Market Pulse
Chips drag the market down. As of the evening (US trading still open), the S&P 500 sits near 7,750 (-0.6%), the Nasdaq near 27,150 (-1.4%), and the Dow is almost flat around 51,140. The semiconductor index fell nearly 4%, Oracle more than 5%.
The trigger: OpenAI’s revenue. Citing financial documents, the Financial Times reports that OpenAI’s annualized revenue in September was about $50 billion, roughly $20 billion less than previously presented to investors. The market immediately repriced the entire AI infrastructure chain.
No relief for bonds. The 30-year US yield holds around 5.6–5.7%, the 10-year around 5.2–5.3%. Fed Governor Waller repeated in Istanbul that rates need to go higher.
Oil jumps. WTI near $91–92 (+4%), Brent briefly above $105 before easing to around $103 after Trump’s statement on Iran. The price is driven by a record number of tanker attacks.
Gold steadies, bitcoin doesn’t. Gold near $4,155 an ounce (+0.3%) after yesterday’s drop. Bitcoin around $80,600 (-3.4%), with spot bitcoin ETFs losing $487 million on Tuesday. The dollar index (DXY) holds around 102.
Lithuania & Baltics
A budget with a 3.8% deficit. Prime Minister Mindaugas Sinkevičius presented the priorities for the 2027 budget: revenue of about €19 billion, spending of nearly €27 billion, a general government deficit of about 3.8% of GDP, and 5% of GDP for defence (over €4.8 billion for the Defence Ministry). The average old-age pension will rise by about €78 to €825, and the family package is €150 million. The draft must reach the Seimas by October 17.
Analysts: temporary only. Swedbank economist Nerijus Mačiulis notes that higher interest rates already cost the state €1–1.5 billion a year, and argues for reviewing spending rather than raising taxes. Artea economist Indrė Genytė-Pikčienė cites the State Audit Office: debt could reach 55% of GDP within a few years, with servicing costs approaching €2 billion in 2029. The Liberal leader calls the deficit a “dramatic signal.”
Troops at the Kaliningrad border. Since Thursday, about 100 soldiers are helping border guards patrol the border with the Kaliningrad region for two weeks, with the option to extend. President Gitanas Nausėda calls it insurance against provocations. Interior Minister Martynas Katelynas stresses the threat level has not risen, and the decision rests on unofficial signals of a possible Russian mobilization after the Duma elections.
Harmony Link signed. Litgrid and Poland’s PSE signed the 700 MW land link agreement in Vilnius. Lithuania’s share is about €220 million, of which €149 million is EU-funded. The connection point will be on the Polish side, about 35 m from the border, and the line must be operational by December 31, 2030 at the latest. No acceleration.
Moscow court targets partisans. A Moscow court declared 13 people from the Baltic states, including partisan leader Juozas Lukša and Juozas Ambrazevičius, head of the 1941 Provisional Government, “accomplices of Nazi Germany.” Justice Minister Rita Tamašunienė calls it a disinformation campaign and says the EU needs a legal response mechanism.
Europe
Šefčovič in Beijing. The EU trade commissioner opened two days of talks, calling the trade deficit with China unsustainable: last year China exported roughly €1 billion a day more to the EU than it imported. Brussels is asking for voluntary export limits (for example on hybrid cars) and clearer rare earth licensing. Next week EU leaders will consider Macron and Merz’s request for a rapid response instrument.
A record sanctions list. EU ambassadors agreed on 1,646 new listings, mostly targeting Russia’s defence industry, with half linked to missile production. Foreign ministers will formally approve them on October 12 in Luxembourg.
French bonds under pressure again. Banque de France Governor Moulin admitted the strain is serious but does not meet the conditions for ECB support. The deficit is heading toward 5.4% of GDP this year, the gap with German bonds is widening, and the euro is weakening with it.
Ukraine
33 dead in Kramatorsk. Russian glide bombs hit a bus stop in Kramatorsk, killing at least 33 people, one of the deadliest attacks in eastern Ukraine this year. A drone attack on Kyiv killed four and disrupted electricity and water supplies.
The peace process stalls. Secretary of State Marco Rubio says “there appears to be no prospect of a negotiated settlement.” US senators urge the administration to start enforcing the new Russia sanctions law by October 18, while NATO has already delivered $10 billion worth of US weapons to Ukraine through the PURL programme.
Strikes deep inside Russia. Ukraine’s General Staff confirmed strikes on the Omsk and Salavat (Gazprom Neftekhim) refineries, the latter about 1,300 km from the front.
Geopolitics
Trump: not before the vote. The US president posted on Truth Social that the US will not attack Iran before the November 3 midterm elections, and the blockade stays. At the same time, The Atlantic reports the White House asked the Pentagon for strike options, possibly for a wider operation after the vote. Iranian Foreign Minister Araghchi says a reply to the US “seven-day plan” will come within a few days.
Hormuz: a record for attacks. According to Kpler, 10 tankers were attacked between September 28 and October 4, against a previous weekly record of six. On Tuesday only seven tankers crossed the strait, half the usual number. For the first time in six months, a ship was attacked outside the strait, north of Qatar. The US Treasury sanctioned another 17 vessels from Iran’s “shadow fleet.”
Houthis hit Riyadh. The Houthis claimed a ballistic missile strike on Riyadh airport for the third time this week. According to Reuters, citing video footage, an empty Saudia aircraft was damaged and about half of departures were cancelled. The Houthis told workers at Saudi oil facilities to leave. This is no longer just a strait risk: the threat is moving onto production infrastructure itself.
US and China: a temporary breather. The US Trade Representative kept the 2018 Section 301 tariffs on China in place, even though the two sides recently agreed to cut tariffs on $60 billion of goods. China’s suspension of rare earth controls expires on November 10, with no signal on renewal.
Central Banks
Waller for more hikes. Fed Governor Christopher Waller says rates need to rise further, though “the hikes do not need to come at consecutive meetings.” This matches yesterday’s September minutes, in which most officials saw one more hike before year-end.
Markets scale back ECB bets. Money markets now price about two and a half ECB hikes, down from three and a half a week ago, after Lagarde acknowledged that higher borrowing costs are already slowing the economy. The ECB deposit rate is 2.50%.
IPO Radar
OpenAI: a $20 billion hole. According to the FT, OpenAI’s annualized revenue in September was about $50 billion, not the nearly $70 billion Axios reported on September 29 based on information given to investors. The company has not publicly commented on the figures. If the FT numbers hold, OpenAI’s valuation and any future IPO will rest on a noticeably smaller revenue base.
What to Watch Tomorrow
OpenAI’s response. Whether the company disputes the FT figures, and whether the chip selloff continues into a second day.
The end of Šefčovič’s talks. Whether Beijing yields at least one sector deal, or EU leaders move to response measures next week.
Iran’s reply to the US. Araghchi promised an answer within days, and Trump’s “not before the vote” pledge leaves the November window open.
Houthis and Saudi oil. If strikes reach production sites, Brent above $105 becomes a floor, not a ceiling.
Coalition budget talks. Where the €1.5 billion in savings the prime minister mentioned will be found before the draft goes to the Seimas on October 17.
Meška’s Take
Vilnius plans a 3.8% deficit, Paris is heading toward 5.4%, Washington’s 30-year bonds pay nearly 5.7%, and the AI story that justified record stock indices lost $20 billion of revenue in a single article today. A correction? No, this is the bill for money borrowed cheaply and now refinanced expensively.
For Lithuania the arithmetic is simple: 5% of GDP for defence is not up for negotiation, so all the pressure falls on debt. As long as the €1–1.5 billion in interest Mačiulis mentioned grows faster than revenue, every extra soldier at the Kaliningrad border is financed by borrowing in a market where the price rises every week.