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Stocks fall, US 2-year yield drops after Fed's Williams cools down rate hike bets
Investors reduced their bets that the Federal Reserve will raise interest rates next month after comments made by Fed Bank of New York president John Williams. Major stock indexes also eased, as yields for longer-dated bonds remained near multi-decade-highs. Williams' comments and the optimism over AI lab Anthropic’s plan to go public tempered the stock market's weakness. Williams stated that he does not see "urgency" in further action following the US central bank's rate hike earlier this month. Based on the pricing of Fed Funds futures contracts traders now expect a 50% chance of a quarter-point increase at the Fed's next meeting in October. This is down from 70% earlier in day. Williams, who believes that a single rate hike will occur by the end of the year is what has influenced the price of short-term rate contracts. Investors remained concerned about the rate outlook, even though the 30-year US Treasury Bond had earlier reached its highest level since 2002. The'monthly US jobs data is also due this week. Investors are getting ready for the PCE tomorrow. "If we see an acceleration in inflation, then I believe that this will cement a rate increase in October," said Peter Cardillo. Chief market economist at Spartan Capital Securities, New York. Bond yields are rising due to concerns about inflation and higher oil prices. Fed increased interest rates this month, the first time they have done so since 2023, to combat inflation. Investors digested other Fed officials' comments?on Tuesday. Chicago Fed President Austan G. Goolsbee said that allowing the inflation to remain above the Fed target for five-and-a half years was "playing with Fire." He noted that the Fed might need to respond to an supply shock which has long lasting effects. Data showed that US consumer confidence fell to its lowest level in over 12 years in September. Households expect both the business environment and the labor market will weaken in the next six-month period. The yield on the 2-year bond, which moves typically in line with expectations of interest rates for the Fed was down 3.51 basis point to 4.889% last week, after previously touching 4.9596% - its highest level since May 2024. The yield on US benchmark 10-year notes rose 1.32 basis points to 5.255% after previously reaching 5.2932%. This was its highest level since June 2007. After reaching its highest level since the morning of June 2002, the 30-year bond rate rose by 3 basis points to 5,592%. The Dow Jones Industrial Average dropped?131.59, or 0.26 percent, to 51349.92. The S&P 500 declined 12.85 points or 0.17% to 7,670.84 while the Nasdaq Composite lost 22.84 points or 0.08% to 26,797.54. Anthropic’s IPO prospectus revealed that the AI lab had grown rapidly in the past year, but also suffered larger losses. The company aims to reach a valuation of $2 trillion or more, which could set a new benchmark for Wall Street's assessment of AI leaders. MSCI's global index of stocks fell by 3.41 points or 0.30% to 1,135.86. The pan-European STOXX 600 fell by 0.09%. The yields on French 10-year debt were near their 2008 highs of 4.74%, and they were expected to rise the most in a single month since 2022. The sovereign yield is a key anchor for the global markets. It's a price reference for riskier stocks, and it's a benchmark when it comes to mortgages and corporate borrowing. Rates that are higher put pressure on the budgets of government, corporations and households. OIL FALLS Investors focused on signs that crude exports to the Middle East were recovering. Oil prices have risen despite the fact that hopes of a US-Iran deal on the horizon are fading. US President Donald Trump has said that he offered Iran nothing in order to end the conflict. He rejected media reports citing?US officials who claimed he would be willing to ease sanctions or?release funds frozen for "concrete steps" regarding Iran's nuke program. US crude futures declined $3.22, to settle at $89.38 per barrel. Brent futures fell by $2.69, to settle at $100.59. The euro rose 0.01% to $1.1341 in the last currency update. The dollar gained 0.03% against the Japanese yen to reach 157.32. The Australian dollar was almost flat against the greenback, at $0.6984. Australia's central banks raised rates earlier to the highest level in 15 years. Spot gold increased 1.46%, to $4174.26 per ounce.
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Talen Energy names Terry Nutt as CEO and expands its share repurchase programs through 2028
Talen Energy announced on Tuesday that it has named President Terry Nutt its new chief executive officer. This will take effect January 1, and the company also expanded its share repurchase authority through 2028. Nutt succeeds Mac McFarland who will continue to serve as CEO, a member of the board and senior advisor until his retirement in march 2027. Talen is undergoing a leadership transition as it aims to capitalize on the growing demand for electricity from data centers and artificial intelligence, while also returning cash to its shareholders via a large share repurchase program. Nutt will be joining the board as soon as he takes over the role of CEO. He has been 'Talen’s president' since December and was previously the chief financial officer. The independent power producer increased its remaining capacity in its share repurchase programs to $3 billion by December 31, 2028 and entered into $1.5 Billion of accelerated share purchase agreements. By the end of 2027, it is expected that Talen will have repurchased more than 10% its outstanding shares. The company stated that it would 'primarily' fund the accelerated repurchases by'monetizing future capacity revenues from PJM, which is the largest US power grid operator. Talen predicted about $4 billion of adjusted free cash flow in the second half 2026 to the end 2028.
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First visit by the UAE Vice President to Saudi Arabia since the rift
Sheikh Mansour bin Zayed Al Nahyan, UAE Vice President, visited Saudi Arabia on Tuesday. He met with Crown Prince Mohammed bin Salman of Saudi Arabia and the Kingdom's Defence Minister. This was the first official visit by a senior UAE official to the kingdom since the Gulf Powers fell into a deep split last year. Saudi Arabia's Defence Minister, Prince Khalid bin Salman invited the Saudi ambassador to visit the Kingdom. Riyadh is under increasing pressure by the Iran-backed Houthis who have been firing missiles and drones for weeks at the kingdom. Saudi Arabia 'has been trying to rally international assistance to face the Houthis. But it wasn't immediately clear if this request extended to UAE. Saudi Arabia was once the main regional partner of the United Arab Emirates in the war against Houthis. According to a Saudi Defence Ministry post on X, Sheikh Mansour discussed with Prince Khalid topics of mutual interest and ways to improve cooperation and coordination between both countries. In a separate meeting on Tuesday with Saudi Crown Prince Mohammed bin Salman, Sheikh Mansour reviewed "fraternal relationships" between the countries and the developments in the area, according to the Saudi state media agency. In?December, the UAE and Saudi Arabia brought their years-long differences over everything from geopolitics to energy policy to light when an advance by a UAE backed southern Yemeni rebel group brought them close to Saudi border. Saudi Arabia has condemned the UAE's involvement in Yemen and conducted an airstrike against a UAE-linked weapon shipment at Mukalla port. The UAE announced that it had withdrawn its entire force from Yemen, but tensions remain. Yemen has been in a 12-year civil war ever since the Houthis took over the capital Sanaa and prompted a Saudi-led intervention.
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After soaking Baja California Sur, Hurricane Polo hits Sonora in northwest Mexico
Hurricane 'Polo' made its second landfall in Mexico on the northwestern Pacific Coast on Tuesday, after flooding the southern Baja California Peninsula. Landfall occurred near the port of Guaymas, on the Sea of Cortez. Sonora State. Emergency evacuations were ordered by state authorities in several southern municipalities, including Guaymas and Empalme. Officials reported that 543 people were huddled in shelters when the storm hit. The US National Hurricane Center reports that the maximum sustained winds were around 120 km/h (75 mph). In its bulletin, the NHC stated that "rapid weakening" is to be expected as "the center of Polo" moves further inland. Private forecaster AccuWeather warned that the remnants of the hurricane, which are moisture-laden, could cause a flood in the US Southwest and Plains. Damage to Property but No Casualties Polo, a stronger Category 2 storm that smashed trees and turned streets into rivers, pounded the Baja California Peninsula earlier. According to Baja California Sur Governor Victor Manuel Castro, no deaths were caused by the storm. Storms are expected to drop 4 to 6 inches (10-15 cm) of rain across the southern and central parts of Sonora, with maximum amounts of 8?inches in isolated areas. According to the NHC, Baja California Sur may see another 1 to 2 inches in rain with the potential for life-threatening floods and mudslides. "At my house, we secured everything. We were very prepared. Bertha Lopez of Loreto, Baja California Sur said, "We expected it to be stronger, but thank God it wasn't as disastrous." Laura Velazquez of Mexico's Civil Protection Agency said that nearly 700 people took refuge in emergency shelters and would be returning home throughout the day. Mexico's?"Secretariat of the Navy" posted on X that a ship had brought 2,000 food hampers, 8,000 liters?? of drinking water, and other items to the area.
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The US finalizes a sharply lower vehicle fuel efficiency standard
Officials said that the?US?Transportation department will on Monday finalize a sharply lower vehicle's fuel economy standard through 2031. This is reversing an effort by the Biden Administration to force automakers into building more electric vehicles. Donald Trump announced that he has approved new fuel efficiency standards for cars, trucks and buses. He said this will reduce the cost of new vehicles. Sean Duffy, Transportation Secretary, said that "a major victory is coming for America's automobile workers on Monday." According to the department's estimates, new standards would reduce vehicle costs but increase fuel consumption. Trump's move comes at a time when American motorists are struggling with steeply higher fuel costs since the U.S. - Israel war began against Iran in February. The government under Democratic President Joe Biden 'tried to push automakers into building more electric vehicles in order to meet the rising fuel efficiency standards. Biden increased the required fuel efficiency of cars by 8% per year for model years 2024-2025, 10% per year for 2026, and 2% each year from 2027-2031. In December, the Trump administration proposed to retroactively reduce the fuel efficiency standard for 2022 model years and then raise it between 0.25 and 0.5% per year through?2031. The Transportation Department proposed that fleetwide fuel efficiency would average 34.5 miles per gallon (14,7 km per liter), down from the 50.4 miles per galon (21.4km per liter), under Biden. It estimated that its proposal would reduce average new vehicle prices by $930 per vehicle. The department stated that it would increase fuel consumption by 100 billion gallons by 2050. Fuel spending would also rise by $185 billion, and carbon dioxide emissions about 5%. Trump's decision?will allow automakers to offer consumers less-efficient vehicles. Pete Buttigieg who was the Transportation Department head under Biden said that lowering?standards would accelerate what Trump has already done: giving the future of clean tech to China, and forcing Americans to spend more money at the pump. Biden's focus was on reducing US greenhouse gas emissions, fossil fuel usage and accelerating the transition to clean energy. Clean-energy manufacturing and technology is a key component of the US's global leadership.
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Falling oil prices provide support for bonds in trouble
US Treasury yields stabilized on Friday, with benchmark 10-year note yields moving lower for the day as oil prices fell, after having earlier reached new'multi-decade highs', and traders priced in more Federal Reserve interest rate increases. The AI industry continued to be a source of optimism, which boosted the stock market. The oil price fell by about 3% as traders grew more hopeful of a possible truce between Iran and the US. However, they were also concerned that the Houthi fighters' increased attacks on Saudi Arabia could cause a disruption in the Middle Eastern producers supply. The US Treasury yields are at their highest level since the financial crises, mainly due to persistent concerns about inflation. While the latest signs of 'diplomatic progress' in the Middle East may have temporarily eased geopolitical worries, the market is still unconvinced of the prospect of a normalization of the global energy supply," said Ian Lyngen, BMO Capital Markets head of US rates. The bond market is experiencing a daily downward trend. The benchmark 10-year Treasury Yield fell 0.37 basis point to 5.158% after earlier reaching 5.2297% - the highest since 2007. The 30-year bond rate rose by 2.63 basis points, to 5.4883%. It had previously reached 5.5319%. The ICE BofA MOVE Index is a measure for?bond market volatility. It has risen by about 30% in the last week. This is the biggest increase since April 2025's Liberation Day tariff chaos. A survey released on Friday showed that US consumer sentiment fell to a new low of four months in September, amid fears?that rising prices would reduce the purchasing power of households. Japan's 10-year bonds yield reached 3.121% elsewhere, a record level last seen in 1996. Five of the most influential central bankers in the Group of 10 have increased rates this month. The rest have signaled a pending hike or warned of increasing inflation. STOCKS STAY BOUGANT The stock market has remained resilient despite bond market turmoil. US stocks have rallied on AI-driven optimism, and hope for improved Middle East oil supplies. The Dow Jones Industrial Average increased by 0.93%. The S&P 500 rose by 0.51%, and the Nasdaq Composite grew by 0.48%. Microsoft's 2026 gain jumped to 7% after it unveiled new features in its Copilot application, such as a coding app and an AI agent that is always on. The MSCI?gauge for stocks around the world rose by 0.53%. The pan-European STOXX 600 rose by 0.35%. US President Donald Trump hosted Xi Jinping, the Chinese President, at 'the White House' on Thursday. The lavish summit was laden with symbolism, but lacking in substance. There were no signs of progress on thorny topics such as AI and trade, Taiwan, or even the 'war with Iran. DOLLAR OPTIMISM Analysts expect further Fed tightening to keep the US currency strong. Morgan Stanley analysts, led by David S. Adams, said in a report on Friday that they expect the dollar to remain strong through 2027. They cited?favorable rate differentials against peers, robust US economic growth and heightened political risks in Europe. The euro rose 0.14% to $1.1395. The dollar fell 1.01% against the Japanese yen to 157.22. Satsuki Katayama, Japan's Finance minister, said that Trump expressed concern over the yen during a meeting with Japanese Prime Minister Sanae Takayichi this week. Spot gold increased 0.31%, to $4.291.25 per ounce.
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Vujcic, ECB's Vujcic, warns diesel prices could fuel inflation
The European Central Bank's Vice President Boris Vujcic stated on Friday that diesel prices are likely to stay high due to the?shrinking refining capacity around the world, which could?push? up inflation in other parts of Europe. As conflicts in the Middle East, Ukraine and elsewhere disrupt supply, diesel prices are at record highs. This adds to the inflation pressures within the fuel-importing Euro zone and complicates the ECB's attempts to control price increases. Vujcic said at an event held by the Federal Reserve Bank of Cleveland that "energy prices, especially diesel, will probably stay high for a long time and this?will feed?inflation, because diesel is used in many products." He said that drone attacks on Russian refining facilities had curtailed supply. Meanwhile, the Iran war disrupted traffic through the Strait of Hormuz. This week, the 'diesel market was again jolted by the US President Donald Trump who voiced his support for a possible ban on US diesel exports. Later, the US administration tried to downplay that possibility.
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EU letter warns about energy price crisis and asks for countries to curb demand.
In a letter to countries that was seen by, the EU's energy chief warned of a looming energy crisis as the fallout from the Iran war has roiled oil and gas markets. In a letter sent to the energy ministers of EU member states, EU Energy Commissioner Dan Jorgensen stated that "we are facing a pricing crisis linked to a supply crises." Europe relies heavily on imported gas and oil. About 80% of Europe's gas needs are met by foreign suppliers. This leaves the continent highly vulnerable to global energy price increases caused by the Iran War's closure of the Strait of Hormuz. The Strait of Hormuz is normally used as a transit route of 20% of the world's oil. Europe is not facing a shortage of gas, but prices are soaring. Some countries are struggling to fill their gas storage before winter when home heating demand peaks. Gas Infrastructure Europe data shows that EU gas storage is 70% full, which is 12 percentage points less than the previous year. Jorgensen stated that the EU was better prepared than in winter 2021, when Russia reduced Europe's gas deliveries. This is due to increased LNG import capacity, renewable energy, and a reduction in gas demand. He urged the governments to intensify their preparations for winter. Jorgensen stated, "I invite you to take or continue to take measures that can sustain [gas-storage] injections or to reduce gas and electric demand for as long?necessary." Jorgensen suggested that such measures might include "limiting the temperature in public buildings", preventing "outdoor heating" and turning off unnecessary lighting. A spokesperson for the European Commission did not respond immediately to a comment request.
What impact US sanctions against Russian oil companies will have on the Ruble and economy
The Russian currency market may be affected by the U.S. sanctions against Russian oil companies Rosneft, and Lukoil that will take effect on Friday at 1701 GMT.
The rouble strengthened ahead of the deadline on the back of reports that the U.S. had drafted a plan to end the conflict in Ukraine. If implemented, this could lead to the cancellation or the sanctions.
What has been happening on the Russian Forex Market?
Last year, sanctions were imposed on Russia's largest operator, MOEX, in June, and Russia's third largest bank, Gazprombank in November.
MOEX was subject to sanctions, which halted all foreign exchange transactions in dollars and euros. China's Yuan, still traded on MOEX has become the dominant currency.
Since then, western currencies are traded on the open market through domestic dollar accounts that have no counterpart accounts abroad. This trade is used by the central bank to determine its official exchange rate.
In 2024, the rouble will have fallen by 37% compared to the dollar. The main reasons are sanctions and the attack of Ukraine on Russia's Kursk Region.
The rouble rose by up to 45% in 2025's first half due to interest rate increases from the central bank and the hope for a peaceful resolution in Ukraine after U.S. president Donald Trump began talks with Russia.
The rouble remained stable during the second half 2025, despite the overwhelming majority of analysts who predicted that the currency was overvalued and would weaken. Its fair value is closer to 100 roubles per dollar.
Economists attribute the unexpected behavior of the rouble to a slower than expected decrease in interest rates, central bank forex interventions, slow imports as a result of an economic downturn, and the government’s policy to encourage import substitution.
What is the role of Rosneft and Lukoil on the Forex Market?
New sanctions prohibit all transactions between the two Russian companies. Lukoil must sell its foreign assets by December 13. An official of the U.S. Treasury said Thursday that companies buying Russian oil would also be subject to U.S. sanctions.
The majority of oil companies and exporters convert their earnings in foreign currencies, which are now mostly in yuan currency, into roubles to pay for taxes, salaries and other domestic expenses.
Finam, an analyst-driven financial services firm in Russia, estimates that Rosneft, Lukoil, and other oil companies account for as much as 35% of the domestic sales of foreign currencies. They predicted that sales would drop by 10 to 20 percent in early December.
The central bank, which is estimated by traders to have a 10% share of the market, is also a major player. The central bank was a net seller in foreign currency throughout the year, mainly yuan.
The majority of Russian analysts predict a gradual weakening in the rouble's value after the deadline for sanctions due to the reduced forex sales, and the expected reduction in the central bank forex sales starting from 2026.
The key to a successful response is the reaction of China and India
The impact of the sanctions will be determined by the response of the banks and companies of China and India. These countries are the largest buyers of Russian crude oil, with about 85% of sales. The Treasury official stated that Indian and Chinese refining companies are aware of the sanctions, and they're risk-averse.
On November 17, the Treasury's Office of Foreign Assets Control stated that their analysis of the initial impact on the market showed they were "having their intended effect of dampening Russian revenue by lowering the Russian oil price".
On October 23, Russian President Vladimir Putin stated that the new sanctions are "serious" and could have "certain consequences". However, he added that these sanctions will not have an impact on Russia's economy.
China and India, Russia’s partners in BRICS, a group of developing countries, have been cautious about their dealings, for fear of punishment by Western financial regulators.
Impact on Budget and Economy
Taxes on oil production and not exports are the main source of revenue for the Russian budget.
The decline in physical exports due to the new sanctions won't directly affect the budget revenue, but the growing discount between Russian and international blends will.
Calculations showed that in November, the price of Russian oil used to calculate taxes was 24 percent lower than what the budget had estimated. This suggests a further drop in revenue.
The budget revenues from oil and gas have declined by 21% in the first ten months of the year. In the amended budget for 2025, oil and gas revenue will decline by the same percentage throughout the year.
The weakening rouble will increase the budget revenues in roubles from the oil and gas sector, which is a good way to balance the budget.
(source: Reuters)