Market Pulse
Softer inflation, but a nervous end to the quarter. The S&P 500 closed at 7,651.5 (−0.25%), the Dow Jones at 50,906 (−0.86%), while the Nasdaq rose to 26,861 (+0.24%). In September the Dow lost 4.3%, the S&P 500 0.45%, and the Nasdaq gained 1.9%. In the third quarter tech won, industrials and financials lost.
PCE inflation cooled more than expected. The personal consumption expenditures price index (PCE, the Fed’s favourite inflation gauge) rose 3.4% year on year in August, down from 3.7% in July. The core index excluding food and energy slowed from 3.3% to 3.0%. Inflation-adjusted spending jumped 0.6%, the strongest in more than a year. Markets cut the probability of an October rate hike to about 41%, from above 70% a week ago.
Bonds didn’t give in. The 10-year US yield held at 5.30%. The dollar index hit a two-month high of 101.7 on Tuesday and ended September with its best month since June.
Oil climbed again. Brent rose about 2% to roughly $98 a barrel, WTI to $90.7. The US government announced it will release up to 40 million barrels from the strategic reserve. Gold stood still at about $4,180 an ounce, bitcoin held at $84,000.
Micron surprised after the close. The memory chipmaker’s quarterly revenue reached $54.2 billion, almost five times more than a year ago, and its guidance for next quarter also beat expectations. The AI (artificial intelligence) investment cycle is not running out of steam yet.
Lithuania and the Baltics
Lithuania ready to pay for US troops. Prime Minister Mindaugas Sinkevičius says he told US special envoy John Coale clearly: we want a permanent American deployment and are ready to cover the costs. Allies have learned the Trump administration’s language quickly.
Government backs restrictions on pro-Russian activity. Amendments to the sanctions law would bar entry to Russian and Belarusian citizens who support the war against Ukraine or worked in occupied territories in culture, sport, science and entertainment. Their purchases of real estate near strategic sites would also be restricted. The amendments still need to pass the Seimas.
Transit grain in Klaipėda will be held. Agriculture Minister Kęstutis Mažeika says grain from Russia and Belarus will wait in port until origin tests are completed. Until now samples were taken during loading and the ship sailed on. The suspicion is clear: some cargo may come from occupied Ukraine.
Finance Ministry against using the Sodra surplus for pensions. The ministry calls the President’s proposal to direct at least 20% of the surplus to extra indexation risky, because by its calculations the pension system will go into deficit as early as 2028. Social Security Minister Inga Ruginienė does not comment on the criticism but repeats that pensions must rise by at least 10% in 2027.
Novaturas owner detained in Turkey. Neset Kockar, who controls 82.7% of the tour operator’s shares, was detained in an Antalya police operation related to drugs and prostitution. The company says it has received no official information.
Banks keep earning. According to the Bank of Lithuania, bank profits rose 10% in the first half to €591 million, with Revolut providing the largest increase.
Europe
Romania without a government. Parliament rejected the pro-European prime minister candidate Siegfried Mureșan: 182 votes in favour, 233 were needed. The Social Democrats want the premiership for themselves, the far-right AUR did not vote. It is already the third failed attempt, and early elections are approaching.
Latvia’s president does not rule out nuclear weapons. Edgars Rinkēvičs said that if needed, nuclear weapons could be deployed in Latvia. Meanwhile, US ambassador to NATO Matthew Whitaker denied reports of plans to withdraw up to 40,000 troops from Europe.
London blames Tehran. UK Prime Minister Andy Burnham said there are “strong indications” of Iranian involvement in the incident near an air base.
Ukraine
Kyiv’s longest air raid alert. Overnight Russia launched 188 drones, 86 of them jet-powered, plus Tsirkon, Oniks and Iskander missiles. Three people were killed, energy infrastructure was damaged, and the alert lasted 12 hours 44 minutes. Prime Minister Serhiy Koretskyi says there has not been a combined attack on this scale since the end of last heating season.
Zelensky with Lyman front commanders. Talks covered pickups for brigades, more money for drones and simpler procurement. Ukraine received a new batch of NASAMS missiles, but the air defence shortage persists.
Geopolitics
Iran received the US reply. Government spokesperson Fatemeh Mohajerani confirmed that Washington’s response to the seven-day Hormuz reopening plan arrived via Qatari mediators. The content was not disclosed. Gulf oil exports already reach about 17.5 million barrels per day, nearly 98% of the pre-war level.
China threatens the EU. Beijing’s commerce ministry warned it will retaliate if Europe creates its own equivalent of the US “Section 301”, which allows unilateral punishment for unfair trade. Brussels has not adopted anything yet, but Beijing is already drawing lines.
Russia’s 2027 budget: more taxes. The finance ministry submitted a draft to the Duma with new taxes on passive income, e-commerce and corporate windfall profits. The budget assumes an oil price of $50 a barrel, which Putin himself calls “very conservative”.
Central Banks
PCE cooled the Fed, but not entirely. After the September hike to 3.75–4.00%, the market still expects one more step by year-end, only now more in December than on October 28. Barkin, Goolsbee, Williams and Logan speak this week.
IPO Radar
Trump’s accord with AI companies. Trump and the heads of Anthropic, OpenAI, Google, Meta, Nvidia and SpaceX (which now owns xAI) signed a voluntary agreement on control and audits of the most advanced AI models. There are no fines and audit results need not be published. Anthropic’s prospectus, whose risk section names AI as an existential threat to humanity, continues to be debated ahead of the November listing.
What to Watch Tomorrow
ISM manufacturing index (October 1). After a soft PCE, the market will look for confirmation that the economy is not overheating.
Lagarde speaks at the ESRB conference (October 1). Will the ECB, a month before its meeting, repeat its hawkish tone.
The Micron effect. Will the results lift the whole semiconductor sector, or just confirm that AI money is concentrated in a few companies.
Iran’s reply to the US. The move is now Tehran’s, and it determines whether Brent stays near $100.
Friday’s jobs report (NFP). According to ADP, the private sector added 90,000 jobs in September, versus 36,000 in August.
Meška’s Commentary
Inflation cooled, yet the S&P 500 still fell. Why isn’t the market celebrating? Because the 10-year yield stayed at 5.3%, and the bond market is clearly saying one good report does not change the arithmetic of wartime oil and deficits.
Lithuania’s offer to pay for American troops itself is the same cycle, just from the other side. The hegemon that once supplied security as a public good now issues an invoice, and small states pay it without negotiating, because they have no alternative.