Market Pulse
October opens under price pressure. Midway through the session, the S&P 500 stood at 7,663 (+0.15%), the Nasdaq at 26,897 (+0.13%), while the Dow barely moved at 50,884. Indices opened in the red but clawed back their losses.
ISM manufacturing strong, prices even stronger. The manufacturing index came in at 54.5 for September (54.6 in August), so the sector is still expanding. But the prices-paid component jumped 6.8 points to 77.9, against expectations of around 72. Yesterday’s soft PCE now looks like a pause, not a turn.
Yields touch a new high. The 10-year US Treasury yield hit 5.34% in the morning, the highest in several decades, before easing to 5.24%. The bond market has just closed its worst quarter in decades. Initial jobless claims came in at 197,000; the labour market is not cooling.
Brent back above $100. Chinese refiners suspended October fuel exports (except to Hong Kong and Macau), and PetroChina cancelled gasoline and jet fuel cargoes. December Brent rose about 2% to $100.15, WTI to roughly $93.
Dollar near its yearly high. The dollar index (DXY) is at 101.6, up 2% over the month. The yen is the weakest: USD/JPY at 158.3. Gold rose to $4,201 an ounce, bitcoin to nearly $85,000.
Lithuania and the Baltics
Parliament on alert, prime minister calm. Rimantas Sinkevičius, chair of the Seimas National Security and Defence Committee, says the threat level is unchanged, but a possible or already started additional mobilisation in Russia is a concern. Prime Minister Mindaugas Sinkevičius, after meeting NATO chief Mark Rutte in Brussels, said there is no intelligence that Russia is preparing an attack. Putin’s envoy Kirill Dmitriev immediately praised the quote; the prime minister’s team called it “propagandistic distortions”.
Construction of the Leopard plant begins in Kaunas FEZ. The 13,000 sq m plant will assemble and repair Leopard 2A8 tanks; construction is worth €29 million, and it is run by Lithuania Defense Services, owned by KNDS Deutschland and Rheinmetall. Construction ends in November 2027, with the first tank planned for late 2028.
The President closes the MoD party saga. Nausėda says Defence Minister Robertas Kaunas apologised properly for the staff event that cost nearly €48,000. The matter is closed, but the audience watching the defence budget is now more alert.
Yes to migrant centres in Africa, but without Lithuania. Vilnius backs the idea of Denmark, Austria, Greece, Germany and the Netherlands to set up return centres in Rwanda or Uganda, but will not take part for now, as it does not have a migration problem of that scale.
Europe
Latvia restricts Russian on public broadcasting. The Latvian Saeima adopted restrictions on the use of Russian in public media. Another step towards separating the Baltic information space.
Norway promises gas for winter. Oslo says it can supply Europe through the heating season. That matters to the market, because Qatari and Gulf LNG supply still depends on Hormuz.
Ukraine
Strikes on a Kyiv bridge and school. Overnight Russia launched 107 drones: six dead, 38 injured. In Kyiv, a school, a bridge linking the left and right banks and a nuclear research institute were hit (the fire was quickly put out). Ukraine used its new FP-7 ballistic missile; the target was not disclosed.
The Russian mobilisation that “doesn’t exist”. On Monday Zelensky announced that Russia had begun a new mobilisation wave and warned of another 10,000 North Korean troops. Putin calls this nonsense, yet on September 28 he signed his fourth decree this year expanding the army, this time by 15,500 troops.
London sanctions, with caveats. The UK announced new sanctions on Russia but allowed Asian allies to keep buying Russian LNG, calling it a “transition period”.
Geopolitics
Putin on Kaliningrad: “all types of weapons”. At the Valdai Club, Putin said that if the Kaliningrad region were attacked, the use of all Russian weapons would “inevitably and immediately” be on the agenda. This is aimed squarely at Lithuania and Poland, along whose borders NATO exercises are under way.
Trump: “blow them up or make a deal”. Iran is weighing the US response to its seven-day plan to reopen Hormuz; Qatar is mediating and talks have moved to Doha. Trump says the US has “almost total control” of the strait but denies offering sanctions relief. Oil flows through Hormuz averaged 13.1 million barrels per day last week, about 80% of the pre-war level.
US completes withdrawal from Iraq. The anti-Daesh coalition mission has formally ended, and Iran’s Revolutionary Guards are proclaiming a “historic victory”. The US stays at sea in the region, while its footholds on land shrink.
China shuts the fuel tap. Beijing, without issuing export permits on the eve of its holiday week, is protecting domestic stocks: diesel and gasoil inventories are about 20 million barrels below the threshold that permits exports. Asia’s fuel market loses a major supplier just before winter.
Central Banks
The Fed talks tough. Barkin and Goolsbee speak today. Both have lately repeated that supply shocks combined with AI investment could entrench inflation. The ISM price jump only strengthened their case; an October 28 rate hike is becoming more realistic again.
Lagarde opens the ESRB conference. The ECB president spoke in Frankfurt about financial stability. A week ago she said inflation is higher but not yet embedded in wages; in September the ECB raised rates for the second time since the war began.
IPO Radar
Broadcom lends Anthropic up to $42 billion. According to Reuters, Anthropic’s IPO filing reveals that the chipmaker will finance about a third of a $125.2 billion five-year TPU (tensor processing unit) lease. The loan converts into shares. A classic circular financing: the supplier lends to the customer so the customer can buy from the supplier.
The IPO window narrows. Smart-ring maker Oura has postponed its stock market debut. With yields rising, risk appetite for new issues is shrinking.
What to Watch Tomorrow
Euro area inflation (October 2). August was 3.3%, energy +14.3%. Will September’s number approach the 4% the market is starting to price in.
US jobs report (NFP, non-farm payrolls). After a strong ISM and low jobless claims, expectations are up, and with them the odds of an October hike.
Nike results. The stock is at 2014 lows; the report after the close will show whether the consumer is already pulling back.
Iran’s reply. Trump has issued an ultimatum; Tehran’s decision determines whether Brent stays above $100.
China’s fuel exports. The holiday week ends October 8; until then no permits, and Asian diesel prices may rise.
Meška’s Commentary
Inflation cooled yesterday and heated up again today. Coincidence? No, it’s a system in which, every time oil rises above $100, factory costs immediately reach price indices, and a 5.3% yield is the price the market charges for such a world.
Putin threatens over Kaliningrad, while in Kaunas on the same day the first pit of the Leopard plant is being dug. Words are cheap, concrete is expensive. Lithuania is finally paying for its security with something that lasts longer than statements.