Market moment
Bonds hit new highs again. The 10-year US Treasury yield rose to 5.225% on Friday, the highest since 2007. The 30-year reached 5.50%, a level not seen since 2004. Over four sessions the 10-year has climbed more than 23 basis points.
Stocks barely care. Mid-session on Friday (21:00 Vilnius time) the S&P 500 stood at 7,742, up 0.5%, the Nasdaq was up 0.55% at 27,088 and the Dow up 0.8% at 51,768. The VIX volatility index fell to 15. The market trusts earnings more than it fears rates.
Oil eased after two days of gains. WTI fell about 2.6% on Friday to $92.15 a barrel, while Brent held around $105.7. The Brent-WTI gap widened to $12.68, the largest since May. Europe and Asia are short of oil in a way America is not.
Gold rose 0.5% to $4,318 an ounce, bitcoin lost half a percent to $84,000, and the dollar index slipped 0.23% to 101.06.
Lithuania and the Baltics
Prime Minister Mindaugas Sinkevičius calls the Belarusian fertiliser talks a great-power game. “Lithuania is more an observer than an actor in this process,” he said, noting that EU sanctions run until 28 February 2027. Vilnius was not informed of Washington’s plans to buy Belarusian potash. Meanwhile, after talks with Trump envoy John Coale, Alexander Lukashenko pardoned another 15 prisoners, 13 of them political.
President Gitanas Nausėda pitched Lithuanian business in Miami as a US partner in lasers, fintech and defence. At a forum attended by about 50 Lithuanian companies, four agreements were signed, including deals between Klaipėda port and the ports of Miami and Corpus Christi on cooperation and LNG supply.
The vote on dismissing electoral commission member Laura Matjošaitytė was postponed to 6 October after she failed to appear in the Seimas. She is suspected of having advised the Nemuno Aušra party before the 2024 election. The commission, the Bar Association and the ethics watchdog have opened inquiries.
The Conservatives asked the anti-corruption service and the ethics commission to examine the hiring of former PM Gintautas Paluckas’s wife at a Vilnius district clinic run by his former adviser. The position was never publicly advertised.
Latvia fast-tracked border controls on third-country grain shipments, aiming to block transit of grain looted in Ukraine. Origin will be checked with laboratory samples.
Europe
Trump’s plan to curb diesel exports alarms Brussels. The White House is weighing a 90-day ban in response to record domestic fuel prices. The US supplies roughly half of Europe’s diesel imports, with 420,000 barrels shipped to the EU and UK last month. The European Commission is negotiating with Washington.
A Croatian court cleared the extradition to Germany of Ukrainian Volodymyr Zhuravlov, a suspect in the Nord Stream sabotage. The ruling is not final and the defence will appeal.
The EU scrapped tariffs on Armenia to counter Russian pressure in the South Caucasus.
Ukraine
Ukraine struck the Perm oil refinery, about 1,450 km from the border. The Lukoil plant processes about 13 million tonnes of crude a year. The same night, drones hit the Novoshakhtinsk refinery, the Iskra plant in Ulyanovsk that makes missiles and Pantsir systems, and two rocket-propellant producers.
Russia launched 295 drones overnight, 267 were downed. A residential building in Kyiv’s Pecherskyi district was damaged.
Volodymyr Zelensky says most of the $27 billion budget deficit is defence-related, chiefly drone and missile production. NATO Secretary General Mark Rutte reads the rise in hybrid attacks as a sign that Putin is losing and calls for more weapons for Ukraine.
Geopolitics
Iran hardens its tone. Supreme National Security Council secretary Mohsen Rezaei said: “Until our conditions are met, the Strait of Hormuz will not be opened and we will not negotiate.” Tehran passed seven conditions via Pakistan and Qatar, including lifting the port blockade. An Iranian source called the New York meetings “workshops to explore positions,” not negotiations.
80 countries at the UN demand restored shipping in the Persian Gulf. The statement condemns Iran and the Houthis, while the US and Europe draft a Security Council initiative for an international naval mission to guard the strait.
The Houthis fired six ballistic missiles at Saudi Arabia’s Yanbu port and Taif, all intercepted. Yanbu is the end of the East-West pipeline Riyadh uses to export oil around Hormuz. France is sending troops, radars and air defence to protect the terminal, while Pakistan and Turkey hold urgent military talks.
Xi Jinping’s US visit ended without new deals. Trade Representative Jamieson Greer admitted China’s May pledge to buy 200 Boeing jets is still being worked out. What remains is the truce extension to 10 January.
What to watch tomorrow
The 30-year yield at 5.5%. A weekly close above it would push pressure into mortgages and US borrowing costs.
PCE data on 30 September. The Fed’s preferred inflation gauge will shape the odds of an October hike.
The diesel export decision. If the White House approves a ban, European fuel prices will rise within weeks, Lithuania included.
A Security Council mission for Hormuz. The US-European draft will show whether the West is preparing for a long closure.
Sinkevičius in Brussels next week. Meetings with Rutte and Commission members, with an evacuation plan to be discussed with Poland in Warsaw in October.
Bear’s comment
The 10-year pays 5.2%, US fuel is at record prices, and the White House is weighing cutting off diesel to its allies. Help for friends? No, a hegemon’s reflex: when home is squeezed, the first tap closed is everyone else’s.
Europe buys half its diesel from America, while Lithuania only watches the Belarusian potash talks. The Brent-WTI gap, widest since May, is the price the periphery pays for depending on the core, and this week it only grew.