Market moment
On Thursday bonds dragged stocks down and Hormuz pulled them back up. The 10-year US Treasury yield rose intraday to 5.17%, the highest since July 2007. The 30-year reached 5.43-5.46%, a level not seen since 2004. US mortgage rates climbed to 7.37%.
Indices ended roughly where they started. The S&P 500 closed at 7,706.10, essentially flat, the Nasdaq lost 0.02% to 26,929.48, and the Dow fell 0.29% to 51,362.06. Early losses were deeper, but were erased by a Reuters report that US and Iranian negotiators in New York are discussing a phased plan to end the war.
The labour market again gave the Fed no reason to pause. Initial jobless claims came in at 197,000 for the week, against 201,000 expected. A strong economy plus expensive oil means rate-hike expectations only harden.
Oil rose for a second day. WTI gained about 2.9% to $94.79 a barrel and Brent crossed $105. The market is betting on Hormuz talks while buying insurance in case they fail.
Gold fell to around $4,300 an ounce, bitcoin held at $84,400 and the dollar index was near 101.1. When Treasuries pay above 5%, gold and crypto compete with them, and today that competition went against them.
Lithuania and the Baltics
The defence ministry party story reached government level. Prime Minister Mindaugas Sinkevičius said the €47,559 bill surprised him, that the event could have been held far more cheaply or even for free, and that the public deserves an apology. Minister Robertas Kaunas, who on Wednesday called the event normal, admitted on Thursday it was inappropriate in current circumstances and ordered a review of the budget and spending limits. The PM did not withdraw confidence in the minister but awaits conclusions after he returns from the US.
Kaunas also spoke on Belarusian fertiliser. He said that if the EU opens a discussion on sanctions on Belarusian fertiliser, Lithuania will consider it. That differs in tone from Foreign Minister Kęstutis Budrys, who said on 22 September that no EU country can currently join US talks on Belarusian fertiliser. EU sanctions on fertiliser transit run until the end of February 2027.
National Paying Agency head Fortunatas Dirginčius was suspended. Agriculture Minister Kęstutis Mažeika opened an internal inquiry after law enforcement searched the agency in September and charged several employees, including a deputy. Possible abuse in the distribution of EU support is under investigation. Dirginčius himself is a witness in the case and pledges to cooperate.
Public procurement drew another question. MG grupė, which failed to declare a criminal record, signed 249 low-value public procurement contracts. Together with the Paying Agency case, it points to the same weak spot: small money is the least supervised.
Europe
Estonia and Latvia restored sanctions on Usmanov and Fridman at national level. Estonian Foreign Minister Margus Tsahkna signed the order from New York. Together with Lithuania’s proposed entry ban, all three Baltic states have publicly opposed the EU decision to delist the oligarchs.
France, Germany and Spain disagree on what “made in Europe” means. The Industrial Accelerator Act gives European goods priority in public procurement. Paris wants strict EU preference, Berlin wants to include trade partners, Madrid proposes a compromise. The goal is to raise industry’s share of EU GDP from 14.3% to 20% by 2035.
Ukraine
Volodymyr Zelensky at the UN General Assembly: “We choose not to die, not to lose our country.” While he met members of Congress in New York on tighter sanctions, Russia hit Kyiv with ballistic missiles.
Russia is widening attacks on Ukraine’s internet infrastructure. Over two days several data centres and internet providers in Kyiv were hit, leaving about 100,000 households offline. In the Kharkiv region village of Stara Hnylytsia, seven civilians were killed in an attack on a farm.
The EU pledges to keep condemning Russia at G20 meetings whether or not Putin attends. This follows Wednesday’s news that Putin has been invited to the G20 summit in Miami in December.
Geopolitics
US and Iranian negotiators in New York are discussing a phased plan to end the war, Reuters reported. Iran would reopen the Strait of Hormuz and the US would lift its economic blockade. The talks come against the backdrop of a war now nearly seven months old, and sources say many obstacles remain.
The Trump-Xi meeting at the White House ended without major agreements. Treasury Secretary Scott Bessent announced that the trade truce, which lowers US tariffs and pauses China’s rare-earth export controls, is extended to 10 January. The leaders clashed on Taiwan, with Xi urging the US to “handle the Taiwan question prudently.” A bigger package, if any, will come only in January.
Danish military intelligence warns Russia could launch a limited military attack on a NATO country bordering Russia in the coming months. The risk is assessed as low but rising, and hybrid attacks in Europe are expected to intensify. A full-scale invasion is considered highly unlikely.
Signs of hybrid war are already visible. A Polish minister calls a fire at a Starlink station sabotage, and a drone fell near Suceava in Romania.
Central banks
New York Fed President John Williams says it is “reasonable to expect” another rate hike before year-end. CME FedWatch on Thursday showed a 77.5% probability of a hike as soon as October, up from 70-71% on Wednesday.
What to watch tomorrow
The last day of Xi’s visit. Will there be concrete purchases such as soybeans or aircraft, or will the truce extension remain the only result?
Hormuz talks in New York. A confirmed first stage would lower oil prices and yields; failure could lift Brent toward $110.
The 30-year yield. If 5.5% is breached, pressure will spread to housing and government borrowing costs.
Kaunas’s conclusions after returning from the US. The PM awaits decisions, and former ministers Arvydas Anušauskas and Juozas Olekas already publicly question such spending.
The interim Paying Agency head. Farmers’ autumn payments will depend on who is appointed.
Bear’s comment
On Thursday the bond market made more noise than the Trump-Xi meeting. The 30-year yield is at its highest since 2004, and on the same day the hegemon extends China’s truce by another two months and gets nothing new. Coincidence? No, it’s the price: when your debt gets more expensive and your rival holds the rare earths, you don’t negotiate from strength.
In Lithuania, the same logic on a smaller scale. Defence money is growing, while the ministry explains a €47,000 party, an agency answers for EU funds, a contractor for 249 contracts. When budgets expand faster than oversight, the first thing to go is not big money but trust that it is being spent properly.