy back $6 billion — triple what it initially planned — in long-term bonds per operation this quarter… While the stated reason for the buyback boost was to improve trading conditions in the bond market, traders saw it as an attempt by the Trump administration to try to push long-term bond yields down. So instead of bonds rallying on the news…, the price of U.S. government debt tumbled.”
September 10 – Financial Times (Benn Steil): “As budget pressures intensify in the US, the impact is hitting harder in the Treasuries market. The interest rate on 30-year US Treasury bonds has hit a 19-year high of 5.35%. The piling up, year after year, of historically large budget deficits — currently running at around 6% of GDP — has doubled interest payments as a share of GDP over that period to 3.2%. The annual net interest bill, currently running at more than a trillion dollars, now exceeds defence spending... What makes this spiral potentially explosive is that the interest rate demanded by investors to absorb this debt appears not to be a straight linear function of its growth. Instead, more debt seems to accelerate the rise in the rate demanded. The reason lies in who buys the debt. Nineteen years ago, 76% of US Treasury bonds were held by price-insensitive investors, such as central banks, who bought them more or less reflexively according to their stable reserve-management policies. Today, they hold only 43%.”
September 6 – Financial Times (Ruchir Sharma): “Doomsday warnings about America’s rising debt date to the 1970s, when the US government began running persistent budget deficits. Late in the next decade, a worried New York real estate developer placed the ‘national debt clock’ in Times Square. None of the warnings materialised, so like the boy who cried wolf, they became background noise, easy to ignore. Now, as in the fable, the wolf is approaching the door. Runaway debt is starting to matter, triggering a global sell-off in government bonds last month. And the first material impact could be that higher interest rates on US bonds short-circuit the AI boom. Going back 300 years, every major bubble ended only when borrowing costs rose significantly for the companies at its core, including the serial railroad busts of the 1800s. In the last century, the era of modern central banking, all big bubbles popped after central banks sharply raised their short-term lending rates.”
September 8 – Financial Times (Ian Smith): “The UK has paid the highest borrowing cost on a sale of its debt in almost three decades, as the global bond sell-off intensifies the pressure on public finances ahead of a crunch Budget. A £4bn sale of 30-year debt… was priced at a yield of 5.82%..., the highest interest rate on any gilt issuance since the DMO’s creation in 1998.”
September 8 – Bloomberg (John Cheng): “Japanese government bond yields near three-decade highs are giving fresh prominence to a long-discussed risk for global investors: the prospect of the nation’s vast pool of overseas capital returning home. While there’s little sign of a rush yet, some money managers say markets are underpricing how quickly that could change as JGBs become increasingly attractive — and how even a modest shift could ripple through the yen and global bond markets. ‘If domestic yields continue to rise, Japan may gradually retain more capital at home,’ said Ales Koutny, head of international rates at Vanguard Asset Management… ‘That matters not only for the yen and JGBs, but also for Treasury markets, European bond markets and broader global funding conditions.’”
September 9 – Financial Times (William Sandlund): “The gap between benchmark borrowing costs in the US and China has reached its widest level ever, threatening to accelerate a shift in capital flows between the world’s two biggest economies. The spread between 10-year bond yields in the US and China rose to a record 3.17 percentage points on Thursday…”
U.S. Credit Trouble Watch:
September 7 – Bloomberg (Editorial Board): “Every year, Americans send hundreds of billions of dollars of retirement savings to life insurers in return for annuities that promise a future income. It’s an industry built on trust and prudence. Recent headlines show those foundations are under threat. Insurers are taking on new kinds of risk, and regulators have fallen behind. Better oversight is essential for all concerned. Federal investigators are digging into the latest episode. Two insurers controlled by Mark Walter’s TWG Global failed to disclose that more than $20 billion of their holdings were backed by companies under Walter’s control. Suddenly 42%, not 3%, of the insurers’ assets were revealed to be affiliated investments.”
September 5 – Financial Times (Kate Duguid, Michelle Chan and Emily Herbert): “Borrowing costs in the riskiest corners of corporate America have climbed to their highest levels since the aftermath of Donald Trump’s ‘liberation day’ tariffs last year, as the recent sell-off in US Treasuries piles pressure on the most indebted companies… The extra yield, or spread, paid by companies rated triple-C or lower has risen to 10.53 percentage points, up from 8.08 percentage points a year ago, as investors warn that higher rates are making it tougher for weaker businesses to roll over their debt and increasing risks of ‘something breaking’ in bond markets. ‘There is broad pessimism in the least creditworthy tail of credit markets,’ said Craig Bergstrom, CIO of Corbin Capital Partners, adding that aggressive debt restructurings in recent years had also dented investor confidence in highly leveraged companies.”
September 8 – Bloomberg (Jack Farchy and Upmanyu Trivedi): “A fund managed by Jefferies Financial Group Inc. has accused Radiant World of falsifying iron ore invoices as part of a ‘fraudulent scheme’ against it in a $500 million London court claim. The lawsuit was filed in late August and led a judge to impose a worldwide freezing order against Radiant World and its founder… However, the details of the claim have not previously been made public, and represent one of the first public accusations of fraud against Radiant World from one of its major lenders. In a summary of its claim filed at the High Court…, LAM Trade Finance Group II LLC accused the defendants in the case of perpetrating a ‘fraudulent scheme’…”
September 7 – Financial Times (Sujeet Indap): “Companies owned by Apollo Global Management funds pay about one percentage point more than typical private equity firms to borrow in corporate loan markets, according to a new paper by two US academics. Vince Buccola of the University of Chicago and Greg Nini of Drexel University wrote in a research paper titled The Sponsor Premium that Apollo-led borrowings face this ‘considerable’ premium because of the group’s reputation for harshly treating creditors in balance sheet restructurings… The typical leveraged loan in the sample yielded just over 7%, making Apollo’s one percentage point drag costly… Apollo is ‘the sponsor most closely associated in market lore with aggressive treatment of lenders’, they wrote.”
September 5 – Bloomberg (Olivia Fishlow and Ellen DiMauro): “Inside Blue Owl Capital Inc.’s retail private credit fund, Loparex looked like most other investments at the end of last year. Its highest-priority loans were valued at 100 cents on the dollar, while its second-lien debt was marked a bit below 90. It only took a matter of months for all of it to look more like a zero. The latest blow came this week from Moody’s Ratings, which deemed the maker of adhesive liners in default and said it sees a Chapter 11 bankruptcy potentially in the cards. Blue Owl’s flagship public business development company, known as OBDC, put the Pamplona Capital Management-backed company on ‘non-accrual’ status…”
Global Credit Bubble and Boom Watch:
September 9 – Bloomberg (Finbarr Flynn): “Companies are ramping up borrowing in bond markets again after raising more than $70 billion Tuesday in the busiest global session since June, as borrowers seek to lock in funding before costs climb any higher… Issuers that priced debt on Tuesday were able to do so at a minimal extra spread to outstanding debt and attracted robust demand…”
September 9 – Bloomberg (Ronan Martin and Tasos Vossos): “An unprecedented number of US companies sold bonds in Europe on Wednesday, drawn by liquidity and attractive terms as their home market strains under a deluge of AI-related debt. Amazon.com Inc. wrapped up the sale of its first sterling bond while Uber Technologies Inc. completed its euro market debut. They were joined by four others. It’s the first time Europe has seen such a large number of US issuers in a single day…”
September 11 – Bloomberg (Anthony Hughes): “US convertible bond sales have reached their highest annual total on record, according to data compiled by Bloomberg, as companies look to fund heavy artificial intelligence-related spending. Companies with US listings have raised $131 billion from the sales of bonds that potentially convert into stock under certain conditions, with the $25 billion gathered in August propelling the annual total above the previous record from two years ago…”
September 8 – Wall Street Journal (Claire Ruckin and Eleanor Dunca): “Credit investors look set to be spoiled for choice as bankers gear up to offload in excess of $138 billion of buyout debt in coming months. The volume in the US is at the highest since the great financial crisis almost 20 years ago, and in Europe it’s the most since the pandemic in 2021, according to JPMorgan… Some deals are already being launched to get to the front of the queue with investors, while the bulk is set to come before US elections in November.”
September 7 – Financial Times (William Sandlund): “Offshore borrowing in China’s currency has hit a record high as a growing number of international corporations and foreign governments seek to take advantage of the country’s record-low interest rates to borrow cheaply. Issuance in China’s ‘dim sum’ and ‘panda’ bond markets has hit Rmb1tn ($149bn) so far this year…, putting it ahead of last year’s total, itself a record high. Borrowers can raise renminbi-denominated debt outside mainland China through the so-called dim sum bond market or in mainland China in what is known as the panda bond market.”
September 8 – Financial Times (Mercedes Ruehl): “The US AI borrowing boom is reshaping Switzerland’s traditionally conservative bond market, as technology giants pour billions of francs of debt into the country. The influx is beginning to affect domestic borrowers… AI-related companies have accounted for 26.4% of Swiss franc corporate bond issuance so far this year, according to new research from Zurich Insurance — the highest proportion of any major credit market. “
Leveraged Speculation Watch:
September 8 – Bloomberg (Vinicius Andrade): “The yen’s recent surge is unlikely to derail popular carry trades across emerging markets, according to Morgan Stanley strategists. The strategy, which involves borrowing cheaply in a low-yielding currency and putting the money to work in higher-yielding names, should be able to withstand the yen’s gains ‘without an additional catalyst that raises broader volatility,’ a team led by James Lord… wrote… ‘Global growth, global stock market performance and the bottom-up trends of key EMs are more important for the performance of EM carry trades than movements in JPY,’ they wrote. ‘On this, we remain constructive.’”
September 10 – Financial Times (Amelia Pollard): “Stanley Druckenmiller, a close ally of Federal Reserve chair Kevin Warsh, told a private Wall Street audience that US borrowing costs remained a ‘little low’ and central bankers who thought monetary policy was restrictive were ‘ridiculous’. The macro hedge fund manager, a longtime mentor of Treasury secretary Scott Bessent and Warsh, said in a closed-door meeting… that rate cuts ‘are no longer needed’. ‘Committee members on the Fed who keep saying fed funds rates are restrictive are just ridiculous,’ he told a packed crowd… at a conference hosted by Piper Sandler… ‘I believe in common sense, and all you have to do is look at asset prices around the world,’ Druckenmiller said.”
September 7 – Bloomberg (Hema Parmar and Katherine Burton): “Millennium Management is speeding toward a rarefied status in the hedge fund universe. Its assets have hit $97 billion…, more than double what Millennium oversaw six years ago. The ascent toward $100 billion has vaulted Izzy Englander’s firm past most of his largest competitors — even as they, too, are managing record sums — and landed him into territory that few other hedge funds have ever breached.”
September 9 – Bloomberg (Isabelle Lee): “An A corner of the ETF market drawing regulatory scrutiny is pushing for still shorter-term speculation. Defiance ETFs has submitted paperwork to the US Securities and Exchange Commission for a series of leveraged funds that would seek to double the moves of some individual stocks — over periods measured in just hours, rather than days.”
Iran War Watch:
September 11 – Financial Times (Andrew England): “Houthi rebels have captured several islands in the Red Sea and the Bab al-Mandeb Strait in an offensive that has roiled energy markets and cemented the Yemeni group’s control over the vital shipping artery. The Iranian-backed militants took over Perim Island, which splits the strait in two, as well as Zuqar and Hanish islands in the Red Sea, after a blitz along Yemen’s western coast and the capture of Mocha port on Thursday, according to Yemeni analysts. ‘Now they are fully in control of Bab al-Mandeb,’ said Ahmed Nagi, a Yemen analyst at Crisis Group, who has spoken with Yemeni government officials. ‘The moment they took Mocha, they took over all the islands facing Mocha.’”
September 10 – Financial Times (Andrew England): “Iran-backed Houthi rebels have seized the Yemeni Red Sea port of Mocha as they advance south towards the Bab al-Mandeb Strait, a vital waterway for international maritime trade. The capture of Mocha deals a significant blow to Saudi Arabia and the Yemeni forces it backs, and is a boost to Iran as it seeks to maintain pressure on global energy prices… Now, the Houthis’ expanding control of the Red Sea coastline means their forces are just 50km from the strait, enabling them to launch more precise attacks on shipping in the area, according to Ahmed Nagi, Yemen analyst at Crisis Group. ‘The Houthis have been preparing for this battle for a long time. For them, the coastline is the most strategic frontline,’ Nagi said. ‘They believe if they can take over the coast it will mean they will impose their demands on the Saudis, and they will provide good support to their backer, Iran.’”
September 10 – Reuters (Parisa Hafezi, Mohammed Ghobari and Timour Azhari): “The lightning Houthi advance down Yemen’s Red Sea coast this week came with direct guidance from Iran’s Revolutionary Guards seeking to open a new front in Iran’s war with the U.S., according to Yemeni government, Iranian and regional sources. By seizing the southwestern port city of Mocha, the Houthis have strengthened their chokehold on the Bab el-Mandeb Strait… Six months into the wider regional conflict between the Houthis’ Iranian allies and the United States, the group now looks focused on consolidating that grip on the strait even as opposing government forces backed by Saudi Arabia focus on an offensive in the north. Iran told the Houthis last week to escalate their attacks on Saudi Arabia, a close U.S. ally, and promised more funding, weapons and senior officers to help them do so, two Iranian sources said.”
September 8 – New York Times (Qasim Nauman and Vivian Nereim): “Saudi Arabia vowed… to retaliate against Yemen’s Iran-backed Houthi militia after attacks by the group injured 73 civilians in the south of the kingdom… With the latest attacks… the two sides appeared to be edging toward full-blown war after weeks of escalating tensions. The Houthis and the Saudi-backed government of Yemen have been at war since 2014, when the Houthis seized the capital, Sanaa. Soon after, Saudi Arabia led a bombing campaign to try to restore the internationally recognized government, plunging Yemen into a devastating civil war until a fragile truce was reached in 2022.”
September 8 – Financial Times (Andrew England): “A wave of Houthi missile and drone attacks on Saudi Arabia caused fires at energy facilities in the kingdom and wounded more than 70 people, marking a significant escalation by the Iranian-backed Yemeni rebels. The Saudi energy ministry said attacks… led to the ‘temporary halt in some operations’… The Houthi strikes, which targeted facilities in four southern cities in Saudi Arabia, appeared to be one of the biggest rebel attacks on the kingdom in years and underlined how a conflict that had been relatively calm is returning to full-blown war.”
September 9 – Wall Street Journal (Georgi Kantchev, Shelby Holliday and Costas Paris): “Iran is increasingly trying to escalate its conflict with the U.S. as it seeks to break a stalemate in the Strait of Hormuz that is strangling its economy. At least three times in the past week, Iranian forces have launched missiles at American warships, including an aircraft carrier, taking direct aim at the U.S. Navy in a way it hasn’t done since the start of the war. Iran also fired a large missile salvo at U.S. forces stationed in Jordan on Wednesday. The attempted strikes on warships have led to much closer calls than previous attempts, with Iran using maneuverable warheads, people familiar with the attacks said.”
September 9 – Bloomberg: “Iran is ready for a more intense war and will escalate counterstrikes if the US continues attacking its territory and infrastructure, according to a senior official from the Islamic Republic. Tehran has no intention of backing down in the face of an American naval blockade and attacks on its oil tankers, said the official… The economic pain for Iran may be increasing, they said, but the country’s leaders see the war with the US as posing an existential threat that leaves them little choice but to keep fighting.”
September 7 – Associated Press (Amir-Hussein Radjy and Cara Anna): “Iran state media… said a ballistic missile with improved capabilities was demonstrating a new doctrine: Tehran ‘will take action against any threat, even before it is carried out.’ The report by Iran’s state news agency repeatedly cited comments aired on state TV the day before by the head of Iran’s Supreme National Security Council, Mohsen Rezaei, who boasted of new missile capability and claimed it had been ‘tested’ against a U.S. warship.”
September 6 – Reuters (Nayera Abdallah and Eman Abouhassira): “Iran threatened on Monday to retaliate against any new U.S. attacks on its assets, warning that energy infrastructure across the Gulf, including U.S. oil and gas interests, was vulnerable. ‘Strike our assets and you get struck,’ Iranian Parliament Speaker Mohammad Baqer Qalibaf said after U.S. and Iranian strikes on shipping at the weekend that pushed oil prices up near six-week highs…”
September 9 – Reuters (Enas Alashray, Idrees Ali and Jana Choukeir): “Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, in the biggest wave of attacks on shipping by both sides since the start of the six-month-old war. The attacks sent the price of oil surging, with benchmark Brent crude futures breaching $100 a barrel for the first time since July. At least one seafarer aboard a tanker was reported killed and another listed as missing.”
September 9 – New York Times (Erika Solomon): “Iran has signaled that it is willing to escalate its fight with the United States, with senior leaders issuing increasingly sharp warnings in recent days after attacking American warships for the first time. The country’s leaders are taking a more aggressive approach as Iran faces mounting economic pressure and they worry that their grip on the Strait of Hormuz is slipping. The American blockade is making it nearly impossible for Iran to ship oil, its main money source. And in effect, Iran sees escalation as the primary leverage it has against the United States, analysts said, warning that the recent clashes could reignite a full-blown war.”
September 10 – Wall Street Journal (Anat Peled, Summer Said and Michael R. Gordon): “Iran has resumed its production of ballistic missiles using stockpiled components and working in underground facilities, officials from the U.S. and Middle East familiar with the matter said, eroding what the U.S. and Israel have touted as a major achievement of the war. Despite heavy attacks on its missile sites and industrial facilities during the initial phase of the war, Iran has been busy assembling liquid-propellant missiles, which have to be fueled just before launch, as well as solid-propellant missiles, which can be stored ready to fire… Intelligence points to activity at several underground sites, including the Khojir missile facility in southeastern Iran... Iran is also attempting to build new underground assembly points to avoid getting struck again, they said.”
September 8 – Associated Press (Samy Magdy, Sarah El Deeb and Qassim Abdul-Zahra): “In July, Saudi Arabia and the United States bombed Iran-backed militias in Iraq after blaming them for drone attacks on Saudi oil facilities that had been claimed by Yemen’s Houthi rebels, another Iranian ally. Now, regional officials tell The AP that the Houthis helped the Iraqi militias plan and execute the two-day swarm attack, showing a new level of coordination. Iran spent decades building up armed groups on Israel’s frontiers that suffered major losses in the wars following Hamas’ Oct. 7, 2023, attack out of Gaza… Regional officials and experts say Iran is now using the Iraqi militias and the Houthis to threaten Saudi Arabia and other American allies in the Gulf in order to drive up the costs of the war launched by the U.S. and Israel in February.”
Iran War Ramifications Watch:
September 9 – Reuters (Trixie Yap and Enes Tunagur): “Vessel transits via the Strait of Hormuz fell on Wednesday to seven from 12 the previous day, preliminary ship-tracking data showed…, with levels also below the 10-day average of 14. Out of these seven ships, four vessels exited and three entered… At the Bab el-Mandeb Strait, 28 commodity ships sailed through it on Wednesday, similar to the 10-day average of 27.”
September 10 – Financial Times (Verity Ratcliffe): “Saudi Arabia’s oil production has fallen to its lowest this year after Iran-backed Houthi rebels in Yemen threatened shipments from the kingdom’s west coast. Saudi Arabia told Opec it produced 6.2mn barrels a day in August, the lowest monthly figure in 2026 and 23% lower than in July… Yemen’s Houthi rebels announced a ‘maritime embargo’ against Saudi Arabia’s ports at the end of July, deterring ship operators from the area and reducing the country’s ability to export. With limited capacity to store oil, Saudi Arabia has been forced to reduce its output.”
September 9 – Bloomberg (Nicholas Lua): “The global refining sector’s diesel crunch is likely to result in tight supply for the coming months, keeping prices high and weighing on demand, according to analysts and traders. On top of more than six months of war in the Persian Gulf, impeding output there… the market is contending with the impact of Ukrainian drone strikes on Russian refineries, which have prompted the country to extend a ban on diesel exports. Fuel exports lost from the major processing hubs in the Middle East and Russia now amount to 2 million barrels a day each, Vitol Group’s CEO Russell Hardy told the Asia Pacific Petroleum Conference…”
September 6 – Reuters (Enes Tunagur and Jeslyn Lerh): “A shortage of fuel oil used in ships and power plants looms in the third quarter as refiners increasingly squeezed by wars that have disrupted both crude processing and tanker traffic prioritise output of diesel and other products at its expense. While crude oil has avoided major price spikes in recent months, refined product prices have soared as strikes damage refineries in Russia and the Middle East and curbs on ship traffic choke flows. China has also cut refining capacity and exports to avoid burning stocks. Tightening supply threatens to further raise costs for shipowners and power generators already dealing with war-related disruptions. Higher bunker fuel costs could also in turn feed into shipping rates.”
September 9 – Bloomberg (Weilun Soon): “Global tanker freight rates are surging to record levels with little respite in sight, a sign of the growing strain in oil markets as traders, shipowners, producers and buyers grapple with a drawn-out conflict in the Persian Gulf and increasingly complex workarounds. Earnings for supertankers sailing on the benchmark Middle East-to-China route are at a record of nearly $800,000 a day. Meanwhile, for the US Gulf to Asia run, charterers have been offered very large crude carriers at a record lump-sum fee of $29.5 million — close to $15 per barrel… ‘There’s quite a few bottlenecks all at the same time,’ Alex Grant, Equinor ASA’s global head of crude, products and liquids trading, said… ‘The market is quite stressed with all of that, and that’s showing up in the shipping rates.’”
Trump Administration Watch:
September 10 – Bloomberg (Patrick Sykes and Jonathan Tirone): “Iran and the US are digging in for a protracted war, with little sign of a near-term ceasefire or return to normal Middle East energy flows even if hostilities remain at a low intensity. Tehran’s leaders are resolved to keep fighting despite mounting economic costs as they see the conflict as an existential threat… The country has been able to rebuild its missile capabilities and will escalate strikes on US and Gulf assets if Washington intensifies its own attacks, the official said. Top White House advisers including Vice President JD Vance and Secretary of State Marco Rubio have told President Donald Trump that the war could drag on through the remainder of his term, which runs until January 2029…”
September 9 – Wall Street Journal (Alexander Ward, Shelby Holliday and Michael R. Gordon): “Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said… In the Oval Office and Situation Room, Vice President JD Vance, Secretary of State Marco Rubio and others have discussed with the president that Tehran could continue to resist U.S. pressure under the blockade and other military tactics, potentially extending the conflict past Inauguration Day in January 2029, the officials said. The closed-door discussions come as Trump told reporters… the war will end ‘immediately’ after the midterm elections in November ‘because they can’t hold out any longer.’”
September 6 – CNBC (Azhar Sukri and Garrett Downs): “U.S. Energy Secretary Chris Wright… said the U.S. may not reach an elusive deal to constrain Iran from obtaining a nuclear weapon… ‘There may not be a nuclear agreement. It may be simply destroying their capabilities to do it,’ Wright said… ‘An agreement may await the next administration in Iran. We simply don’t know that.’”
September 9 – Wall Street Journal (Damian Paletta): “President Trump on Wednesday night unleashed perhaps his biggest election-year promise to date. He vowed a $5,000 ‘dividend’ payment to every American adult citizen if Republicans retain control of the House and the Senate in the November midterms. This could be more than 200 million payments. He’s essentially promising more than $1 trillion in these ‘dividends’ unless income limit restrictions were put in place. Where would the money come from? He hinted it could come from tariff revenue, though that wasn’t completely clear. And how could this be done in a way that didn’t cause a spike in inflation?”
September 9 – Yahoo Finance (Jennifer Schonberger): “Treasury Secretary Scott Bessent said he believes the US can grow its way out of debt if it can achieve annual economic growth of 3%. ‘We don’t have a revenue problem. We have a spending problem,’ Bessent said during a Q&A… at SMU Cox School of Business in Dallas. If the US tries to contain spending coupled with 3% growth, he said, ‘we [can] grow our way out of this.’”
September 5 – CNBC (Spencer Kimball): “The Pentagon has received a big ownership stake in an obscure private oil company that will control crude reserves larger than ExxonMobil’s global portfolio if President Donald Trump’s Venezuela deal is successful. The deal comes eight months after Washington ousted… Nicolás Maduro in a military raid and co-opted the remaining regime led by interim President Delcy RodrÃguez. The RodrÃguez government has granted North American Blue Energy Partners, headquartered in Barbados, concessions to 17 oilfields in Venezuela for a century. NABEP’s CEO, Alejandro Betancourt, is a controversial figure who has faced investigations into his past ventures.”
Trade War Watch:
September 9 – Axios (Courtenay Brown): “President Trump said the U.S. would ban Canadian alcohol, some dairy products and large motorcycles, sharply escalating a trade war largely fought with tariffs. The measures deepen the economic rift between countries that have spent decades interlinking commerce, threatening disruption for businesses and consumers on both sides of the border. The import bans take effect Sept. 29, effectively cutting off U.S. market access for the targeted Canadian goods rather than simply making them more expensive.”
September 8 – New York Times (Tony Romm): “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. The duties apply to a variety of U.S. goods, including clothing, cheese, metal parts and wood products… For now, the economic effects of the tit-for-tat may be limited because the tariffs encompass only a small portion of the annual trade between the United States and Canada.”
September 8 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said his government will ‘do whatever it takes’ to backstop regions and industrial sectors targeted by U.S. tariffs as the trade conflict between the neighboring and closely-integrated economies enters a precarious stage… Carney said retaliatory tariffs on about $20 billion in U.S. goods… were necessary to protect domestic sectors and workers. ‘I don’t believe in escalating the conflict,’ said Carney. ‘The harsh reality is that the American tariffs will hurt some Canadians or others, and that was by design.’ As a result, ‘we will do whatever it takes for as long as it takes to bridge those people’ in affected sectors ‘to a better future,’ he said.”
September 7 – New York Times (Ian Austen): “With an insulted and angry nation solidly behind him, Prime Minister Mark Carney… is charging ahead in a bitter trade war with the United States started by President Trump, risking a further fraying of what once was one of the world’s closest alliances. Retaliatory tariffs… demonstrate Mr. Carney’s defiance toward increasing bombast by Mr. Trump, who has been trying to humiliate Canada economically after more than two weeks of finger pointing and threats. Mr. Carney’s response has distinguished him as one of the few world leaders standing up to Mr. Trump as he lashes out at American allies on a range of issues. The new measures will double the rate of existing tariffs that Canadian businesses pay on imported American steel and aluminum products and affect about 700 products, including aluminum foil, railway locomotives and steel bridges.”
September 8 – Axios (Courtenay Brown): “Trump is reaching for a more drastic trade war weapon, with new threats to shut foreign goods out of the U.S. altogether. It would mark a significant evolution of the administration’s trade agenda, with potentially bigger economic fallout than the tariffs that have defined it so far. Trump may also have firmer legal footing for some import bans than emergency tariffs. Federal trade laws explicitly give presidents the power to prohibit imports under certain conditions, even where courts have rejected their authority to impose tariffs. Businesses can absorb the cost of a tariff, pass it on to customers, or some combination of both. But losing access to a key part or product altogether can result in shortages, stalled production and a chaotic scramble to find new suppliers.”
September 7 – CNBC (Greg Iacurci and Lim Hui Jie): “Bombardier pointed out its footprint in the U.S. after President Donald Trump said the Canadian airplane manufacturer must build in America to access the local market. ‘NO MORE SELLING BOMBARDIER IN THE UNITED STATES!’ Trump wrote... ‘If they want our Market, they must build here, and stop treating America like a ‘piggybank.’’ Bombardier… said that its workers are based all over the U.S., with direct employment in more than 20 states and sites in 10 states, including California, Texas and Arizona. The company also added that its aircraft are built with American-made components such as engines, avionics and many more key systems provided by American companies.”
U.S./Russia/China/Europe/Iran Watch:
September 6 – Financial Times (Henry Foy, Sam Jones and Ben Hall): “Europe is failing to deter Russia’s ‘hybrid’ war against the continent, defence and intelligence officials have warned, and must rapidly develop new methods to suppress Moscow’s campaign against Nato member states... A foiled attack on Leipzig/Halle airport last month using a drone laden with military-grade explosives has underscored the level of Russian impunity over its aggressive approach towards Nato and the failure of existing deterrence methods… That near miss has provided a brutal wake-up call about Moscow’s intensifying hybrid campaign against Europe, and exposed Nato’s failure to deter Russia from staging attacks below the threshold to trigger the alliance’s ‘Article 5’ mutual defence clause.”
September 6 – Bloomberg: “Russian Foreign Minister Sergei Lavrov accused Germany of moving toward a direct confrontation with Russia as he criticized Berlin’s decision to close some diplomatic offices after a drone incident at Leipzig airport. ‘In general, this is, broadly speaking, kind of the beginning of a real war,’ Lavrov said… ‘I remember that before the start of World War II, the Great Patriotic War, the Germans also closed their diplomatic missions,’ Lavrov said. ‘They want war again.’”
New World Order Watch:
September 9 – Bloomberg (Lionel Laurent): “Is Canada becoming the European Union’s 28th state, rather than America’s 51st? Next week, Prime Minister Mark Carney will join EU President Ursula von der Leyen in announcing a plan for deeper ties as the Trump administration escalates its trade war against its neighbor. Closer trade, security, supply chains and critical raw materials are all on the table for allies looking to offset a wayward US hegemon. Talk of actually becoming a full EU member is more meme than reality… Still, the openness to talks on ‘anything other than membership’ is driving justified enthusiasm among the Ottawa and Brussels crowds…”
September 7 – Financial Times (Alice Hancock): “The rules governing global shipping are breaking down, the world’s largest maritime nations have warned, disrupted by wars and a growing shadow fleet that operates beyond western oversight. The shipping industry has for decades been protected by laws that ensure free navigation and the neutrality of commercial vessels, but the collapse of those principles is posing a severe risk to global trade, according to a group of 18 shipping superpowers. ‘Without maritime trade, supply chains would fragment and the global economy as we know it would come to a sudden halt,’ the group said…”
Ukraine War Watch:
September 6 – Wall Street Journal (Alexander Osipovich): “Ukraine’s long-range drone strikes are inflicting pain on some of the most strategic sectors of the Russian economy. The costs are adding up. By pounding refineries, shipping terminals and e-commerce warehouses, Ukraine is using economic pressure to weaken its larger foe and push Moscow to end the conflict. Russian President Vladimir Putin has declared that the strikes won’t change his military aims, and Russia has hit back with its own ruthless drone strikes.”
Taiwan Watch:
September 6 – Bloomberg (Andreo Calonzo): “For decades, China’s maritime pressure on Taiwan centered on the major shipping strait separating the two neighbors. Now, Beijing is piling unprecedented pressure on its Pacific coast — a vital lifeline with US allies. China has deployed on average two Coast Guard cutters per month east of Taiwan since June, after Japan and the Philippines announced plans to define their overlapping maritime border in the region. The appearance of those vessels marks the first time such patrols have been reported in the area in data going back to January 2025.”
AI Bubble/Arms Race Watch:
September 9 – Bloomberg (Lorelei Smillie): “Artificial intelligence companies in the US have spent hundreds of billions of dollars to develop advanced chatbots, betting they can earn enough from customers to justify the investment. That approach carries the risk of being undermined by rivals who build competing AI systems for far less. US security agencies on Sept. 8 accused Chinese competitors, including DeepSeek and Kimi maker Moonshot AI, of doing just that by improperly piggybacking on leading American AI models using a technique known as distillation. The Chinese firms since at least 2024 have accessed and drawn information from US AI models ‘at an industrial scale’ to train their own systems, according to… the National Security Agency, FBI and Cybersecurity and Infrastructure Security Agency.”
September 9 – Bloomberg (Saritha Rai): “DeepSeek rolled out an AI model that charges as little as a fraction of a cent per million tokens, ramping up the pressure on rivals from Anthropic PBC to Z.AI Co. The Chinese startup unveiled the V4.1 Flash on Thursday, a slimmed-down platform it claims outperformed mainstays such as Moonshot’s Kimi K3, yet offers a steep discount... DeepSeek’s latest move highlights the intensifying price battle between Chinese open-weight models and their US counterparts, at a time Anthropic and ChatGPT-developer OpenAI are preparing to go public.”
September 10 – Axios (Jim VandeHei and Mike Allen): “Two seemingly contradictory realities are true at once: Most people find AI only modestly useful, a more clever Google search. Many people building AI or using it obsessively worry it could severely damage or destroy humanity. We’re living in an AI twilight zone. For many, the technology is simultaneously underwhelming in daily use and terrifying in its trajectory. The gap between these two realities helps explain why confusion and fear are exploding across politics, AI labs and business. The AI labs are in full panic. They worry the public dislikes AI and despises data centers — and that's before Anthropic insiders went public with their latest warnings that AI could end humanity this decade.”
September 8 – Bloomberg (Dawn Lim, Preeti Singh, and Dina Bass): “Alphabet Inc. and Blackstone Inc.’s new cloud venture has hit delays for major data-center locations that were supposed to run Google’s chips, underscoring the obstacles standing in the way of Big Tech’s AI ambitions. Crux AI — known internally as ‘Project Braid’ — was launched with $5 billion from Blackstone and aims to rent Google AI processors to customers in 2027. The business joins a growing number of neoclouds, entities that lease chips and computing capacity.”
Bubble Watch:
September 9 – Bloomberg (Tim LeeMaster and Scarlet Fu): “With the Labor Day holiday — and summer in the US — now officially over, the traditional push to the end of the year in the market for initial public offerings is on. While Anthropic PBC looms largest in most eyes, a clutch of other companies in artificial intelligence and other sectors are also soon headed for the public markets… IPO candidates include AI cloud computing firm Nscale, power supplier Aggreko Plc and consumer medical technology maker Oura Health Oy.”
Inflation Watch:
September 7 – Axios (Ben Berkowitz): “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… Energy inflation shows up across the entire economy, and the recent surge in diesel prices in particular threatens to have a dramatic impact on freight and travel in the weeks and months to come. The Iran War Energy Cost Tracker from Brown’s Watson School says higher gasoline and diesel prices have cost the average U.S. household more than $760 since the war began Feb. 28.”
September 10 – Axios (Courtenay Brown): “Renewed inflation risks are complicating the economic outlook on both sides of the Atlantic. In the U.S., wholesale prices accelerated in August, boosting expectations for a Fed rate hike next week… U.S. wholesale prices rose 0.4% in August and 5.4% from a year earlier, largely reflecting higher energy costs. Goods prices jumped 1.1%, reversing two months of declines. Diesel surged 24% in a single month, accounting for more than a third of the goods increase and raising costs for moving goods. Transportation and warehousing costs gained 2.3%, a sign higher fuel costs may be bleeding into shipping.”
September 8 – Wall Street Journal (Giulia Petroni): “Copper prices climbed to fresh records on U.S. and UK exchanges as distortions to trade flows due to concerns over potential U.S. tariffs collided with supply challenges at key mines worldwide. Three-month copper futures rose 1.5% to $14,728 a metric ton… after touching an intraday high of $14,779. The metal is up nearly 18% this year.”
Federal Reserve Watch:
September 8 – Bloomberg (Claudia Sahm): “At Jackson Hole last month, all eyes were on Federal Reserve Chair Kevin Warsh in his first speech at the Fed’s annual conference. But all thoughts were about the Fed’s rate decision next week. Kenneth Rogoff, a Harvard economist who was at Jackson Hole as a lunchtime speaker, offered this advice…: ‘If they can possibly put it off till after the midterms, it would be good for the institution.’ Given President Donald Trump’s attacks on the Fed, he asked: ‘If you’re trying to preserve Fed independence, are you preserving it better by spitting in his face, or are you preserving it better by laying low and waiting until the winter?’ But playing politics to preserve independence is a terrible strategy for the Fed.”
U.S. Economic Bubble Watch:
September 10 – Reuters (Lucia Mutikani): “The number of Americans filing claims for unemployment benefits fell last week, suggesting that layoffs remained low and continued to anchor the labor market. Initial claims for state unemployment benefits dipped 1,000 to a seasonally adjusted 206,000 for the week ended September 5… The… number of people receiving unemployment benefits after an initial week of aid… slipped 1,000 to a seasonally adjusted 1.774 million…”
September 6 – Wall Street Journal (Theo Francis and Ray A. Smith): “For most U.S. workers—those without college degrees, that is—it is one of the best job markets in decades. In fact, the unemployment rate for workers ages 22 to 34 who never graduated from college has rarely been lower in the past two decades, according to a new analysis by labor-market think tank Burning Glass Institute. What is just as remarkable is how different that is from the experience of job seekers who did graduate from college, says Gad Levanon, Burning Glass’s chief economist. For most of the past two decades, the two groups largely tracked each other, in good economic times and bad.”
September 10 – CNBC (Diana Olick): “The average rate on the popular 30-year fixed mortgage crossed over 7% on Thursday for the first time since May 2025, hitting 7.07%... That is an increase of 10 bps from Wednesday… ‘It’s been a rough couple of days for the bond market,’ said Matthew Graham, chief operating officer at Mortgage News Daily.”
September 10 – Associated Press (Alex Veiga): “Sales of previously occupied U.S. homes declined in August to their slowest annual pace in more than a year as home shoppers grappled with rising mortgage rates and home prices. Existing home sales fell 2% last month from July to a seasonally adjusted annual rate of 3.98 million units… This is the third straight monthly decline. Sales also fell 1.2% compared with August last year… Despite the latest pullback, existing U.S. home sales are running 1.6% higher through the first eight months of this year… The U.S. median sales price increased 1.6% in August from a year earlier to $429,100, an all-time high for… August... Home prices have risen on an annual basis for 38 months in a row… Although home inventory levels remain well below historical norms, there were 1.62 million unsold homes at the end of last month, up 3.2% from July and up 5.9% from August last year…”
September 8 – Bloomberg (Jeffrey Sparshott and Julia Fanzeres): “US consumer borrowing increased in July by more than expected, reflecting the biggest advance in non-revolving credit in three years. Total credit outstanding rose $18.1 billion after a revised $14.6 billion advance in June… Non-revolving credit, such as loans for vehicle purchases and school tuition, jumped $15.3 billion in July. Meantime, credit-card and other revolving debt outstanding rose $2.8 billion.”
September 8 – Bloomberg (Maria Eloisa Capurro): “More US consumers in August reported a deterioration in their household finances over the past year, and more expect things will get worse in the year ahead, according to a Federal Reserve Bank of New York survey… The proportion of Americans reporting their financial situation was much worse or somewhat worse than a year ago rose to 38.6% last month, up from 37.6% in July. Those who expected their finances to get much worse or somewhat worse in the year ahead also climbed to 32.6% from 30.3%... Workers’ perceived probability of losing their job in the next year fell to 13.8%, the lowest reading since February… Consumers expectations for inflation one and five years ahead were unchanged at 3.6% and 3%...”
September 9 – Bloomberg (Laura Curtis): “The Port of Los Angeles just completed its busiest three-month run on record, as the early peak season stretched through August and importers navigated changing tariff policies and extreme weather across the globe. Dockworkers at the busiest US container gateway moved than 2.9 million container units in June, July, and August combined, marking the busiest three-month period in the port’s history.”
China Watch:
September 6 – Financial Times (Joe Leahy): “China is pumping Rmb360bn ($54bn) into its biggest banks and insurers in a bid to prop up the financial sector’s declining margins and create buffers to boost economic growth. Eight institutions including state-run commercial banks ICBC and Agricultural Bank and insurers China Life and China Reinsurance announced they would receive a total of Rmb300bn in fresh equity… ICBC and AgBank aim to raise a combined Rmb260bn and will use the funds to boost their core tier one capital ratios. China’s five biggest state-owned banks posted 3 to 5% profit growth for the first half of this year, with ICBC and AgBank among the country’s most profitable listed companies.”
September 7 – Reuters (Yukun Zhang and Liz Lee): “China’s export growth quickened last month, buoyed by strong overseas appetite for high-tech and AI-related products, providing vital support for an economy weighed down by sluggish domestic demand… Exports from the world’s second-biggest economy surged 25% year-on-year in August in U.S. dollar terms…, accelerating from the 23.9% growth in the previous month… Imports jumped 28.2%, compared with a 27.5% year-on-year increase in July… In the first eight months, exports of high-tech products rose 42.9% in U.S. dollar value terms.”
September 8 – Bloomberg: “China’s consumer inflation accelerated for the first time since April and factory-gate prices grew faster than expected, as more expensive food and energy revive cost pressures. The consumer-price index rose 0.8% in August from a year earlier, in line with forecasts and up from 0.5% in the previous month… Producer inflation rebounded to 3.8% from 3.5% in July…”
September 8 – Bloomberg: “Chinese banks are increasingly buying government bonds to improve returns as a depressed mortgage and consumer loan market leaves them with few options to deploy capital. Claims on the government — a proxy for such debt held by banks — accounted for 16.4% of lenders’ total assets in July, up from 11.5% five years ago… The equivalent share on residents, which typically consist of more profitable home and consumer loans, fell to 16.4% from 20.3%.”
September 6 – Bloomberg: “China’s recent overhaul of the way homes are sold will exacerbate already stretched local government finances, fueling a 30% drop in land sale revenues, Goldman Sachs… economists said. That estimate exceeds the bank’s earlier forecast of a 20% decline, according to… economist Lisheng Wang. He pointed to China’s recent move to shift developers away from a popular presale model and toward offering completed properties, something that could make it harder for cash-strapped developers to buy land… In the first seven months of the year, land sales revenue by local governments nationwide dropped 30.8% to 1.2 trillion yuan ($179bn)…”
Central Banker Watch:
September 10 – Financial Times (Olaf Storbeck and Ian Smith): “The European Central Bank said it was bracing for ‘longer-lasting’ inflation that will drag on well into 2027 as it raised interest rates by a quarter point to 2.5%..., the second increase this year. ECB president Christine Lagarde warned that inflation will only return to the central bank’s medium-term 2% target ‘by the end of 2027’ after its governing council unanimously voted to lift borrowing costs in the Eurozone to a level last seen in April 2025.”
Europe/UK Watch:
September 10 – Financial Times (Leila Abboud): “France expects the cost of servicing its national debt to increase by 25% this year to €65bn, aggravated by geopolitical crises and turmoil in global bond markets. ‘Today we spend more on servicing the debt than on educating our kids or defending our nation,’ the country’s finance minister Roland Lescure said…”
September 7 – Associated Press (Geir Moulson and Kirsten Grieshaber): “German Chancellor Friedrich Merz doubled down… on pushing through unpopular reforms to Europe’s largest economy after a far-right party surged to a landslide victory in a regional election, with a very good chance of forming the first far-right state government since the Nazi era. Merz said his center-right Christian Democratic Union was ‘deeply shocked’ by what he called ‘the most serious election defeat that the CDU has had for years, for decades.’ But he indicated that he’s determined to stay at the helm and said that ‘giving up is not an option for me.’”
September 7 – Bloomberg (James Hertling): “The Alternative for Germany’s record election victory in the eastern state of Saxony-Anhalt… marked a milestone not just for the far right but for Europe’s tilt toward Vladimir Putin. The anti-immigration party known by its German acronym, AfD, has openly sympathized with the Russian president’s attempt to batter Ukraine into submission… Pressed about the connection between the AfD and Russia, German Chancellor Friedrich Merz said the result would clearly please the Kremlin. ‘The goal of the Russian leadership is the destabilization of the value system that we have called the West,’ Merz told reporters… ‘And this value system is not up for discussion.’”
Japan Watch:
September 11 – Reuters (Leika Kihara): “Japan's wholesale inflation remained elevated in August, data showed on Friday, highlighting mounting price pressures that cement the case for the central bank to raise interest rates this month… The producer price index rose 7.6% in August from a year earlier, faster than a median market forecast for a 7.4% increase…”
September 7 – Reuters (Makiko Yamazaki): “Japan’s foreign reserves posted their biggest-ever drop in August…, after Tokyo launched another round of record dollar-selling, yen-buying intervention to stem persistent weakness in its currency. The reserves stood at $1.208 trillion at the end of August, down by a record $79.6 billion, or 6.18%, from $1.287 trillion a month earlier…”
September 10 – Reuters (Leika Kihara): “The Bank of Japan may eventually be forced to raise interest rates rapidly if inflation accelerates given the country’s loose financial conditions, board member Kazuyuki Masu said, warning of price risks that solidify the chance of a September hike… Masu warned of broadening price pressures that have pushed underlying inflation ‘very close’ to its 2% target. He also said… the BOJ must pull real interest rates out of negative territory as soon as possible, signalling his concern over the demerits of too-low borrowing costs.”
September 9 – Reuters (Satoshi Sugiyama): “Business confidence among big Japanese manufacturers climbed in September to its highest level since December 2021, buoyed by robust semiconductor and data-centre-related demand… The Reuters Tankan sentiment index for manufacturers rose to plus-21 from plus-18 in August, extending a steady recovery from plus-7 in April. Non-manufacturers' sentiment edged up to plus-29 from plus-28…”
September 7 – Bloomberg (Erica Yokoyama): “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… Nominal pay climbed 4.7% in July from a year earlier, following a revised 4% increase in June… The gain, the biggest since 1997, far exceeded economists’ forecast of 3.8% and marked a sixth straight month in which the advance exceeded 3%, the longest such streak in 34 years.”
Social, Political, Environmental, Cybersecurity Instability Watch:
September 10 – Bloomberg (Brian K Sullivan): “The powerful El Niño that’s already disrupting global weather patterns has a 75% chance of becoming ‘a historic event,’ surpassing all records dating back to 1950, the US Climate Prediction Center said. El Niño will likely keep getting stronger through the end of the year, the center said… The more powerful it becomes, the more likely it threatens to affect global weather in predictable ways. El Niño, which emerged in June, has strengthened since then, worsening drought in Central America that slowed traffic through the Panama Canal and fueling wildfires in Indonesia that have pushed up palm oil prices. Those disruptions are adding to inflation and supply-chain pressures already heightened by the war in Iran.”
September 9 – Financial Times (Attracta Mooney and Aditi Bhandari): “Scientists predicted a brutal year ahead as climate change and the El Niño pattern collide, after the latest data showed sea temperatures broke heat records for 100 days and August was the equal hottest on record. The European earth observation service said the global average surface air temperature in August was 1.65C higher than the pre-industrial baseline, reaching just under 17C. This put it on a par with the previous record set in July 2023. The global sea temperature in August was put at 21.07C. This week marked 100 consecutive days of record warming since early June, according to… the US National Oceanic and Atmospheric Administration.”
September 9 – New York Times (Raymond Zhong): “Last month tied July 2023 as the planet’s hottest month on record, European scientists said… Dangerous heat hammered Europe for the fifth time since May. Temperatures soared into the triple digits across the southern United States from California to Texas. South Korea recorded its highest temperature reading in modern history: 108.5 degrees Fahrenheit in the southern city of Yangsan on Aug. 2. August tied the record for the oceans’ hottest month in history as well, scientists said…”
September 6 – Financial Times (Christine Murray in Mexico City and Jamie Smyth): “The Panama Canal may be forced to cut shipping transits due to sharp declines in its water levels, adding to the global trade disruptions caused by the Iran War, its new administrator has warned. Daily transits through the canal could fall to as low as 27, down from an already reduced number of 32 — a decline that would amount to a ‘worst-case scenario,’ warned Ilya Espino de Marotta… The Panama Canal Authority modelled the estimates on rainfall patterns last seen in 1997, the driest year on record for the canal. Climate change was making water shortages a problem ‘every three years or so’ for the canal… ‘[Climate change is] the most important thing because, I mean, we can see how the frequency of dry years is increasing,’ she said…”
The S&P500 declined 0.8% (up 11.9% y-t-d), and the Dow fell 1.6% (up 9.4%). The Utilities slumped 1.7% (up 0.4%). The Banks dipped 0.8% (up 14.5%), and the Broker/Dealers declined 1.2% (up 22.6%). The Transports fell 1.8% (up 18.8%). The S&P 400 Midcaps lost 1.9% (up 12.4%), and the small cap Russell 2000 dropped 2.4% (up 17.0%). The Nasdaq100 slipped 0.6% (up 16.3%). The Semiconductors added 0.8% (up 66.9%). The Biotechs dropped 3.4% (up 27.4%). With bullion retreating $81, the HUI gold index fell 2.2% (up 16.0%).
Three-month Treasury bill rates ended the week at 3.9081%. Two-year government yields surged 26 bps to 4.63% (up 115bps y-t-d). Five-year T-note yields jumped 24 bps to 4.78% (up 106bps). Ten-year Treasury yields rose 18 bps to 4.97% (up 80bps). Long bond yields gained 11 bps to 5.35% (up 51bps). Benchmark Fannie Mae MBS yields surged 26 bps to 6.04% (up 99bps).
Italian 10-year yields surged 20 bps to 4.35% (up 80bps y-t-d). Greek 10-year yields jumped 22 bps to 4.22% (up 78bps). Spain's 10-year yields gained 19 bps to 3.96% (up 67bps). German bund yields jumped 17 bps to 3.50% (up 65bps). French yields surged 26 bps to 4.45% (up 89bps). The French to German 10-year bond spread widened nine bps to 95 bps. U.K. 10-year gilt yields jumped 21 bps to 5.34% (up 86bps). U.K.’s FTSE equities index dropped 1.7% (up 7.1% y-t-d).
Japan’s Nikkei 225 Equities Index slumped 1.6% (up 27.2% y-t-d). Japan’s 10-year “JGB” yields rose seven bps to 2.99% (up 92bps y-t-d). France’s CAC40 declined 1.2% (up 0.4%). The German DAX equities index fell 1.8% (up 4.4%). Spain’s IBEX 35 equities index dipped 1.1% (up 14.6%). Italy’s FTSE MIB index added 0.8% (up 16.8%). EM equities were mixed. Brazil’s Bovespa index increased 1.1% (up 16.2%), while Mexico’s Bolsa index fell 1.5% (down 0.7%). South Korea’s Kospi rallied 3.3% (up 64.0%). India’s Sensex equities index lost 2.3% (down 12.2%). China’s Shanghai Exchange Index declined 1.1% (down 2.0%). Turkey’s Borsa Istanbul National 100 index rose 3.2% (up 28.5%).
Federal Reserve Credit increased $4.4 billion last week to $6.692 TN, with a 39-week expansion of $201 billion. Fed Credit was down $2.198 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.965 TN, or 80%. Fed Credit inflated $3.881 TN, or 138%, since November 7, 2012 (722 weeks). Elsewhere, NY Fed holdings for foreign owners of Treasury, Agency Debt dropped $11 billion last week to $2.874 TN - just off the low back to August 2010. “Custody holdings” were down $267 billion y-o-y, or 8.%.
Total money market fund assets (MMFA) slipped $6.1 billion from last week's record to $7.973 TN. MMFA were up $670 billion, or 9.2%, y-o-y - having ballooned a historic $3.389 TN, or 74%, since October 26, 2022.
Total Commercial Paper dipped $4.5 billion to $1.437 TN. CP increased $36 billion, or 2.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates rose five bps to a 13-month high 6.76% (up 41bps y-o-y). Fifteen-year rates gained five bps to 6.09% (up 59bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up two bps to 6.84% (up 24bps).
Currency Watch:
For the week, the U.S. Dollar Index was about unchanged at 99.122 (up 0.8% y-t-d). On the upside, the Japanese yen increased 1.7%, the South Korean won 0.7%, the Norwegian krone 0.2%, the Brazilian real 0.2%, and the British pound 0.1%. On the downside, the Swedish krona declined 1.3%, the New Zealand dollar 1.1%, the South African rand 1.1%, the Swiss franc 0.8%, the Mexican peso 0.5%, the Australian dollar 0.5%, the Canadian dollar 0.3%, and the euro 0.1%. China's (onshore) renminbi increased 0.06% versus the dollar (up 4.18% y-t-d).
Commodities Watch:
September 7 – Bloomberg (Jessica Zhou and Jack Ryan): “China added the most gold to its reserves since 2023, accelerating purchases in August even as bullion prices surged. Holdings at the People’s Bank of China, one of the world’s biggest official-sector buyers, rose by 650,000 ounces… That extends the PBOC’s buying streak to 22 months.”
The Bloomberg Commodities Index gained 1.6% (up 32.4% y-t-d). Spot Gold fell 1.8% to $4,349 (up 0.7%). Silver dropped 2.6% to $64.4889 (down 10.0%). WTI Crude surged $8.57, or 9.4%, to $100.05 (up 74%). Gasoline rose 2.9% (up 93%), while Natural Gas fell 4.8% to $2.831 (down 23%). Copper retreated 2.0% (up 15%). Wheat declined 1.3% (up 39%), and Corn slipped 0.3% (up 16%). Bitcoin dropped $2,500, or 3.2%, to $77,300 (down 11.8%).
Market Instability Watch:
September 7 – Financial Times (Ian Smith, Sam Fleming and Emily Herbert): “The world’s governments have created a $2tn monster — a debt-servicing burden that gobbles up tax revenues and has the power to overwhelm elected leaders. More money is now spent on servicing the national debt than on defence in the UK, France and the US; the same is true for more than a dozen states in the 38-member OECD rich countries’ club. Their problem is that borrowing costs have climbed to the highest in almost two decades just as governments are taking on record debt. The total owed by the US government reached a record $40tn last month. This year, OECD nations are expected to borrow $18tn between them, another all-time high. In 2025, the group’s total debt-servicing bill exceeded $2tn, or 3% of GDP.”
September 9 – New York Times (Joe Rennison and Alan Rappeport): “The bond market issued a swift rebuke on Wednesday to the Trump administration’s latest attempt to lower borrowing costs, as the 10-year Treasury yield rose to its highest level in roughly three years. The Treasury Department said… morning that it would repurchase up to $6 billion of its own long-dated debt, fulfilling a promise to at least double its regular debt buybacks as it seeks to tame borrowing costs that have drifted steadily higher in recent months.”
September 10 – Axios (Matt Phillips): “The Treasury Department failed to cow the bond market Wednesday with its amped-up buyback announcement, as rates still rose. The reaction suggests that Treasury Secretary Scott Bessent’s unusual showdown with the markets could itself add to upward pressure on interest rates — precisely the opposite of what most think he’s trying to achieve. The Treasury announced… it would buy back $6 billion — triple what it initially planned — in long-term bonds per operation this quarter… While the stated reason for the buyback boost was to improve trading conditions in the bond market, traders saw it as an attempt by the Trump administration to try to push long-term bond yields down. So instead of bonds rallying on the news…, the price of U.S. government debt tumbled.”
September 10 – Financial Times (Benn Steil): “As budget pressures intensify in the US, the impact is hitting harder in the Treasuries market. The interest rate on 30-year US Treasury bonds has hit a 19-year high of 5.35%. The piling up, year after year, of historically large budget deficits — currently running at around 6% of GDP — has doubled interest payments as a share of GDP over that period to 3.2%. The annual net interest bill, currently running at more than a trillion dollars, now exceeds defence spending... What makes this spiral potentially explosive is that the interest rate demanded by investors to absorb this debt appears not to be a straight linear function of its growth. Instead, more debt seems to accelerate the rise in the rate demanded. The reason lies in who buys the debt. Nineteen years ago, 76% of US Treasury bonds were held by price-insensitive investors, such as central banks, who bought them more or less reflexively according to their stable reserve-management policies. Today, they hold only 43%.”
September 6 – Financial Times (Ruchir Sharma): “Doomsday warnings about America’s rising debt date to the 1970s, when the US government began running persistent budget deficits. Late in the next decade, a worried New York real estate developer placed the ‘national debt clock’ in Times Square. None of the warnings materialised, so like the boy who cried wolf, they became background noise, easy to ignore. Now, as in the fable, the wolf is approaching the door. Runaway debt is starting to matter, triggering a global sell-off in government bonds last month. And the first material impact could be that higher interest rates on US bonds short-circuit the AI boom. Going back 300 years, every major bubble ended only when borrowing costs rose significantly for the companies at its core, including the serial railroad busts of the 1800s. In the last century, the era of modern central banking, all big bubbles popped after central banks sharply raised their short-term lending rates.”
September 8 – Financial Times (Ian Smith): “The UK has paid the highest borrowing cost on a sale of its debt in almost three decades, as the global bond sell-off intensifies the pressure on public finances ahead of a crunch Budget. A £4bn sale of 30-year debt… was priced at a yield of 5.82%..., the highest interest rate on any gilt issuance since the DMO’s creation in 1998.”
September 8 – Bloomberg (John Cheng): “Japanese government bond yields near three-decade highs are giving fresh prominence to a long-discussed risk for global investors: the prospect of the nation’s vast pool of overseas capital returning home. While there’s little sign of a rush yet, some money managers say markets are underpricing how quickly that could change as JGBs become increasingly attractive — and how even a modest shift could ripple through the yen and global bond markets. ‘If domestic yields continue to rise, Japan may gradually retain more capital at home,’ said Ales Koutny, head of international rates at Vanguard Asset Management… ‘That matters not only for the yen and JGBs, but also for Treasury markets, European bond markets and broader global funding conditions.’”
September 9 – Financial Times (William Sandlund): “The gap between benchmark borrowing costs in the US and China has reached its widest level ever, threatening to accelerate a shift in capital flows between the world’s two biggest economies. The spread between 10-year bond yields in the US and China rose to a record 3.17 percentage points on Thursday…”
U.S. Credit Trouble Watch:
September 7 – Bloomberg (Editorial Board): “Every year, Americans send hundreds of billions of dollars of retirement savings to life insurers in return for annuities that promise a future income. It’s an industry built on trust and prudence. Recent headlines show those foundations are under threat. Insurers are taking on new kinds of risk, and regulators have fallen behind. Better oversight is essential for all concerned. Federal investigators are digging into the latest episode. Two insurers controlled by Mark Walter’s TWG Global failed to disclose that more than $20 billion of their holdings were backed by companies under Walter’s control. Suddenly 42%, not 3%, of the insurers’ assets were revealed to be affiliated investments.”
September 5 – Financial Times (Kate Duguid, Michelle Chan and Emily Herbert): “Borrowing costs in the riskiest corners of corporate America have climbed to their highest levels since the aftermath of Donald Trump’s ‘liberation day’ tariffs last year, as the recent sell-off in US Treasuries piles pressure on the most indebted companies… The extra yield, or spread, paid by companies rated triple-C or lower has risen to 10.53 percentage points, up from 8.08 percentage points a year ago, as investors warn that higher rates are making it tougher for weaker businesses to roll over their debt and increasing risks of ‘something breaking’ in bond markets. ‘There is broad pessimism in the least creditworthy tail of credit markets,’ said Craig Bergstrom, CIO of Corbin Capital Partners, adding that aggressive debt restructurings in recent years had also dented investor confidence in highly leveraged companies.”
September 8 – Bloomberg (Jack Farchy and Upmanyu Trivedi): “A fund managed by Jefferies Financial Group Inc. has accused Radiant World of falsifying iron ore invoices as part of a ‘fraudulent scheme’ against it in a $500 million London court claim. The lawsuit was filed in late August and led a judge to impose a worldwide freezing order against Radiant World and its founder… However, the details of the claim have not previously been made public, and represent one of the first public accusations of fraud against Radiant World from one of its major lenders. In a summary of its claim filed at the High Court…, LAM Trade Finance Group II LLC accused the defendants in the case of perpetrating a ‘fraudulent scheme’…”
September 7 – Financial Times (Sujeet Indap): “Companies owned by Apollo Global Management funds pay about one percentage point more than typical private equity firms to borrow in corporate loan markets, according to a new paper by two US academics. Vince Buccola of the University of Chicago and Greg Nini of Drexel University wrote in a research paper titled The Sponsor Premium that Apollo-led borrowings face this ‘considerable’ premium because of the group’s reputation for harshly treating creditors in balance sheet restructurings… The typical leveraged loan in the sample yielded just over 7%, making Apollo’s one percentage point drag costly… Apollo is ‘the sponsor most closely associated in market lore with aggressive treatment of lenders’, they wrote.”
September 5 – Bloomberg (Olivia Fishlow and Ellen DiMauro): “Inside Blue Owl Capital Inc.’s retail private credit fund, Loparex looked like most other investments at the end of last year. Its highest-priority loans were valued at 100 cents on the dollar, while its second-lien debt was marked a bit below 90. It only took a matter of months for all of it to look more like a zero. The latest blow came this week from Moody’s Ratings, which deemed the maker of adhesive liners in default and said it sees a Chapter 11 bankruptcy potentially in the cards. Blue Owl’s flagship public business development company, known as OBDC, put the Pamplona Capital Management-backed company on ‘non-accrual’ status…”
Global Credit Bubble and Boom Watch:
September 9 – Bloomberg (Finbarr Flynn): “Companies are ramping up borrowing in bond markets again after raising more than $70 billion Tuesday in the busiest global session since June, as borrowers seek to lock in funding before costs climb any higher… Issuers that priced debt on Tuesday were able to do so at a minimal extra spread to outstanding debt and attracted robust demand…”
September 9 – Bloomberg (Ronan Martin and Tasos Vossos): “An unprecedented number of US companies sold bonds in Europe on Wednesday, drawn by liquidity and attractive terms as their home market strains under a deluge of AI-related debt. Amazon.com Inc. wrapped up the sale of its first sterling bond while Uber Technologies Inc. completed its euro market debut. They were joined by four others. It’s the first time Europe has seen such a large number of US issuers in a single day…”
September 11 – Bloomberg (Anthony Hughes): “US convertible bond sales have reached their highest annual total on record, according to data compiled by Bloomberg, as companies look to fund heavy artificial intelligence-related spending. Companies with US listings have raised $131 billion from the sales of bonds that potentially convert into stock under certain conditions, with the $25 billion gathered in August propelling the annual total above the previous record from two years ago…”
September 8 – Wall Street Journal (Claire Ruckin and Eleanor Dunca): “Credit investors look set to be spoiled for choice as bankers gear up to offload in excess of $138 billion of buyout debt in coming months. The volume in the US is at the highest since the great financial crisis almost 20 years ago, and in Europe it’s the most since the pandemic in 2021, according to JPMorgan… Some deals are already being launched to get to the front of the queue with investors, while the bulk is set to come before US elections in November.”
September 7 – Financial Times (William Sandlund): “Offshore borrowing in China’s currency has hit a record high as a growing number of international corporations and foreign governments seek to take advantage of the country’s record-low interest rates to borrow cheaply. Issuance in China’s ‘dim sum’ and ‘panda’ bond markets has hit Rmb1tn ($149bn) so far this year…, putting it ahead of last year’s total, itself a record high. Borrowers can raise renminbi-denominated debt outside mainland China through the so-called dim sum bond market or in mainland China in what is known as the panda bond market.”
September 8 – Financial Times (Mercedes Ruehl): “The US AI borrowing boom is reshaping Switzerland’s traditionally conservative bond market, as technology giants pour billions of francs of debt into the country. The influx is beginning to affect domestic borrowers… AI-related companies have accounted for 26.4% of Swiss franc corporate bond issuance so far this year, according to new research from Zurich Insurance — the highest proportion of any major credit market. “
Leveraged Speculation Watch:
September 8 – Bloomberg (Vinicius Andrade): “The yen’s recent surge is unlikely to derail popular carry trades across emerging markets, according to Morgan Stanley strategists. The strategy, which involves borrowing cheaply in a low-yielding currency and putting the money to work in higher-yielding names, should be able to withstand the yen’s gains ‘without an additional catalyst that raises broader volatility,’ a team led by James Lord… wrote… ‘Global growth, global stock market performance and the bottom-up trends of key EMs are more important for the performance of EM carry trades than movements in JPY,’ they wrote. ‘On this, we remain constructive.’”
September 10 – Financial Times (Amelia Pollard): “Stanley Druckenmiller, a close ally of Federal Reserve chair Kevin Warsh, told a private Wall Street audience that US borrowing costs remained a ‘little low’ and central bankers who thought monetary policy was restrictive were ‘ridiculous’. The macro hedge fund manager, a longtime mentor of Treasury secretary Scott Bessent and Warsh, said in a closed-door meeting… that rate cuts ‘are no longer needed’. ‘Committee members on the Fed who keep saying fed funds rates are restrictive are just ridiculous,’ he told a packed crowd… at a conference hosted by Piper Sandler… ‘I believe in common sense, and all you have to do is look at asset prices around the world,’ Druckenmiller said.”
September 7 – Bloomberg (Hema Parmar and Katherine Burton): “Millennium Management is speeding toward a rarefied status in the hedge fund universe. Its assets have hit $97 billion…, more than double what Millennium oversaw six years ago. The ascent toward $100 billion has vaulted Izzy Englander’s firm past most of his largest competitors — even as they, too, are managing record sums — and landed him into territory that few other hedge funds have ever breached.”
September 9 – Bloomberg (Isabelle Lee): “An A corner of the ETF market drawing regulatory scrutiny is pushing for still shorter-term speculation. Defiance ETFs has submitted paperwork to the US Securities and Exchange Commission for a series of leveraged funds that would seek to double the moves of some individual stocks — over periods measured in just hours, rather than days.”
Iran War Watch:
September 11 – Financial Times (Andrew England): “Houthi rebels have captured several islands in the Red Sea and the Bab al-Mandeb Strait in an offensive that has roiled energy markets and cemented the Yemeni group’s control over the vital shipping artery. The Iranian-backed militants took over Perim Island, which splits the strait in two, as well as Zuqar and Hanish islands in the Red Sea, after a blitz along Yemen’s western coast and the capture of Mocha port on Thursday, according to Yemeni analysts. ‘Now they are fully in control of Bab al-Mandeb,’ said Ahmed Nagi, a Yemen analyst at Crisis Group, who has spoken with Yemeni government officials. ‘The moment they took Mocha, they took over all the islands facing Mocha.’”
September 10 – Financial Times (Andrew England): “Iran-backed Houthi rebels have seized the Yemeni Red Sea port of Mocha as they advance south towards the Bab al-Mandeb Strait, a vital waterway for international maritime trade. The capture of Mocha deals a significant blow to Saudi Arabia and the Yemeni forces it backs, and is a boost to Iran as it seeks to maintain pressure on global energy prices… Now, the Houthis’ expanding control of the Red Sea coastline means their forces are just 50km from the strait, enabling them to launch more precise attacks on shipping in the area, according to Ahmed Nagi, Yemen analyst at Crisis Group. ‘The Houthis have been preparing for this battle for a long time. For them, the coastline is the most strategic frontline,’ Nagi said. ‘They believe if they can take over the coast it will mean they will impose their demands on the Saudis, and they will provide good support to their backer, Iran.’”
September 10 – Reuters (Parisa Hafezi, Mohammed Ghobari and Timour Azhari): “The lightning Houthi advance down Yemen’s Red Sea coast this week came with direct guidance from Iran’s Revolutionary Guards seeking to open a new front in Iran’s war with the U.S., according to Yemeni government, Iranian and regional sources. By seizing the southwestern port city of Mocha, the Houthis have strengthened their chokehold on the Bab el-Mandeb Strait… Six months into the wider regional conflict between the Houthis’ Iranian allies and the United States, the group now looks focused on consolidating that grip on the strait even as opposing government forces backed by Saudi Arabia focus on an offensive in the north. Iran told the Houthis last week to escalate their attacks on Saudi Arabia, a close U.S. ally, and promised more funding, weapons and senior officers to help them do so, two Iranian sources said.”
September 8 – New York Times (Qasim Nauman and Vivian Nereim): “Saudi Arabia vowed… to retaliate against Yemen’s Iran-backed Houthi militia after attacks by the group injured 73 civilians in the south of the kingdom… With the latest attacks… the two sides appeared to be edging toward full-blown war after weeks of escalating tensions. The Houthis and the Saudi-backed government of Yemen have been at war since 2014, when the Houthis seized the capital, Sanaa. Soon after, Saudi Arabia led a bombing campaign to try to restore the internationally recognized government, plunging Yemen into a devastating civil war until a fragile truce was reached in 2022.”
September 8 – Financial Times (Andrew England): “A wave of Houthi missile and drone attacks on Saudi Arabia caused fires at energy facilities in the kingdom and wounded more than 70 people, marking a significant escalation by the Iranian-backed Yemeni rebels. The Saudi energy ministry said attacks… led to the ‘temporary halt in some operations’… The Houthi strikes, which targeted facilities in four southern cities in Saudi Arabia, appeared to be one of the biggest rebel attacks on the kingdom in years and underlined how a conflict that had been relatively calm is returning to full-blown war.”
September 9 – Wall Street Journal (Georgi Kantchev, Shelby Holliday and Costas Paris): “Iran is increasingly trying to escalate its conflict with the U.S. as it seeks to break a stalemate in the Strait of Hormuz that is strangling its economy. At least three times in the past week, Iranian forces have launched missiles at American warships, including an aircraft carrier, taking direct aim at the U.S. Navy in a way it hasn’t done since the start of the war. Iran also fired a large missile salvo at U.S. forces stationed in Jordan on Wednesday. The attempted strikes on warships have led to much closer calls than previous attempts, with Iran using maneuverable warheads, people familiar with the attacks said.”
September 9 – Bloomberg: “Iran is ready for a more intense war and will escalate counterstrikes if the US continues attacking its territory and infrastructure, according to a senior official from the Islamic Republic. Tehran has no intention of backing down in the face of an American naval blockade and attacks on its oil tankers, said the official… The economic pain for Iran may be increasing, they said, but the country’s leaders see the war with the US as posing an existential threat that leaves them little choice but to keep fighting.”
September 7 – Associated Press (Amir-Hussein Radjy and Cara Anna): “Iran state media… said a ballistic missile with improved capabilities was demonstrating a new doctrine: Tehran ‘will take action against any threat, even before it is carried out.’ The report by Iran’s state news agency repeatedly cited comments aired on state TV the day before by the head of Iran’s Supreme National Security Council, Mohsen Rezaei, who boasted of new missile capability and claimed it had been ‘tested’ against a U.S. warship.”
September 6 – Reuters (Nayera Abdallah and Eman Abouhassira): “Iran threatened on Monday to retaliate against any new U.S. attacks on its assets, warning that energy infrastructure across the Gulf, including U.S. oil and gas interests, was vulnerable. ‘Strike our assets and you get struck,’ Iranian Parliament Speaker Mohammad Baqer Qalibaf said after U.S. and Iranian strikes on shipping at the weekend that pushed oil prices up near six-week highs…”
September 9 – Reuters (Enas Alashray, Idrees Ali and Jana Choukeir): “Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, in the biggest wave of attacks on shipping by both sides since the start of the six-month-old war. The attacks sent the price of oil surging, with benchmark Brent crude futures breaching $100 a barrel for the first time since July. At least one seafarer aboard a tanker was reported killed and another listed as missing.”
September 9 – New York Times (Erika Solomon): “Iran has signaled that it is willing to escalate its fight with the United States, with senior leaders issuing increasingly sharp warnings in recent days after attacking American warships for the first time. The country’s leaders are taking a more aggressive approach as Iran faces mounting economic pressure and they worry that their grip on the Strait of Hormuz is slipping. The American blockade is making it nearly impossible for Iran to ship oil, its main money source. And in effect, Iran sees escalation as the primary leverage it has against the United States, analysts said, warning that the recent clashes could reignite a full-blown war.”
September 10 – Wall Street Journal (Anat Peled, Summer Said and Michael R. Gordon): “Iran has resumed its production of ballistic missiles using stockpiled components and working in underground facilities, officials from the U.S. and Middle East familiar with the matter said, eroding what the U.S. and Israel have touted as a major achievement of the war. Despite heavy attacks on its missile sites and industrial facilities during the initial phase of the war, Iran has been busy assembling liquid-propellant missiles, which have to be fueled just before launch, as well as solid-propellant missiles, which can be stored ready to fire… Intelligence points to activity at several underground sites, including the Khojir missile facility in southeastern Iran... Iran is also attempting to build new underground assembly points to avoid getting struck again, they said.”
September 8 – Associated Press (Samy Magdy, Sarah El Deeb and Qassim Abdul-Zahra): “In July, Saudi Arabia and the United States bombed Iran-backed militias in Iraq after blaming them for drone attacks on Saudi oil facilities that had been claimed by Yemen’s Houthi rebels, another Iranian ally. Now, regional officials tell The AP that the Houthis helped the Iraqi militias plan and execute the two-day swarm attack, showing a new level of coordination. Iran spent decades building up armed groups on Israel’s frontiers that suffered major losses in the wars following Hamas’ Oct. 7, 2023, attack out of Gaza… Regional officials and experts say Iran is now using the Iraqi militias and the Houthis to threaten Saudi Arabia and other American allies in the Gulf in order to drive up the costs of the war launched by the U.S. and Israel in February.”
Iran War Ramifications Watch:
September 9 – Reuters (Trixie Yap and Enes Tunagur): “Vessel transits via the Strait of Hormuz fell on Wednesday to seven from 12 the previous day, preliminary ship-tracking data showed…, with levels also below the 10-day average of 14. Out of these seven ships, four vessels exited and three entered… At the Bab el-Mandeb Strait, 28 commodity ships sailed through it on Wednesday, similar to the 10-day average of 27.”
September 10 – Financial Times (Verity Ratcliffe): “Saudi Arabia’s oil production has fallen to its lowest this year after Iran-backed Houthi rebels in Yemen threatened shipments from the kingdom’s west coast. Saudi Arabia told Opec it produced 6.2mn barrels a day in August, the lowest monthly figure in 2026 and 23% lower than in July… Yemen’s Houthi rebels announced a ‘maritime embargo’ against Saudi Arabia’s ports at the end of July, deterring ship operators from the area and reducing the country’s ability to export. With limited capacity to store oil, Saudi Arabia has been forced to reduce its output.”
September 9 – Bloomberg (Nicholas Lua): “The global refining sector’s diesel crunch is likely to result in tight supply for the coming months, keeping prices high and weighing on demand, according to analysts and traders. On top of more than six months of war in the Persian Gulf, impeding output there… the market is contending with the impact of Ukrainian drone strikes on Russian refineries, which have prompted the country to extend a ban on diesel exports. Fuel exports lost from the major processing hubs in the Middle East and Russia now amount to 2 million barrels a day each, Vitol Group’s CEO Russell Hardy told the Asia Pacific Petroleum Conference…”
September 6 – Reuters (Enes Tunagur and Jeslyn Lerh): “A shortage of fuel oil used in ships and power plants looms in the third quarter as refiners increasingly squeezed by wars that have disrupted both crude processing and tanker traffic prioritise output of diesel and other products at its expense. While crude oil has avoided major price spikes in recent months, refined product prices have soared as strikes damage refineries in Russia and the Middle East and curbs on ship traffic choke flows. China has also cut refining capacity and exports to avoid burning stocks. Tightening supply threatens to further raise costs for shipowners and power generators already dealing with war-related disruptions. Higher bunker fuel costs could also in turn feed into shipping rates.”
September 9 – Bloomberg (Weilun Soon): “Global tanker freight rates are surging to record levels with little respite in sight, a sign of the growing strain in oil markets as traders, shipowners, producers and buyers grapple with a drawn-out conflict in the Persian Gulf and increasingly complex workarounds. Earnings for supertankers sailing on the benchmark Middle East-to-China route are at a record of nearly $800,000 a day. Meanwhile, for the US Gulf to Asia run, charterers have been offered very large crude carriers at a record lump-sum fee of $29.5 million — close to $15 per barrel… ‘There’s quite a few bottlenecks all at the same time,’ Alex Grant, Equinor ASA’s global head of crude, products and liquids trading, said… ‘The market is quite stressed with all of that, and that’s showing up in the shipping rates.’”
Trump Administration Watch:
September 10 – Bloomberg (Patrick Sykes and Jonathan Tirone): “Iran and the US are digging in for a protracted war, with little sign of a near-term ceasefire or return to normal Middle East energy flows even if hostilities remain at a low intensity. Tehran’s leaders are resolved to keep fighting despite mounting economic costs as they see the conflict as an existential threat… The country has been able to rebuild its missile capabilities and will escalate strikes on US and Gulf assets if Washington intensifies its own attacks, the official said. Top White House advisers including Vice President JD Vance and Secretary of State Marco Rubio have told President Donald Trump that the war could drag on through the remainder of his term, which runs until January 2029…”
September 9 – Wall Street Journal (Alexander Ward, Shelby Holliday and Michael R. Gordon): “Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said… In the Oval Office and Situation Room, Vice President JD Vance, Secretary of State Marco Rubio and others have discussed with the president that Tehran could continue to resist U.S. pressure under the blockade and other military tactics, potentially extending the conflict past Inauguration Day in January 2029, the officials said. The closed-door discussions come as Trump told reporters… the war will end ‘immediately’ after the midterm elections in November ‘because they can’t hold out any longer.’”
September 6 – CNBC (Azhar Sukri and Garrett Downs): “U.S. Energy Secretary Chris Wright… said the U.S. may not reach an elusive deal to constrain Iran from obtaining a nuclear weapon… ‘There may not be a nuclear agreement. It may be simply destroying their capabilities to do it,’ Wright said… ‘An agreement may await the next administration in Iran. We simply don’t know that.’”
September 9 – Wall Street Journal (Damian Paletta): “President Trump on Wednesday night unleashed perhaps his biggest election-year promise to date. He vowed a $5,000 ‘dividend’ payment to every American adult citizen if Republicans retain control of the House and the Senate in the November midterms. This could be more than 200 million payments. He’s essentially promising more than $1 trillion in these ‘dividends’ unless income limit restrictions were put in place. Where would the money come from? He hinted it could come from tariff revenue, though that wasn’t completely clear. And how could this be done in a way that didn’t cause a spike in inflation?”
September 9 – Yahoo Finance (Jennifer Schonberger): “Treasury Secretary Scott Bessent said he believes the US can grow its way out of debt if it can achieve annual economic growth of 3%. ‘We don’t have a revenue problem. We have a spending problem,’ Bessent said during a Q&A… at SMU Cox School of Business in Dallas. If the US tries to contain spending coupled with 3% growth, he said, ‘we [can] grow our way out of this.’”
September 5 – CNBC (Spencer Kimball): “The Pentagon has received a big ownership stake in an obscure private oil company that will control crude reserves larger than ExxonMobil’s global portfolio if President Donald Trump’s Venezuela deal is successful. The deal comes eight months after Washington ousted… Nicolás Maduro in a military raid and co-opted the remaining regime led by interim President Delcy RodrÃguez. The RodrÃguez government has granted North American Blue Energy Partners, headquartered in Barbados, concessions to 17 oilfields in Venezuela for a century. NABEP’s CEO, Alejandro Betancourt, is a controversial figure who has faced investigations into his past ventures.”
Trade War Watch:
September 9 – Axios (Courtenay Brown): “President Trump said the U.S. would ban Canadian alcohol, some dairy products and large motorcycles, sharply escalating a trade war largely fought with tariffs. The measures deepen the economic rift between countries that have spent decades interlinking commerce, threatening disruption for businesses and consumers on both sides of the border. The import bans take effect Sept. 29, effectively cutting off U.S. market access for the targeted Canadian goods rather than simply making them more expensive.”
September 8 – New York Times (Tony Romm): “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. The duties apply to a variety of U.S. goods, including clothing, cheese, metal parts and wood products… For now, the economic effects of the tit-for-tat may be limited because the tariffs encompass only a small portion of the annual trade between the United States and Canada.”
September 8 – Wall Street Journal (Paul Vieira): “Canadian Prime Minister Mark Carney said his government will ‘do whatever it takes’ to backstop regions and industrial sectors targeted by U.S. tariffs as the trade conflict between the neighboring and closely-integrated economies enters a precarious stage… Carney said retaliatory tariffs on about $20 billion in U.S. goods… were necessary to protect domestic sectors and workers. ‘I don’t believe in escalating the conflict,’ said Carney. ‘The harsh reality is that the American tariffs will hurt some Canadians or others, and that was by design.’ As a result, ‘we will do whatever it takes for as long as it takes to bridge those people’ in affected sectors ‘to a better future,’ he said.”
September 7 – New York Times (Ian Austen): “With an insulted and angry nation solidly behind him, Prime Minister Mark Carney… is charging ahead in a bitter trade war with the United States started by President Trump, risking a further fraying of what once was one of the world’s closest alliances. Retaliatory tariffs… demonstrate Mr. Carney’s defiance toward increasing bombast by Mr. Trump, who has been trying to humiliate Canada economically after more than two weeks of finger pointing and threats. Mr. Carney’s response has distinguished him as one of the few world leaders standing up to Mr. Trump as he lashes out at American allies on a range of issues. The new measures will double the rate of existing tariffs that Canadian businesses pay on imported American steel and aluminum products and affect about 700 products, including aluminum foil, railway locomotives and steel bridges.”
September 8 – Axios (Courtenay Brown): “Trump is reaching for a more drastic trade war weapon, with new threats to shut foreign goods out of the U.S. altogether. It would mark a significant evolution of the administration’s trade agenda, with potentially bigger economic fallout than the tariffs that have defined it so far. Trump may also have firmer legal footing for some import bans than emergency tariffs. Federal trade laws explicitly give presidents the power to prohibit imports under certain conditions, even where courts have rejected their authority to impose tariffs. Businesses can absorb the cost of a tariff, pass it on to customers, or some combination of both. But losing access to a key part or product altogether can result in shortages, stalled production and a chaotic scramble to find new suppliers.”
September 7 – CNBC (Greg Iacurci and Lim Hui Jie): “Bombardier pointed out its footprint in the U.S. after President Donald Trump said the Canadian airplane manufacturer must build in America to access the local market. ‘NO MORE SELLING BOMBARDIER IN THE UNITED STATES!’ Trump wrote... ‘If they want our Market, they must build here, and stop treating America like a ‘piggybank.’’ Bombardier… said that its workers are based all over the U.S., with direct employment in more than 20 states and sites in 10 states, including California, Texas and Arizona. The company also added that its aircraft are built with American-made components such as engines, avionics and many more key systems provided by American companies.”
U.S./Russia/China/Europe/Iran Watch:
September 6 – Financial Times (Henry Foy, Sam Jones and Ben Hall): “Europe is failing to deter Russia’s ‘hybrid’ war against the continent, defence and intelligence officials have warned, and must rapidly develop new methods to suppress Moscow’s campaign against Nato member states... A foiled attack on Leipzig/Halle airport last month using a drone laden with military-grade explosives has underscored the level of Russian impunity over its aggressive approach towards Nato and the failure of existing deterrence methods… That near miss has provided a brutal wake-up call about Moscow’s intensifying hybrid campaign against Europe, and exposed Nato’s failure to deter Russia from staging attacks below the threshold to trigger the alliance’s ‘Article 5’ mutual defence clause.”
September 6 – Bloomberg: “Russian Foreign Minister Sergei Lavrov accused Germany of moving toward a direct confrontation with Russia as he criticized Berlin’s decision to close some diplomatic offices after a drone incident at Leipzig airport. ‘In general, this is, broadly speaking, kind of the beginning of a real war,’ Lavrov said… ‘I remember that before the start of World War II, the Great Patriotic War, the Germans also closed their diplomatic missions,’ Lavrov said. ‘They want war again.’”
New World Order Watch:
September 9 – Bloomberg (Lionel Laurent): “Is Canada becoming the European Union’s 28th state, rather than America’s 51st? Next week, Prime Minister Mark Carney will join EU President Ursula von der Leyen in announcing a plan for deeper ties as the Trump administration escalates its trade war against its neighbor. Closer trade, security, supply chains and critical raw materials are all on the table for allies looking to offset a wayward US hegemon. Talk of actually becoming a full EU member is more meme than reality… Still, the openness to talks on ‘anything other than membership’ is driving justified enthusiasm among the Ottawa and Brussels crowds…”
September 7 – Financial Times (Alice Hancock): “The rules governing global shipping are breaking down, the world’s largest maritime nations have warned, disrupted by wars and a growing shadow fleet that operates beyond western oversight. The shipping industry has for decades been protected by laws that ensure free navigation and the neutrality of commercial vessels, but the collapse of those principles is posing a severe risk to global trade, according to a group of 18 shipping superpowers. ‘Without maritime trade, supply chains would fragment and the global economy as we know it would come to a sudden halt,’ the group said…”
Ukraine War Watch:
September 6 – Wall Street Journal (Alexander Osipovich): “Ukraine’s long-range drone strikes are inflicting pain on some of the most strategic sectors of the Russian economy. The costs are adding up. By pounding refineries, shipping terminals and e-commerce warehouses, Ukraine is using economic pressure to weaken its larger foe and push Moscow to end the conflict. Russian President Vladimir Putin has declared that the strikes won’t change his military aims, and Russia has hit back with its own ruthless drone strikes.”
Taiwan Watch:
September 6 – Bloomberg (Andreo Calonzo): “For decades, China’s maritime pressure on Taiwan centered on the major shipping strait separating the two neighbors. Now, Beijing is piling unprecedented pressure on its Pacific coast — a vital lifeline with US allies. China has deployed on average two Coast Guard cutters per month east of Taiwan since June, after Japan and the Philippines announced plans to define their overlapping maritime border in the region. The appearance of those vessels marks the first time such patrols have been reported in the area in data going back to January 2025.”
AI Bubble/Arms Race Watch:
September 9 – Bloomberg (Lorelei Smillie): “Artificial intelligence companies in the US have spent hundreds of billions of dollars to develop advanced chatbots, betting they can earn enough from customers to justify the investment. That approach carries the risk of being undermined by rivals who build competing AI systems for far less. US security agencies on Sept. 8 accused Chinese competitors, including DeepSeek and Kimi maker Moonshot AI, of doing just that by improperly piggybacking on leading American AI models using a technique known as distillation. The Chinese firms since at least 2024 have accessed and drawn information from US AI models ‘at an industrial scale’ to train their own systems, according to… the National Security Agency, FBI and Cybersecurity and Infrastructure Security Agency.”
September 9 – Bloomberg (Saritha Rai): “DeepSeek rolled out an AI model that charges as little as a fraction of a cent per million tokens, ramping up the pressure on rivals from Anthropic PBC to Z.AI Co. The Chinese startup unveiled the V4.1 Flash on Thursday, a slimmed-down platform it claims outperformed mainstays such as Moonshot’s Kimi K3, yet offers a steep discount... DeepSeek’s latest move highlights the intensifying price battle between Chinese open-weight models and their US counterparts, at a time Anthropic and ChatGPT-developer OpenAI are preparing to go public.”
September 10 – Axios (Jim VandeHei and Mike Allen): “Two seemingly contradictory realities are true at once: Most people find AI only modestly useful, a more clever Google search. Many people building AI or using it obsessively worry it could severely damage or destroy humanity. We’re living in an AI twilight zone. For many, the technology is simultaneously underwhelming in daily use and terrifying in its trajectory. The gap between these two realities helps explain why confusion and fear are exploding across politics, AI labs and business. The AI labs are in full panic. They worry the public dislikes AI and despises data centers — and that's before Anthropic insiders went public with their latest warnings that AI could end humanity this decade.”
September 8 – Bloomberg (Dawn Lim, Preeti Singh, and Dina Bass): “Alphabet Inc. and Blackstone Inc.’s new cloud venture has hit delays for major data-center locations that were supposed to run Google’s chips, underscoring the obstacles standing in the way of Big Tech’s AI ambitions. Crux AI — known internally as ‘Project Braid’ — was launched with $5 billion from Blackstone and aims to rent Google AI processors to customers in 2027. The business joins a growing number of neoclouds, entities that lease chips and computing capacity.”
Bubble Watch:
September 9 – Bloomberg (Tim LeeMaster and Scarlet Fu): “With the Labor Day holiday — and summer in the US — now officially over, the traditional push to the end of the year in the market for initial public offerings is on. While Anthropic PBC looms largest in most eyes, a clutch of other companies in artificial intelligence and other sectors are also soon headed for the public markets… IPO candidates include AI cloud computing firm Nscale, power supplier Aggreko Plc and consumer medical technology maker Oura Health Oy.”
Inflation Watch:
September 7 – Axios (Ben Berkowitz): “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… Energy inflation shows up across the entire economy, and the recent surge in diesel prices in particular threatens to have a dramatic impact on freight and travel in the weeks and months to come. The Iran War Energy Cost Tracker from Brown’s Watson School says higher gasoline and diesel prices have cost the average U.S. household more than $760 since the war began Feb. 28.”
September 10 – Axios (Courtenay Brown): “Renewed inflation risks are complicating the economic outlook on both sides of the Atlantic. In the U.S., wholesale prices accelerated in August, boosting expectations for a Fed rate hike next week… U.S. wholesale prices rose 0.4% in August and 5.4% from a year earlier, largely reflecting higher energy costs. Goods prices jumped 1.1%, reversing two months of declines. Diesel surged 24% in a single month, accounting for more than a third of the goods increase and raising costs for moving goods. Transportation and warehousing costs gained 2.3%, a sign higher fuel costs may be bleeding into shipping.”
September 8 – Wall Street Journal (Giulia Petroni): “Copper prices climbed to fresh records on U.S. and UK exchanges as distortions to trade flows due to concerns over potential U.S. tariffs collided with supply challenges at key mines worldwide. Three-month copper futures rose 1.5% to $14,728 a metric ton… after touching an intraday high of $14,779. The metal is up nearly 18% this year.”
Federal Reserve Watch:
September 8 – Bloomberg (Claudia Sahm): “At Jackson Hole last month, all eyes were on Federal Reserve Chair Kevin Warsh in his first speech at the Fed’s annual conference. But all thoughts were about the Fed’s rate decision next week. Kenneth Rogoff, a Harvard economist who was at Jackson Hole as a lunchtime speaker, offered this advice…: ‘If they can possibly put it off till after the midterms, it would be good for the institution.’ Given President Donald Trump’s attacks on the Fed, he asked: ‘If you’re trying to preserve Fed independence, are you preserving it better by spitting in his face, or are you preserving it better by laying low and waiting until the winter?’ But playing politics to preserve independence is a terrible strategy for the Fed.”
U.S. Economic Bubble Watch:
September 10 – Reuters (Lucia Mutikani): “The number of Americans filing claims for unemployment benefits fell last week, suggesting that layoffs remained low and continued to anchor the labor market. Initial claims for state unemployment benefits dipped 1,000 to a seasonally adjusted 206,000 for the week ended September 5… The… number of people receiving unemployment benefits after an initial week of aid… slipped 1,000 to a seasonally adjusted 1.774 million…”
September 6 – Wall Street Journal (Theo Francis and Ray A. Smith): “For most U.S. workers—those without college degrees, that is—it is one of the best job markets in decades. In fact, the unemployment rate for workers ages 22 to 34 who never graduated from college has rarely been lower in the past two decades, according to a new analysis by labor-market think tank Burning Glass Institute. What is just as remarkable is how different that is from the experience of job seekers who did graduate from college, says Gad Levanon, Burning Glass’s chief economist. For most of the past two decades, the two groups largely tracked each other, in good economic times and bad.”
September 10 – CNBC (Diana Olick): “The average rate on the popular 30-year fixed mortgage crossed over 7% on Thursday for the first time since May 2025, hitting 7.07%... That is an increase of 10 bps from Wednesday… ‘It’s been a rough couple of days for the bond market,’ said Matthew Graham, chief operating officer at Mortgage News Daily.”
September 10 – Associated Press (Alex Veiga): “Sales of previously occupied U.S. homes declined in August to their slowest annual pace in more than a year as home shoppers grappled with rising mortgage rates and home prices. Existing home sales fell 2% last month from July to a seasonally adjusted annual rate of 3.98 million units… This is the third straight monthly decline. Sales also fell 1.2% compared with August last year… Despite the latest pullback, existing U.S. home sales are running 1.6% higher through the first eight months of this year… The U.S. median sales price increased 1.6% in August from a year earlier to $429,100, an all-time high for… August... Home prices have risen on an annual basis for 38 months in a row… Although home inventory levels remain well below historical norms, there were 1.62 million unsold homes at the end of last month, up 3.2% from July and up 5.9% from August last year…”
September 8 – Bloomberg (Jeffrey Sparshott and Julia Fanzeres): “US consumer borrowing increased in July by more than expected, reflecting the biggest advance in non-revolving credit in three years. Total credit outstanding rose $18.1 billion after a revised $14.6 billion advance in June… Non-revolving credit, such as loans for vehicle purchases and school tuition, jumped $15.3 billion in July. Meantime, credit-card and other revolving debt outstanding rose $2.8 billion.”
September 8 – Bloomberg (Maria Eloisa Capurro): “More US consumers in August reported a deterioration in their household finances over the past year, and more expect things will get worse in the year ahead, according to a Federal Reserve Bank of New York survey… The proportion of Americans reporting their financial situation was much worse or somewhat worse than a year ago rose to 38.6% last month, up from 37.6% in July. Those who expected their finances to get much worse or somewhat worse in the year ahead also climbed to 32.6% from 30.3%... Workers’ perceived probability of losing their job in the next year fell to 13.8%, the lowest reading since February… Consumers expectations for inflation one and five years ahead were unchanged at 3.6% and 3%...”
September 9 – Bloomberg (Laura Curtis): “The Port of Los Angeles just completed its busiest three-month run on record, as the early peak season stretched through August and importers navigated changing tariff policies and extreme weather across the globe. Dockworkers at the busiest US container gateway moved than 2.9 million container units in June, July, and August combined, marking the busiest three-month period in the port’s history.”
China Watch:
September 6 – Financial Times (Joe Leahy): “China is pumping Rmb360bn ($54bn) into its biggest banks and insurers in a bid to prop up the financial sector’s declining margins and create buffers to boost economic growth. Eight institutions including state-run commercial banks ICBC and Agricultural Bank and insurers China Life and China Reinsurance announced they would receive a total of Rmb300bn in fresh equity… ICBC and AgBank aim to raise a combined Rmb260bn and will use the funds to boost their core tier one capital ratios. China’s five biggest state-owned banks posted 3 to 5% profit growth for the first half of this year, with ICBC and AgBank among the country’s most profitable listed companies.”
September 7 – Reuters (Yukun Zhang and Liz Lee): “China’s export growth quickened last month, buoyed by strong overseas appetite for high-tech and AI-related products, providing vital support for an economy weighed down by sluggish domestic demand… Exports from the world’s second-biggest economy surged 25% year-on-year in August in U.S. dollar terms…, accelerating from the 23.9% growth in the previous month… Imports jumped 28.2%, compared with a 27.5% year-on-year increase in July… In the first eight months, exports of high-tech products rose 42.9% in U.S. dollar value terms.”
September 8 – Bloomberg: “China’s consumer inflation accelerated for the first time since April and factory-gate prices grew faster than expected, as more expensive food and energy revive cost pressures. The consumer-price index rose 0.8% in August from a year earlier, in line with forecasts and up from 0.5% in the previous month… Producer inflation rebounded to 3.8% from 3.5% in July…”
September 8 – Bloomberg: “Chinese banks are increasingly buying government bonds to improve returns as a depressed mortgage and consumer loan market leaves them with few options to deploy capital. Claims on the government — a proxy for such debt held by banks — accounted for 16.4% of lenders’ total assets in July, up from 11.5% five years ago… The equivalent share on residents, which typically consist of more profitable home and consumer loans, fell to 16.4% from 20.3%.”
September 6 – Bloomberg: “China’s recent overhaul of the way homes are sold will exacerbate already stretched local government finances, fueling a 30% drop in land sale revenues, Goldman Sachs… economists said. That estimate exceeds the bank’s earlier forecast of a 20% decline, according to… economist Lisheng Wang. He pointed to China’s recent move to shift developers away from a popular presale model and toward offering completed properties, something that could make it harder for cash-strapped developers to buy land… In the first seven months of the year, land sales revenue by local governments nationwide dropped 30.8% to 1.2 trillion yuan ($179bn)…”
Central Banker Watch:
September 10 – Financial Times (Olaf Storbeck and Ian Smith): “The European Central Bank said it was bracing for ‘longer-lasting’ inflation that will drag on well into 2027 as it raised interest rates by a quarter point to 2.5%..., the second increase this year. ECB president Christine Lagarde warned that inflation will only return to the central bank’s medium-term 2% target ‘by the end of 2027’ after its governing council unanimously voted to lift borrowing costs in the Eurozone to a level last seen in April 2025.”
Europe/UK Watch:
September 10 – Financial Times (Leila Abboud): “France expects the cost of servicing its national debt to increase by 25% this year to €65bn, aggravated by geopolitical crises and turmoil in global bond markets. ‘Today we spend more on servicing the debt than on educating our kids or defending our nation,’ the country’s finance minister Roland Lescure said…”
September 7 – Associated Press (Geir Moulson and Kirsten Grieshaber): “German Chancellor Friedrich Merz doubled down… on pushing through unpopular reforms to Europe’s largest economy after a far-right party surged to a landslide victory in a regional election, with a very good chance of forming the first far-right state government since the Nazi era. Merz said his center-right Christian Democratic Union was ‘deeply shocked’ by what he called ‘the most serious election defeat that the CDU has had for years, for decades.’ But he indicated that he’s determined to stay at the helm and said that ‘giving up is not an option for me.’”
September 7 – Bloomberg (James Hertling): “The Alternative for Germany’s record election victory in the eastern state of Saxony-Anhalt… marked a milestone not just for the far right but for Europe’s tilt toward Vladimir Putin. The anti-immigration party known by its German acronym, AfD, has openly sympathized with the Russian president’s attempt to batter Ukraine into submission… Pressed about the connection between the AfD and Russia, German Chancellor Friedrich Merz said the result would clearly please the Kremlin. ‘The goal of the Russian leadership is the destabilization of the value system that we have called the West,’ Merz told reporters… ‘And this value system is not up for discussion.’”
Japan Watch:
September 11 – Reuters (Leika Kihara): “Japan's wholesale inflation remained elevated in August, data showed on Friday, highlighting mounting price pressures that cement the case for the central bank to raise interest rates this month… The producer price index rose 7.6% in August from a year earlier, faster than a median market forecast for a 7.4% increase…”
September 7 – Reuters (Makiko Yamazaki): “Japan’s foreign reserves posted their biggest-ever drop in August…, after Tokyo launched another round of record dollar-selling, yen-buying intervention to stem persistent weakness in its currency. The reserves stood at $1.208 trillion at the end of August, down by a record $79.6 billion, or 6.18%, from $1.287 trillion a month earlier…”
September 10 – Reuters (Leika Kihara): “The Bank of Japan may eventually be forced to raise interest rates rapidly if inflation accelerates given the country’s loose financial conditions, board member Kazuyuki Masu said, warning of price risks that solidify the chance of a September hike… Masu warned of broadening price pressures that have pushed underlying inflation ‘very close’ to its 2% target. He also said… the BOJ must pull real interest rates out of negative territory as soon as possible, signalling his concern over the demerits of too-low borrowing costs.”
September 9 – Reuters (Satoshi Sugiyama): “Business confidence among big Japanese manufacturers climbed in September to its highest level since December 2021, buoyed by robust semiconductor and data-centre-related demand… The Reuters Tankan sentiment index for manufacturers rose to plus-21 from plus-18 in August, extending a steady recovery from plus-7 in April. Non-manufacturers' sentiment edged up to plus-29 from plus-28…”
September 7 – Bloomberg (Erica Yokoyama): “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… Nominal pay climbed 4.7% in July from a year earlier, following a revised 4% increase in June… The gain, the biggest since 1997, far exceeded economists’ forecast of 3.8% and marked a sixth straight month in which the advance exceeded 3%, the longest such streak in 34 years.”
Social, Political, Environmental, Cybersecurity Instability Watch:
September 10 – Bloomberg (Brian K Sullivan): “The powerful El Niño that’s already disrupting global weather patterns has a 75% chance of becoming ‘a historic event,’ surpassing all records dating back to 1950, the US Climate Prediction Center said. El Niño will likely keep getting stronger through the end of the year, the center said… The more powerful it becomes, the more likely it threatens to affect global weather in predictable ways. El Niño, which emerged in June, has strengthened since then, worsening drought in Central America that slowed traffic through the Panama Canal and fueling wildfires in Indonesia that have pushed up palm oil prices. Those disruptions are adding to inflation and supply-chain pressures already heightened by the war in Iran.”
September 9 – Financial Times (Attracta Mooney and Aditi Bhandari): “Scientists predicted a brutal year ahead as climate change and the El Niño pattern collide, after the latest data showed sea temperatures broke heat records for 100 days and August was the equal hottest on record. The European earth observation service said the global average surface air temperature in August was 1.65C higher than the pre-industrial baseline, reaching just under 17C. This put it on a par with the previous record set in July 2023. The global sea temperature in August was put at 21.07C. This week marked 100 consecutive days of record warming since early June, according to… the US National Oceanic and Atmospheric Administration.”
September 9 – New York Times (Raymond Zhong): “Last month tied July 2023 as the planet’s hottest month on record, European scientists said… Dangerous heat hammered Europe for the fifth time since May. Temperatures soared into the triple digits across the southern United States from California to Texas. South Korea recorded its highest temperature reading in modern history: 108.5 degrees Fahrenheit in the southern city of Yangsan on Aug. 2. August tied the record for the oceans’ hottest month in history as well, scientists said…”
September 6 – Financial Times (Christine Murray in Mexico City and Jamie Smyth): “The Panama Canal may be forced to cut shipping transits due to sharp declines in its water levels, adding to the global trade disruptions caused by the Iran War, its new administrator has warned. Daily transits through the canal could fall to as low as 27, down from an already reduced number of 32 — a decline that would amount to a ‘worst-case scenario,’ warned Ilya Espino de Marotta… The Panama Canal Authority modelled the estimates on rainfall patterns last seen in 1997, the driest year on record for the canal. Climate change was making water shortages a problem ‘every three years or so’ for the canal… ‘[Climate change is] the most important thing because, I mean, we can see how the frequency of dry years is increasing,’ she said…”
