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Lenders tell investors to show them the money as bond chaos spreads
Stella Qiu gives us a look at what the future holds for European and global markets. Maybe promising to borrow $1.3 billion to 'give' to each American who votes for your party wasn’t a good idea. This fiscal excess at a time of high inflation may not have directly caused the latest bond market 'rout', but it sure did not help. Bond markets are sending a message to governments around the world: If you want to continue borrowing, you will have to pay more. Much more. The benchmark 10-year U.S. Treasury Yield hit a three-year high in Asia of 4.9708%, closing in on 5% which could slow down the economy and disrupt the stock markets. The Australian bond yields reached 15-year highs.?New Zealand swap rate surged by 22 basis points. Even the Japanese benchmark government's yield rose 9 basis points as traders bet that central banks will have to raise rates to stop inflation running wild. Brent crude's surge back above $108 per barrel - now more than?50% higher from its lows in July - is the primary culprit. The Strait of Hormuz remains effectively closed and the narrow Bab al-Mandab Strait at the southern end of Red Sea could fall to Houthi control following the?capture of the Red Sea port of Mokha. This would lead to more shipments being rerouted through the Suez Canal or around Africa. This would create additional logistical problems and add weeks to Asian journeys. Imagine the impact on oil prices. Asia's shares are in the red, with Japan's Nikkei down over 2% and South Korea's KOSPI down more than 2%. European stock exchanges are likely to open calmer, as yields in Europe have already reached multi-decade highs. Wall Street?futures in Asia were not much different, as they awaited the arrival of liquidity. The U.S. CPI is the key factor that will determine the Federal Reserve's policy. It could also seal the deal for an increase in interest rates next week. Forecasts center?on an increase of 0.2% monthly in the core CPI measure, but the Fed's decision may come down to the 2nd or 3rd decimal places in the figure. Futures indicate a 70% chance that the Fed will increase rates on Wednesday. A "hot" result could easily push 10-year Treasury yields over the psychologically difficult 5% barrier. Donald Trump is watching and he will not be happy. It is clear that interest rates will remain higher, as the Gulf conflict may continue beyond the U.S. Midterm Elections, if not years. The following are key developments that may influence the markets on Friday. CPI data in the U.S. for August University of Michigan Consumer Sentiment Report U.K. Industrial output and trade figures for July
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Gasoline prices likely to rise in August for US consumers
U.S. consumer price increases are likely to accelerate in August, as gasoline prices?rebound after two consecutive monthly declines. This would confirm financial market expectations of a Federal Reserve interest rate hike next week. Labor Department's upcoming Consumer Price Index report will follow the Producer Price Index, which was released on Thursday. The Producer Price Index is the measure of inflation that the U.S. Central Bank uses to track its 2% inflation target. The Fed Governor Christopher Waller said at a NEXT Newsmaker Event that he would be inclined to maintain rates if the data showed that inflation pressures had cooled. Economists predicted that inflation would remain high and continue to spread as oil prices climbed back over $100 per barrel. Some economists saw price pressures continuing due to tariffs on imported goods, including the most recent against?Canada, a top US trade partner. What was once thought to be temporary reasons for high inflation now appears to be persistent. Joe Brusuelas is chief economist at RSM. He said that the war-induced energy crisis has now been going on for seven months, with no end in sight. The impact of tariffs, which was thought to be a more one-time effect, has been more lasting as the administration continues to use tariffs to achieve its political goals in a haphazard manner. A survey of economists has predicted that the CPI increased by 0.4% in August after increasing by 0.1% in July. Consumer inflation was expected to have risen 3.4% in the year up until August, a similar gain as July. The U.S. Energy Information Administration reported that gasoline prices in August averaged $4.192 per gallon, up from $4.064 a month earlier. Food prices are expected to rise moderately over the next month, but year-on-year increases will likely be around 3.0%. The frustration over rising prices, particularly for gasoline and foods, has caused a sharp decline in the approval rating of President Donald Trump and could cost him control of his Republican Party in November's midterm elections. A TAME CORE CPI REASONABLE READING IS EXPECTED The CPI, excluding volatile components such as food and energy, is expected to increase by 0.2% following a similar rise in July. Rents, clothing prices and new vehicles are among the categories that would be reflected in the tame increase in core CPI inflation. The higher cost of jet fuel is likely to have kept the price of airfares high. The core CPI is expected to increase by 2.4% in the 12 months through August after rising 2.5% in July. The core PCE is below the CPI. After Thursday's PPI, economists estimated that August's core PCE index would range from a gain of 0.15% to a gain as high as 0.28 percent. Core PCE inflation increased by 0.2% in July. The estimates for the increase in core PCE inflation year-on-year ranged between 3.2% and 3.3%. Core PCE inflation?advanced by 3.3% over the past 12 months, up to July. Some economists believe that the August PCE report could include changes in the methodology which will lower the core rate of inflation by a few basis points. According to CME's FedWatch, the financial markets priced in an approximately 70% chance that the Fed will raise rates by 25 basis points at its policy meeting on September 15-16. Fed's overnight benchmark interest rate currently ranges between?a 3.50-3.75%. Fed Chairman Kevin Warsh said last month that the central bank would "have to work" if they don't gain the confidence needed to believe inflation will fall to 2%. Trump has been urging the Fed to lower?rates. He posted on social media "LOWER THE RATES OR I'LL STOP TRADES WITH COUNTRIES WHERE WE HAVE A DEFICIT." The rise in yields for long-term U.S. Government bonds has been blamed by economists on what they call political intimidation. Some people expected the Fed would tighten its policy on Wednesday in order to demonstrate its independence. John Ryding is the chief economist at Brean Capital. He said, "A rate increase by the Fed on 16 September would be a strong declaration underlining the institution's independent. I expect them to do that, even without knowing the August inflation figures."
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Eight people are injured in Kyiv by Russian air strikes, while Ozon is hit in Saratov
On Friday morning, Russian air strikes in Kyiv injured eight people and caused a fire at a nine-storey apartment building, according to the city's authorities. This was after Moscow had taken a brief break from its attacks in the Ukrainian capital for the trip of U.S. ambassadors. The footage shows servicemen attempting to extinguish a fire in an apartment building where windows have been blown out. After a short pause during the visit of Donald Trump's negotiators to Moscow and Kyiv, Russia resumed its almost constant air attacks against Kyiv. The Kremlin began the war by invading Ukraine 2022. Roman Busargin, the regional governor of Russia's Volga River region, said that drones from Ukraine?damaged civil infrastructure in Saratov on the central Volga River, adding that no one was injured. The Russian ecommerce company Ozon announced on Telegram, that a drone attack in Ukraine caused an fire at its logistic hub in Saratov. This is the latest of more than two dozen warehouses that were recently targeted by both Ozon and Wildberries. Saratov, which is a frequent target of Ukrainian airstrikes, including one earlier this week. It's home to an oil refinery operated by the state oil company Rosneft as well as other industrial and military installations. Local authorities reported on Telegram that a missile strike in 'the city of Volgograd, south of Saratov, also on the Volga River caused two injuries after it hit a residential building. The debris from this attack also damaged an industrial facility. The post didn't provide any details about the industrial plant. The Volgograd refinery, which is one of Russia's largest?by processing capability, and is run by Lukoil?is located?outside the city. We could not verify these reports immediately. Russia and Ukraine deny targeting civilians.
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Prices of oil to rise above $100 in the final week for the first time since nearly 4 months
The price of oil rose on Friday, and both major benchmarks will 'end the week above $100 per barrel for the first time since mid-May. This is due to the increasing number of attacks on key shipping routes across the Middle East. Brent crude futures rose $1.05 or 1% to $108.68 per barrel at 0045 GMT. U.S. West Texas Intermediate Crude rose 95 cents or 1% to $103.45 per barrel. Both benchmarks were up over 6% Thursday. The benchmarks gained nearly 13% on a weekly basis - the biggest gain since the week ending July 17. The Houthis, who are Iran-aligned, took control of Yemen's Mocha port on Thursday. This poses a new threat to Red Sea and Gulf traffic. Analysts say that the attacks by Yemen on Saudi energy installations marked an escalation of tensions beyond Iran and Strait of Hormuz and raised concerns about 'prolonged disruptions? in the region. Donald Trump, the U.S. president, warned that the U.S. may strike Iran's Pickaxe Mountain located near its damaged Natanz uranium-enrichment facility and said that the war would end following the November midterm election. Tony Sycamore, an IG analyst, said that "with events spiralling" and Iran showing its willingness to prolong this conflict for as long as possible, it's becoming more likely that WTI will retest $119.48 from early March. Iran claimed that it had launched 10 attacks on ships in the vicinity of the Strait of Hormuz after the U.S. attacked five Iranian oil tanks. Iran's Islamic Republic?Guard Corps has said that it will escalate its response to further attacks. According to GasBuddy's price tracking service, the U.S. average price of diesel in the United States surpassed $6 per gallon on Thursday for the first ever time. This is due to the U.S. Iran war and the?Ukrainian attack on Russia's refining facilities, which have squeezed the supply. Analysts believe that the durability of the rally will depend on China, as the world's biggest crude importer. China's continued purchases could increase the impact of disruptions in supply and push prices higher. OPEC has lowered its 'forecast of world oil demand growth - 2026, to 380,000 barrels a day. This is the fifth consecutive downward revision. A survey revealed that OPEC's oil production fell by 640,000 bpd during August.
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Global bonds fall due to rising oil prices
On Friday, global bond yields reached new highs while sharemarkets fell. Soaring oil prices exacerbated inflation risk and investors were scrambling to factor in further policy 'tightening' from central banks around the world. Brent crude futures hit a four-month record of $109.97 per barrel on Friday. Oil flow through the Strait of Hormuz was restricted as Iran and the U.S. traded blows, while the Houthis, who are aligned with Iran, took control of Yemen's Mocha port, threatening Saudi Arabian oil exports to the Red Sea. Analysts at RBC Capital Markets said that the Houthi advance has gravely threatened maritime traffic through Bab el-Mandeb. They predicted Brent could reach $121.99 a barge in the fourth quarter. This was a warning to markets who are now beginning to factor in the possibility of a prolonged war. The comments from Donald Trump, that the war might last past the midterm elections in November, haven't helped. Bond yields are surging worldwide on inflation fears. The benchmark 10-year Treasury yields rose overnight, closing in on the crucial 5% level. The 30-year Treasury yields reached their highest levels since 2007. Asian bonds plunged on Friday. Australia's government bond yields for three years soared 17 basis points, reaching a 15-year-high of 5,037%. Japan's 10-year bond yields increased 5.5 basis points, to 2.965%. We expect eight out of nine DM central bank to raise rates before the end of this year. The Fed, BoJ and all four European central banks that we cover are included. Australia, New Zealand, Australia, New Zealand, Australia, New Zealand, said JPMorgan analysts in a recent note. "Canada will remain the lonesome hawk." For now, tightening will remain modest, but the risks of our forecasts point to more action due to resilient growth, core inflation that is sticky, and commodity price pressures. The rise in oil prices is raising the stakes in U.S. consumer price data due later today. This could make or break the case for a Fed rate hike next week. Forecasts centre on a 0.2% rise in CPI core, but the risks are more skewed to a higher number because the PPI data showed some stickiness overnight. The discount rates for corporate valuations were raised by higher bond yields, putting Asian stocks in the red. Australia's resource-heavy stock fell 1%. Japan's Nikkei plunged 2.8%. South Korea's KOSPI dropped 2.7%. Nasdaq Futures dropped?0.2%, and S&P500 futures remained unchanged. Overnight, the U.S. Dollar gained 0.4% against its major counterparts due to higher Treasury yields. The dollar was stable on Friday, at 99.06. Gold held steady at $4,317 per ounce in the commodity markets after dropping by nearly 2% over night, failing to capture some of safe-haven demand.
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WSJ reports that the Pentagon is in talks with Fluidstack to lend $5 billion.
Wall Street Journal reports that the Pentagon is in talks to loan $5 billion to the AI cloud computing startup Fluidstack to shore up the U.S. Data Center Supply Chain. The newspaper reported that the money would be coming from?the Pentagon Office of Strategic Capital. Fluidstack 'would use the loan to shore -up?the U.S. manufacturing capacity and supply chain for certain data centre-related components rather than funding a brand new AI 'facility, WSJ said. The U.S. The Department of Defense and Fluidstack have not responded to requests for comments immediately. Last month, U.S. president Donald Trump signed a presidential order declaring a "national emergency" and prohibiting the use of certain foreign equipment within the United States. The data centers use the electricity grid. The Office of Strategic Capital previously struck deals with rare-earth companies Vulcan Elements and Phoenix?Tailings, as well as Energy Fuels. The WSJ reported that it has also signed deals to?fund some?drone firms, including Unusual Machines, and Sequoia capital-backed Neros.
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Petrobras is preparing to raise diesel prices, while waiting for government protection measures, say sources.
Petrobras, the state-owned oil company in Brazil, is preparing to increase diesel prices at its refineries by about $1.964 per liter. However, it is waiting for government protection measures to protect consumers. The increase 'would help Petrobras close the gap between domestic prices of diesel?and international benchmarks. This has been widened by the conflict in the Middle East, and the Russian restrictions on diesel exports. Brazil is a diesel producer but imports about a quarter of its demand. Petrobras' profitability is hurt when it has to import fuel for higher prices abroad than what it charges in Brazil. One source claimed that the price gap could?almost disappear' with a real increase of 1 percent. The increase is possible because a new diesel subvention?of 1 real per milliliter will be added to the existing subsidy of 1.12 reais. The details of the measure are yet to be revealed. Petrobras didn't immediately respond to a request that it comment on the price increase.
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Officials say that Ghana has drafted wage and tender floors for mining contractors.
A senior official revealed on Thursday that Ghana's mining regulator was developing minimum wage?and?tender benchmarks to be used by contract mining companies. The goal is to reduce aggressive underbidding, as the country encourages its miners to subcontract more work to local contractors. Ghana, Africa's largest gold producer, ordered in January 2025 that surface operations (blasting, loading and hauling) be transferred to Ghanaian owned contractors, and underground operations, to joint ventures with a minimum of 50% local ownership, by December 31, or face sanctions. This is part of a larger push by Africa's resource-rich countries to retain the value of their mineral wealth. Ghanaian miners have spoken out against this directive. They claim that contractors offer lower wages and less job security. Ben Birch Mensah, Director of Local Content at the Minerals Commission, the national regulator said in an interview on Thursday that officials wanted to make sure that wages and conditions for workers would not be affected. Birch-Mensah stated, "The regulator does not want contract mining to make people worse off." We are creating a base so that contract miner's cannot pay their employees below a specific threshold. OFFICIALS TRY CURB UNDERBIDDING Birch-Mensah added that the commission is also preparing benchmarks for minimum bids in order to prevent contractors from submitting bids below levels which are sustainable. He stated that aggressive underbidding in some cases had left contractors unable meet operating costs. A committee will be formed to determine the details of this policy. Ghana's mining rules of January 2025 required that miners switch to contract mining. Birch-Mensah stated that the December 2026 compliance requirement for local contractors was "non-negotiable." He added that firms such as?Newmont?, Zijin? and Ghana Manganese Company?were still to meet this deadline. The companies didn't immediately respond to our requests for comments. Ghana Chamber of Mines criticised the policy and said that contract mining should not be mandatory but optional. The chamber, on the other hand, supported?efforts aimed at addressing underbidding and warned that unhealthy competition between contractors could impact worker welfare and safety. Ken Ashigbey, CEO of the Chamber, said that if people continue to undercut themselves, then they might not have the resources necessary to complete the job, or they might not pay workers correctly, or they wouldn't train them. Ashigbey added that the chamber is also looking at contractor classifications and thresholds for minimum bids in order to reduce underbidding. He noted that contractors are responsible for a large share of mining accidents.
What are India's largest share offerings as NSE and Reliance Jio look to list?
The largest stock exchange in India, the National Stock Exchange (NSE), will open its initial public offer next week.
The NSE IPO, which 'doesn't include any new capital being raised', would value the company at close to $46 billion. This would make it a third largest IPO in the country.
Mukesh Ambani, the billionaire owner of Reliance Jio Platforms, is likely to launch his IPO later this year. It's expected to raise $3.8 billion and be the largest stock offering in India's history.
The five biggest Indian IPOs so far:
HYUNDAI MOTOR INDIANA
Hyundai, India's 4th largest passenger vehicle manufacturer and the 3rd largest automaker in the world, raised $2.95 billion in October 2024, in what was India's 'biggest ever IPO'.
The South Korean parent of the manufacturer sold a 17.5% share in a pure "offer-for-sale" where existing shareholders are selling shares and no new capital was raised. Jio Platforms will likely follow a similar strategy, as the company's largest investors are expected to dilute their shares.
LIFE INSURANCE COMPANY OF INDIA
The government made 205 billion rupees (2.17 billion dollars) by selling a 3.5% share in India's largest financial investor and insurer. This is far less than its original target of up to $12 billion.
On their debut, the shares fell?nearly 8 percent.
Paytm is an Indian fintech company that raised 183 billion rupees (about $36 billion) in November 2021 through a combination of a new share offering and a sale. Ant Group reduced their stake from 28% to 23% and SoftBank Vision Fund's holding was cut to 16%.
Paytm's debut listing saw a drop of more than 27%, which was the largest in the history of Indian IPOs.
TATA CAPITAL
Tata Group Financial Services raised 155 billion rupees (approximately $155 billion) in October 2025. Tata Sons, IFC and other companies sold?in an offer for sale component along with a new issue. This was the largest IPO ever by a non-banking financial firm in India. The shares were listed at a small premium of 1.23%.
LG ELECTRONICS INDIA
In a pure sale offer, LG Electronics of South Korea sold a 15% stake in its Indian unit. This unit makes refrigerators, washing machine, air conditioners and televisions. The deal netted 116 billion rupees by October 2025.
The IPO attracted bids of?about 4.4 billion rupees. It was the'most heavily subscribed Indian IPO' since?Reliance Power listed in 2008.
The shares of LG surged by 50% in their first trading day, making the unit more valuable than its parent company based in Seoul.
(source: Reuters)