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Oil prices fuel inflation fears, which in turn intensifies the bond selloff and stock drop.
The global bond yields reached new highs as the renewed fighting in the Middle East pushed up oil prices. Traders were preparing for an interest rate increase, which put pressure on stock markets around the world. Investors were also worried about the ever-increasing public debt. The yield on Britain's 10-year bond hit its highest level since 2008, above 5.25%. Meanwhile, the German equivalent yield reached a 15-year record at 3.36%. Ryutaro kimura, senior strategist at BNPParibas Asset Management, Tokyo, said: "I think that there is now a sense -- tinged by helplessness -- of resignation about rising interest rates." The march upward in Japanese borrowing costs has been a reliable anchor on world markets for years. The rise in oil prices, and the renewed U.S. - Iran fighting, are causing investors to worry about inflation. Federal Reserve chair Kevin Warsh's speech last week has also led traders to increase their bets that U.S. interest rates will rise this year. The 10-year U.S. Treasury yields, which are used as a benchmark to compare prices of different asset classes, have risen to 4,8%, their highest level since early 2025. Andrew Lilley is the chief rates strategist for Barrenjoey in Sydney. "I believe the Fed will hike in September and that it is the beginning of a?three rate hike cycle, at least." Data released on Tuesday showed that euro zone inflation increased above 3% again in August, due to rising energy costs. This supports the argument for an increase in the rate of the European Central Bank's September rate. Stocks fall as borrowing costs rise The S&P 500 futures contract fell 0.6% as bond yields rose and oil prices increased. The STOXX 600, Europe's continental index, fell by 0.5%. Hong Kong's Hang Seng fell 1% on Monday, as the disappointing debut of Shein Global, a clothing retailer, set the tone. Shein Global's shares dropped as much as 10% before ending the day flat. Aneeka Gupta is a senior analyst at WisdomTree. She said that higher?yields may put pressure on tech firms who are borrowing heavily in the bond market to fund AI investment. She said that the higher the yields, the more strain they put on this sector which is one of the biggest growth drivers in equity markets. "I believe that's resulting in the spillover that's taking place today?in equity market." As renewed conflict in the Middle East dampened prospects for a reopening of Strait of Hormuz, rising oil prices drove global bond yields up on Tuesday. Brent crude rose by 2% to $92.10 while Europe's benchmark natural gas price increased towards its highest level since early 2023. Donald Trump, the U.S. president, has warned of further strikes against Iran following the "first exchange in fire for a month." In the meantime, increased fighting between Russia Ukraine has driven wheat prices to near three-year-highs. As bonds and stocks dropped, the U.S. Dollar gained on Tuesday. The dollar grew 0.3% against yen and fell 0.2% against the euro. According to CME’s FedWatch tool traders?priced in a 65% probability of a Fed interest rate hike in September. This is up from 40% one week earlier. The money markets also priced in a second rate hike by the ECB for this month.
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Can the Middle East help with Asia's low refined fuel imports? Russell
In August, the crisis caused by the conflict in Iran in Asia's supply of refined fuels continued. The region that imports the most refined fuels dropped to its lowest level since the start of the war. According to data compiled by Kpler - a commodities analyst - Asia's imports for light and middle distillates in August were estimated at 5,10 million barrels a day (bpd), down from 5.61 millions bpd during July. Imports have dropped by about 2 million bpd from the 7.06 million bpd average in the three months prior to February 28, when Israel and the U.S. launched aerial attacks against Iran. The market has focused on crude oil supply since the beginning of the conflict, due to the dramatic drop in the shipments that passed through the Strait of Hormuz. This narrow waterway was the route through which 20% of global oil supplies were transported prior to hostilities. The movement of tankers through the strait remained restricted, but there was debate over how much oil made it through. Claims by the U.S. Energy secretary that up to 9,000,000?bpd were disputed by several tracking services who saw less than half this amount. The oil market shouldn't be focused on the debate about crude volume leaving the Middle East, at least not immediately. Asia, which is the final destination of 90% of Middle East oil, has adjusted its supply to lower prices, with China, as the top buyer, cutting imports by almost 4 million bpd, and also? by reducing inventories. The real pressure comes from the middle distillates, such as diesel and jet-fuel. The market has to cope with the loss in cargoes coming from the Middle East, as well as?from Russia which has cut back on fuel shipments following the successful attack by Ukraine on several of its refineries. Singapore gasoil ended Monday at $155.15 per barrel, up 70% compared to the $91.42 it was on February 27, just before the Iran War began. On Monday, the profit margin of a typical Singapore refinery producing a barrel gasoil was $67.93. This is three times higher than the $21.90 on February 27. Gasoline has a similar dynamic. The profit is the same. For making a barrel light motor fuel end last week at $27.47 - more than threefold the $8.00 price the day before conflict began. PRODUCT FLOWS The large margins of light and middle distillates raises some questions regarding the dynamics of the market. Why do Gulf producers risk their lives by shipping crude oil through the Strait of Hormuz or the Bab el Mandeb when they could make more money by moving refined products instead? Kpler estimates that exports of middle and light distillates from the Middle East were 2.14 million barrels per day in August. This is down from 2.58 millions in July. The average of 4,49 million bpd for the last three months, ending in February, is also 55% lower. Asia's imports are down about 2 million bpd - almost the same as if they were coming from the Middle East. In the initial phases of the?Iran war, Tehran attacked refinery sites in the Gulf. However, most of the damage was repaired. Some capacity is still offline. Saudi Arabia and the United Arab Emirates are likely to have the refinery capacity? to produce the fuels needed in Asia. It may be difficult to transfer fuel from one ship to another, and there are not enough vessels available for this. This is assuming that you don't get attacked by Iranian drones or missiles. The Iran conflict has shown that the oil markets are remarkably able to adapt in difficult circumstances. The Middle East's producers could reduce the pressure on the refined product markets by exporting more fuels. This would also help to mitigate the risks of economic damage due to high prices and a limited supply. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist, who is also an author.
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SoftBank-backed SB Energy is moving closer to the public markets through its US IPO.
SB Energy, a SoftBank-backed data center developer, disclosed on Tuesday that it had seen a 66.4% increase in revenue in the first half of 2026. This comes as AI infrastructure firms flock to public markets. The company reported a loss of $3.21billion on revenue of $138.7m in the six-month period ended June 30. This compares to a loss of $215.5m on revenue $83.3m a year ago. This year, companies involved in the AI buildout are increasingly turning to the IPO markets. Hyperscalers and tech firms have invested billions of dollars to expand data centers to keep up with the soaring computing demand. The listing is a test for investor appetite?for the AI Infrastructure trade. This has been under pressure over the past few weeks due to growing concerns about the sustainability and growth of AI spending. Nvidia announced last week a long-term revenue forecast of 70% growth next year. This helped ease fears that the AI boom was fading. According to S&P Global Ratings, AI infrastructure investment is expected to reach $1.3 trillion in 2027 by the world's biggest hyperscalers. SB Energy, based in Redwood City (California), plans to sell new stock shares. The company was reported to be aiming for a valuation in excess of $50 billion. This could happen as soon as September. SB Energy was founded in 2019 and focuses on combining power generation with data centres to address AI's increasing energy needs. The company is working with OpenAI, SoftBank and other companies on a $500 Billion multi-year project to build AI data centres for training and inference. SB Energy's backlog was approximately $439 billion. NVIDIA INVESTS $1.5 BILLION FOR PRIVATE PLACEMENT According to the prospectus, Nvidia has agreed to invest $1.5billion in SB Energy through a private placement priced at the IPO. The chipmaker announced earlier this month a $1.5 Billion investment in SB Energy. It also agreed to guarantee up to $105?billion for?OpenAI to lease a vast data center being built by SoftBank-backed firm in Ohio. According to SB Energy, OpenAI also issued warrants valued at approximately $5.5 billion. As concerns?mount about so-called circular agreements between Nvidia and its customers, the?latest investment has sharpened scrutiny surrounding Nvidia's financial connections across the AI sector. SB Energy's investor base has grown this year with new investments coming from Nvidia, OpenAI and other companies. Ares Management, a private capital?firm, has been a longtime?investor. OpenAI and SoftBank invested $500,000,000 each in SB Energy earlier this year as part of Stargate Initiative. JPMorgan, Goldman Sachs, and Morgan Stanley will be among the underwriters of the offering. SB Energy will be listed on Nasdaq Texas and Nasdaq under the symbol SBE.
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Israeli strikes kill 4 in Gaza, military claims it arrested Hamas militant
Officials in Gaza said that an Israeli-backed 'raid' to detain Hamas militants was discovered on Tuesday. This prompted airstrikes aimed at covering their withdrawal, which killed three Palestinians?including two children. Israel Katz, Israeli Defence Minister, said that a Hamas senior militant was arrested. Hamas official Ismail Al-Thawabta claimed that an Israeli Special Force had attempted to conduct an operation in Gaza City without being detected. Thawabta is the director of Hamas's Gaza government media. Israel launched heavy airstrikes that killed and injured several people. A senior Israeli security official said that the man arrested is the chief of Hamas internal security. According to some Israeli media reports, the raid could have been carried out by a militia backed by Israel that operates in Israeli-controlled zones inside Gaza. Israeli warplanes are believed to have fired 12 missiles at least near the Katiba neighborhood in Gaza City's west, a place crowded with families displaced from their homes. The medics reported that at least three people, including two children and one woman, were killed in the bombardment. Two vehicles were damaged and reduced to twisted wreckage. A medic said that another child was killed by Israeli fire in central Gaza. In a Tuesday statement, the Israeli army said that it had struck multiple targets in Gaza Strip to eliminate threats to Israeli security forces. Katz refused to provide any details on the arrest or the Hamas militant. Katz said, "This is our strategy: we don't wait for threats but instead pursue Hamas terrorists and destroy their terror network." Israa Al-Hissi was shot dead and two others were injured in a separate incident when Israeli forces east of Deir Al-Balah, central Gaza, opened fire. The CEASEFIRE has not stopped the strikes Israeli attacks continue despite a ceasefire backed by the United States that came into effect in October 2025. According to the?military, such operations are meant to stop attacks from Hamas and Palestinian militant groups. Hamas claims that Israel has repeatedly violated the ceasefire, and undermined efforts to advance the broader plan of U.S. president Donald Trump for ending the war. The plan calls for a further Israeli troop pullout from Gaza, as well as the disarmament and dismantling of Hamas. Gaza's health officials claim that more than 1,300 Palestinians have died in Gaza since October last year, when the ceasefire was implemented. According to the Israeli military, four Israeli soldiers were killed by militant attacks in Gaza during this period.
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Zinc and Copper prices spiked on supply concerns before falling due to the strong dollar
On Tuesday, zinc prices reached a four-year-high on concerns about supply. Copper also hit a seven-month high before retreating due to a stronger dollar and global bond selling. Benchmark three-month Zinc?on the London Metal Exchange?was up 1.3% to $3,933 per metric ton at 1020 GMT, after reaching its highest level since May 2022. The stock markets fell on Tuesday, and bond yields rose on the back of renewed Middle East fighting. Ole Hansen is head of commodity strategy for Saxo Bank, Copenhagen. He said that the tight supply outlook was the main focus in industrial metals. "There are concerns about rising prices and funding costs. But it shows that commodities in a tight supply can weather the storm, even when the outlook for demand is uncertain." The highest-trading?zinc contract at the Shanghai Futures Exchange reached a high of 27,165 yuan per ton, its highest level since?January. The metal used to galvanize steel has seen its price rise due to falling refined zinc stocks outside China, tight supply of raw materials and speculation. August saw the highest monthly performance on the LME and SHFE since January. Data showed that the LME's available zinc inventories (materials not earmarked for disposal) fell to 68.250 tons in less than one week, a?28% drop, their lowest level since December of last year. The shortage of metal outside China has pushed it out of the country into overseas warehouses. This has supported prices and reduced inventories on these?markets. In a recent note, Chinese broker Jinrui futures stated that domestic (Chinese), inventories experienced a "sharp drawdown" on Monday. Spot purchases were concentrated in brands with a high delivery rate. LME 'copper' reached its highest level since January 29, 2014 at $14441.50 per ton, before slipping to the red and ending up 0.5% lower at $14218. The dollar's strength makes the price of commodities in U.S. dollars more expensive for buyers who use other currencies. LME?aluminum rose 0.3% to a ton of $3,253 after reaching its highest level since August 13, at $3,288, while lead was little altered at $1,905, Nickel shed 0.7% to $15,750, and Tin dipped by 0.2% to $55,125.
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Mapping the Market - Death Cross to Golden Cross for Global Oil Prices
The global oil price was teetering on the 'edge' of a bearish signal. However, it swerved?away from that and opened the door for a bullish signal. Click here to view a more detailed chart. Brent crude is the international benchmark for oil. Since the beginning of hostilities in Iran at the end of last month, headlines have been dominated by the conflict. Prices were falling earlier this month as there was hope that the Strait of Hormuz would reopen. This decline, on top of a broader retreat since?April's high, has contributed to a decline in the 50 day moving average, which is now close to crossing the 200 day average. Technical analysts refer to this pattern as a "death-cross," usually viewed by them as a sign that the sellers are taking the lead. This cross was never really achieved. Prices rose again as fresh doubts emerged about the ease of Iran tensions. Now the market is flirting?with the opposite signal: the 10-day moving average is positioning itself to possibly rise above the hundred-day average. This is often seen as an indication of further gains, though momentum is already fading. These signals are lagging indicators, as they occur after large moves have been accounted for in the moving averages. However, once triggered, both can spark new buying or selling. If oil prices rise above the $94.83 high for this month, bullish momentum could be re-ignited towards July's peak price of $102 per barrel. If oil prices fall below the $85.41 low from last week, however, it could lead to $78.11 or even July's $70.14 low. The chart below shows: Prices rebounded and prices avoided the 50-day/200 day "death crossing" The 10-day/100 day "golden Cross" is close, but losing momentum Support? at $85.41, $78.11, $69.14
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Foresters in Serbia plan to make the scorched dunes even hotter.
Foresters in Serbia are facing difficult choices more than a week after fires ravaged the Deliblatska Pescara Reserve. They must decide how to restore its unique dunes, woodlands and forest ecosystems so that they can better withstand 'future wildfires. The question of what to replace and keep in a region where forest fires were once rare but will become more frequent with global warming is a core issue. Jovana devetakovic is a lecturer in the Faculty of Forestry at University of Belgrade. She said, "For the next 15, 20, or even 25 years it won't likely look like a tree -- it will probably look like low shrubland." She said that damage assessment alone would take a full year. After that, the?ravaged materials will be removed. This includes half-burned trees or weaker ones. It is a slow process so as to not create new fires or breeding grounds for bark insects which threaten healthy forests. There are many options for replanting the conifers, including birch, oak, ash, and poplar. The reserve is located about 80 km from Belgrade. Since more than 200 years, black pines and locusts have dotted the horizon. Replanted trees of these trees were destroyed by past fires, including major fires that occurred in 1996 and 2007. Alexander Held, senior expert at the European Forest Institute (a group backed by thirty European states), asked: "Do you want Robinia (black locust) and Pinus (black pine) to be in this ecosystem?" He warned against rushing to replant large areas and suggested a period of observation between three and five years in areas where erosion was not an immediate risk. According to data from the European Forest Fire Information System, the three worst years for fires in Serbia were 2023-2025. Experts are drawing comparisons between the current situation and traditionally drier areas. Theocharis Zagas is Emeritus Professor of Forestry and Natural Environment, Aristotle University of Thessaloniki. He said that "special methods" must be used, including organic materials in the planting holes as well as materials that capture water and improve soil moisture.
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Oil prices fuel inflation fears, which in turn intensifies the bond selloff and stock drop.
The global bond yields reached new highs as traders prepared for an interest rate increase and renewed fighting in the Middle East boosted oil prices. This put pressure on stock markets all over the world. Investors were also worried about the ever-increasing public debt. The yield on Britain's 10-year bond hit a record high since 2008, above 5.24%. Meanwhile, the German equivalent yield reached a 15-year peak at 3.36%. Ryutaro kimura, senior strategist at BNP?Asset management in Tokyo, said: "I think that there is a sense of resignation - tinged by helplessness - about rising interest rates." The march upward of Japanese borrowing costs has been a reliable anchor on world markets for years. The rise in oil prices, and the renewed U.S.-Iran conflict, are fueling inflation fears, which is bad for bonds. Meanwhile, Federal Reserve Chair Kevin Warsh's speech last week has led traders to increase their bets that U.S. interest rates will rise this year. The yield on the 10-year U.S. Treasury, which is used as a benchmark to compare prices of all asset classes, has risen to 4.79%, its highest level since early 2025. "I believe that most of the (bond) sale-off has been a reassessment by Fed policy," said Andrew Lilley. He is the chief rates strategist for Barrenjoey Investment Bank in Sydney. "I believe the Fed will?hike in September and I think that it is?the start of a three-rate cycle at least." Stocks fall as borrowing costs rise The S&P 500 futures contract fell 0.6% as bond yields rose and oil prices increased. The STOXX 600, Europe's continental index, fell by 0.7%. Hong Kong's Hang Seng fell 1% as the disappointing debut of clothing company Shein Global set the tone for a weak market. Shein Global's value is now less than one quarter of what it was pre-listing in 2022, after the shares fell 8%. Aneeka Gupta is a senior analyst at WisdomTree. She said that higher yields may put pressure on tech firms who are heavily borrowing in bond markets to finance AI investments. She said: "The higher the yields, the greater the strain on this sector, one of the biggest growth drivers in equity markets." "I believe that's resulting in the spillover in equity markets that we are seeing today." As renewed conflict in the Middle East dampened prospects for a reopening of Strait of Hormuz, rising oil prices drove?global bonds yields higher? on Tuesday. Brent crude rose by 2% to $92.20 while Europe's benchmark gas price increased towards its highest level since early 2023. Donald Trump, the president of the United States, has warned that he will continue to strike Iran following a first exchange in fire within a month. In the meantime, increased fighting between Russia and Ukraine is pushing wheat prices to three-year-highs. As bonds and stocks declined, the U.S. Dollar gained on Tuesday. The euro fell 0.2% to 1.16 dollars and the dollar rose 0.1% to 159.9. According to CME’s FedWatch tool on Tuesday, traders were pricing in a 65% probability of a Fed interest rate hike this September. This is up from 40% one week earlier. The money markets also priced in an additional rate hike by the European Central Bank for this month.
MORNING BID AMERICAS - September storm
What is important in U.S. markets and global markets today
By?Mike Dolan Editor-at-Large for Finance and Markets
As September begins, the world markets are preparing for another storm of government bonds.
Following Kevin Warsh’s Jackson Hole speech, U.S. Treasury rates climbed?across curves, with the benchmark 10-year borrowing rate reaching its highest level since Donald Trump took office in January of last year.
Below, I'll explain more.
Listen to the Morning Bid Daily Podcast, which discusses the bond rout, and Shein's poor IPO.
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SEPTEMBER Storm
The rising yield on 10-year bonds will have greater ripple effects in the economy, affecting mortgage rates and other consumer and business loans.
Warsh made a speech on Friday at the Jackson Hole Symposium, in which he said that the central banks has "work to be done" if the inflation rate doesn't return to its target. He said that he believes the current Fed settings do not limit the economy significantly right now.
The Fed will meet again at the end of this month and little is expected to change in the way of inflation. Futures markets are now predicting a two thirds chance that rates will rise. The pressure will be increased by another jump in the world crude oil price this week due to the return of military exchanges?in the Iran War.
Bond markets are in a frenzy as the Bank of Japan, the European Central Bank and other central banks may also raise rates this month.
The 10-year Japanese government bond yield reached 3% on Tuesday for the first since 1996, as the revival of dollar following the Warsh speech has weighed heavily on the yen. This is increasing calls for the BOJ rate hike this month to follow the currency market intervention of the summer.
The European bond market is also agitated by the tricky budget season in Europe and its upcoming elections.
Asian stocks were mixed Tuesday, and U.S. Futures were down before the bell. Hong Kong's Hang Seng ended?1% lower due to a fall in Shein's shares following the retailer's debut on the market.
Chart of the Day
There are still some big tech names to report earnings this week. Dell and Palo Alto Networks will update on Tuesday. Broadcom, the chip giant, will report tomorrow.
Broadcom, with a market capitalization of $1.7 trillion is the seventh-most valuable stock on Wall Street. It's well above so-called Magnificent 7 names Meta and Tesla.
Watch today's events
* U.S. JOLTS July job openings (10 am EDT), August ISM Manufacturing PMI (10 am EDT)
Michael Barr, Feds' Michael Barr speaks
The G20 Finance Ministers Meeting in Asheville, North Carolina is on its final day.
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(source: Reuters)