Market Pulse
The weekend’s rejection of Iran’s offer reached prices on Monday. The S&P 500 closed at 7,707.78 (−0.46%), the Nasdaq at 26,935.7 (−0.49%) and the Dow at 51,463.1 (−0.71%). The pressure came not from earnings but from the same triangle: oil, yields and the Fed.
Brent jumped to $108.83 intraday but closed at $105.28. WTI settled at $92.60 after touching $96.54. The rally was capped by news that Saudi Arabia, after repairs, has restored flows through its East-West pipeline to about 3.5 million barrels a day, the only route that bypasses Hormuz.
The 10-year US Treasury yield is back above 5.2%, the 30-year above 5.3%. The dollar index rose about 0.27%. According to CME FedWatch, the probability of an October rate hike rose from 64% to 70% in a single day.
Gold fell about 3% to roughly $4,150 an ounce, a seven-week low. Bitcoin slid from $84,500 to around $83,000. High real rates and a strong dollar hit every non-yielding asset equally today.
Lithuania & Baltics
US troops are returning, but the president warns against celebrating too early. Gitanas Nausėda says that although the rotation to Lithuania resumes on a nine-month cycle, the overall number of US troops in Europe will fall. The conclusion is the one Washington has repeated all year: Europe will increasingly have to pay for its own defence.
Prime Minister Mindaugas Sinkevičius asked Brussels for air defence money. At a meeting with Ursula von der Leyen, the Baltic states urged the Commission to allocate €500 million for counter-drone defence this year. Lithuania’s 2027 EU Council presidency and the long-term EU budget were also discussed.
A Defence Ministry party has become a political problem. The September 10 event on Tower Square cost €47,559, of which €44,994 came from ministry funds. Nausėda expects an apology from Minister Robertas Kaunas and will not say whether he still trusts him. The president’s point is well aimed: every future fight over the defence budget will bring this story back up.
Luminor’s buyer is weighing an exit from Russia. According to Bloomberg, Hungary’s OTP Bank is considering a full withdrawal from Russia, as its subsidiary there could block approval of the Luminor acquisition by the ECB and Estonia’s regulator. The catch: OTP’s Russian profit has grown more than fivefold since 2021 to $635 million, and it has around 2 million clients there.
It is fuel and heating, not food, that is driving prices in Lithuania. That is what Pricer.lt data show, and ministry figures confirm it: applications for heating compensation rose 9% in September.
Europe
Hungary’s parliament lifted Prime Minister Péter Magyar’s immunity. Prosecutors accuse him of snatching a phone from a person filming him in a nightclub in 2024 and throwing it into the Danube. Immunity was also lifted for two Orbán-era politicians: Balázs Hankó, suspected of wasting more than €40 million of public funds, and former minister Miklós Seszták. 139 MPs voted in favour; Fidesz boycotted the session.
Moscow seized the Russian business of Germany’s Metro. By Putin’s decree, the company was placed under “temporary management”. It follows Nestlé, Auchan and the former Leroy Merlin chain, all taken over this month. The OTP case above shows the other side of the same coin: staying in Russia is becoming dangerous, leaving is still expensive.
Kaja Kallas says after Lavrov’s UN speech that Moscow does not want peace. The diplomatic UN week ended without any breakthrough.
Ukraine
Russia again attacked Kyiv with jet-powered drones and ballistic missiles. A water treatment facility was damaged and at least 20 people were injured in the capital. Across the country at least six civilians were killed and 53 injured in a day.
Ukraine reports progress near Lyman. The army is changing tactics: first striking Russian supply routes and reinforcements, only then the troops themselves. This is Kyiv’s claim; there is no independent confirmation of frontline changes yet.
A Russian jet-powered drone crashed 2 km from the Yahodyn crossing on the Polish border. The blast damaged the checkpoint, the crossings were temporarily evacuated and Poland scrambled fighters. The same day Warsaw changed its rules: its pilots may now engage airspace violators without visual confirmation.
Geopolitics
Araghchi met mediators in New York, with no US officials at the table. Iran is waiting for Washington’s “final” position. Trump confirmed that US officials also met the mediators, while UN Ambassador Mike Waltz called Iran’s seven-day plan “a fairly cynical attempt” to end the war. According to AP sources, indirect talks continue.
Trump is “very seriously” considering a ban on diesel exports. Treasury Secretary Scott Bessent confirmed the administration is weighing a full or partial ban. The motive is domestic politics: record diesel prices ahead of the November elections are squeezing farmers and truckers. For Europe this is a direct risk, as Russian and Middle Eastern flows are already disrupted.
Iran filed a UN complaint over US aviation restrictions. Another legal front alongside the naval blockade.
Central Banks
Lagarde defends “measured” hikes. The ECB president says the oil and gas price surge has not yet triggered dangerous second-round effects, although euro area inflation is already above 3% and could approach 4% by year-end. Most economists expect the ECB to wait on October 29 and hike in December alongside new projections.
The Fed talks tough after its September hike. Michelle Bowman, Lisa Cook and Thomas Barkin spoke on Monday, and the market has already priced a 70% probability of another 25 basis point hike on October 28.
What to Watch Tomorrow
The mediators’ answer to Tehran. It will decide whether Brent heads back toward $108 or drops below $100.
A decision on diesel exports. If a ban is announced, European diesel prices will jump faster than American ones fall.
PCE data on September 30. A hot print would push the odds of an October hike above 80%.
Minister Kaunas’s apology, or its absence. The president left the question of trust open, so the next move is the minister’s.
Saudi pipeline flows. 3.5 million barrels a day held oil back today. If the Houthis hit it again, that counterweight disappears.
Meška’s Take
Gold falls on the same day oil rises and talks stall. A safe haven? No, this is the price of rates: when 10-year Treasuries pay 5.2% and the Fed is preparing another hike, even a war premium no longer protects an asset that pays no income.
For Lithuania, the day showed how much our security depends on other people’s decisions. The troops are coming back, but there will be fewer of them in Europe; the bank buying the Baltics’ third-largest bank earns its money in Russia; diesel can be cut off by a single White House statement. At the end of the cycle, the periphery pays not only in money but also in the fact that its fate is increasingly decided by others.