Market Pulse
Indexes split, and the reason is one word, Hormuz. Mid-session in New York the Dow was up about 0.9% near 54,550 and back at a record, the S&P 500 sat almost flat around 7,742, while the Nasdaq slid about half a percent. Money is rotating out of tech and into cyclicals. The market is starting to believe energy prices will normalise, so it buys whatever expensive oil hurt most.
Oil got cheaper. Brent eased toward $78 and WTI to roughly $75 after Tehran said it had agreed with Oman on a shipping route through the strait. Brent was still above $80 at the start of August. When a headline about talks alone knocks several dollars off the price, that tells you how much of the price was fear rather than supply and demand.
Gold is holding near $4,200 an ounce, a third straight session of gains. Bitcoin sits around $64k, up half a percent, and the dollar barely moved with DXY near 99.9. More than $170m flowed into US bitcoin funds on Tuesday. Gold rising alongside hope for calm in the strait is an odd pairing, unless buyers are thinking less about oil and more about what happens to the dollar.
Lithuania & Baltics
Vilnius is cutting back on Russian, the state institutions are not. The municipality will no longer accept residents’ applications and complaints in Russian, has removed the Russian version of its website and dropped Russian from its queue system. Mayor Valdas Benkunskas says he is following through on a decision taken in spring to strengthen the state language. Meanwhile Sodra, the social insurance fund, and the State Tax Inspectorate will keep serving Russian speakers in whatever language suits them. One city moves, the state stands still, which shows exactly how much a symbolic decision weighs without a law behind it.
China put Lithuanian laser maker Ekspla on its export control list. The restrictions took effect on 24 July and swept in fourteen EU companies, and Beijing frames them as an answer to the latest EU sanctions on Russia. Chinese suppliers now need a licence to sell dual-use goods or technology. The company says Chinese parts make up less than 8% of its purchases because it broke up its supply chain years ago. That number is the whole story. The lesson of 2021 was not wasted.
Eurostat: Lithuania recorded the largest fall in industrial producer prices in the entire EU in June, down 1.7%. Prices fell 0.3% in the eurozone and 0.2% across the Union, with Ireland down 1.5% and Bulgaria and Greece down 1.3% each. At the same time Social Security and Labour Minister Inga Ruginienė is pushing for faster pension indexation, while Finance Minister Taurimas Valys says he cannot promise it. Producer prices are falling and budget promises are rising, and the gap between those two lines is where next year’s fiscal negotiation will happen.
A third tunnel has been found under the Belarusian border. Officers of the Varėna border unit found a passage dug about a metre and a half beneath the physical barrier near Latežeris in the Druskininkai municipality, running some four metres into Lithuanian territory. The tunnel was unfinished, there was no exit shaft and nobody got through. A pre-trial investigation has been opened. A third one in a short stretch of time is not a coincidence. It is a method.
Latvia’s defence minister Raivis Melnis is talking about cruise and ballistic missiles of Latvia’s own. Not only drones but long-range strike, for now at the stage of looking for allies willing to pay for it. The Baltic states are shifting from buying defence to buying deterrence, and those are different products at different prices.
Europe
France reports a fresh Russian disinformation attack on a presidential contender. Viginum, the agency that tracks foreign digital interference, attributed the campaign with high confidence to the pro-Russian “Matryoshka” network, this time targeting Gabriel Attal. The same signature was aimed at Édouard Philippe and Raphaël Glucksmann in late July, using a fake news site, AI-cloned voices and forged documents. The election is in 2027. The campaign against it is already running.
Poland is weighing a permanent US military base. A Polish official hinted at it. America’s weight in Europe is not shrinking but sliding east, and Warsaw wants to lock that direction into a treaty while it still can.
Ukraine
A Russian strike on Kyiv killed at least 17 people. An overnight wave of drones and ballistic missiles across the capital and the surrounding region wounded 44. Zelensky called it one of the Kremlin’s deadliest attacks on the capital this year, and air defence did not hold against the volume.
Ukraine answered deep in Russia’s rear. Drones set fire to a Wildberries warehouse south of Moscow, the fourteenth warehouse belonging to the retailer to burn in under three weeks. The target is neither a factory nor a base but retail logistics. The repetition is the message.
A North Korean missile unit has begun deploying to western Russia with capacity for up to 120 ballistic missiles. Washington is at the same time accelerating talks that would let Ukraine build Patriot interceptors itself. One side tops up its arsenal from Pyongyang, the other tries to manufacture what its allies can no longer produce fast enough.
Geopolitics
Iran and Oman have agreed a shipping route through Hormuz. Under the emerging model ships would enter the Persian Gulf through an Iranian-controlled corridor and leave through an Omani one, with a fee charged for security and protection of the marine environment. A joint statement is still being drafted, the deal would run for one to three months and it would be tied to lifting the US blockade of Iranian ports. In mid-July Trump declared Hormuz an American protection zone and promised to collect a transit fee. Three weeks later the fee is being collected by Tehran and Muscat.
Trump says a deal could land “tomorrow or the next day”. The US is in the talks through envoy Steve Witkoff, whose calls with the Iranian and Omani foreign ministers ran for several days. Washington wants to sign something it did not design, and it is now negotiating not over terms but over a seat at the table.
The US burned through almost all of its long-range precision missiles during the Iran conflict. Defence Secretary Hegseth told congressional Republicans why defence spending has to rise sharply, with two arguments, the China threat and empty magazines. A blockade costs munitions, and munitions take years to build, not weeks.
Benjamin Netanyahu rejected Trump’s Gaza framework. Israel will not pull back from its current positions until Hamas fully disarms, and the document, in the prime minister’s words, is “not our draft”. An ally says no to Washington on the same day Washington asks for a seat at the table in Hormuz.
China restricted six US organisations in response to American sanctions over alleged forced labour. Off the coast of Yemen an Indian-flagged vessel sank with all fourteen crew rescued, and the Houthis claimed a strike on a Saudi tanker in the Red Sea.
Central Banks
The US private sector added only 44,000 jobs in July. That is the count from payroll processor ADP, against an expected 70,000. June was revised to 95,000 and the current pace is the slowest in six months. Leisure and hospitality lost 11,000 positions and trade and transport lost 8,000. Pay growth was 4.4% for job stayers and 7% for job changers, the fastest since August 2025.
The ISM services index came in at 54.1 in July, just above June’s 54.0 but below the 54.5 expected. The business activity component jumped to 59.1 and new orders to 57.2. The economy is not breaking. Hiring is, and markets like to confuse the two.
After those two numbers the market pushed a September hike further away. The dollar slipped and Treasury yields softened. Fed chair Kevin Warsh has spent the summer repeating that inflation is too high, and nine participants in the June projections saw a hike. A soft labour print and a cheaper Brent are melting those arguments faster than any speech can.
What to Watch Tomorrow
The joint Iran and Oman statement on Hormuz. Whether it appears, and whether the US lifts the blockade of Iranian ports in exchange. September oil prices and the quarter’s inflation path hang on it.
Friday’s US jobs report. The forecast is 91,000 new jobs and 4.3% unemployment. After ADP at 44,000 the risk has shifted to the weaker side.
Brent below $80. Whether the price stays there, or whether the risk premium returns if talks stall. It is one of the week’s most important variables.
China’s next move against Europe. Whether more EU firms follow Ekspla onto the list, and whether Brussels responds.
Kyiv’s air defence. Whether the night strikes repeat, and what the West says about the shortage of interceptors.
The Bear’s Take
Three weeks ago Washington declared Hormuz its own protection zone and promised to collect a transit fee from shipping. Today a deal over that same strait is taking shape without Washington. The fee for security would go to Iran and Oman, and the American role has shrunk to phone calls and a request not to obstruct the process. Between those two points sits one sentence from the Pentagon, that the long-range precision missile stockpile is nearly exhausted. A hegemon with nothing left to strike with moves from dictating terms to negotiating for a seat.
To markets this still looks like good news. Oil is cheaper, inflation fear is receding, the rate hike is postponed and indexes are holding records. But the reason for the discount is not new supply or better efficiency. It is a change of ownership over the toll. When the price falls because the gatekeeper changed rather than because production rose, that price is rented rather than earned, and it holds for exactly as long as an agreement whose duration is measured in months.