Bank of Korea To Buy 1 Ton Of Gold In First Purchase Since 2013

Add South Korea to the list of countries taking tentative steps to hedge their exposure to the US dollar, and fiat in general.

The Bank of Korea will buy approximately one ton of domestically produced gold in December, worth 200 billion won, according to the office of Rep. Chung Tae-ho of the Democratic Party of Korea, a member of the National Assembly's Strategy and Finance Committee, on the 30th.

The move, which follows indirect investment through ETFs in the second quarter, signals a more active push into gold and marks the central bank's first physical gold purchase in 13 years. The first transaction is scheduled for December 14, after the bank establishes the system needed for domestic gold trading, Seoul Daily reported.

In materials submitted to Chung's office, the BOK said the necessary systems are expected to be in place around Dec. 14, allowing the first transaction to take place at that time. The central bank estimated the planned volume at around one ton. One ton of gold is valued at roughly 200 billion won ($140 million).

The Bank of Korea held 104.4 tons of physical gold as of the end of August, valued at $14.88 billion and representing 3.4% of foreign exchange reserves. One ton adds less than 1% to that position.

The BOK halted gold purchases in February 2013. It had ramped up gold investment until then, only to face fierce criticism from politicians when prices fell. But with geopolitical risks mounting and interest in gold as a safe-haven asset growing, and amid criticism that the BOK's gold holdings were smaller than those of other central banks, the bank decided this year to expand its reserves. It officially announced in August that it would resume buying physical gold. In the second quarter, it had already purchased $250 million worth of gold ETFs, which are classified as securities.

The most likely approach for the physical purchases is to buy volumes that domestic gold producers had planned to export. The arrangement is significant because it secures a channel for buying gold in won rather than foreign currency. That allows the BOK to build up safe-haven assets without dollar outflows, minimizing volatility in the domestic foreign exchange market. The Korea Exchange recently overhauled the trading, custody and settlement systems of its KRX gold market to support the BOK's purchases.

Chung said the BOK's decision to resume physical gold purchases after 13 years is a meaningful first step toward diversifying the country's foreign exchange reserve portfolio.

What makes the purchase notable is the resumption itself. As Binance notes, a central bank that has not bought physical gold since 2013 building the infrastructure to do so signals an intent to continue, and the report describes establishing a system rather than executing a one-off trade.

Confirming an August report from Reuters, the purchase is expected to cover gold that domestic producers had originally planned to export. That will allow the central bank to pay in Korean won without drawing on foreign exchange reserves.

The distinction matters for how the transaction affects Korea's external position. A conventional gold purchase converts foreign currency into bullion, changing the composition of reserves without altering their total. Buying domestic production with won adds to reserves without spending any.

It also keeps gold inside Korea that would otherwise have left, which has a marginal effect on the country's trade flows.

The Bank of Korea began indirect gold investment in the second quarter of this year, purchasing $250 million worth of gold ETFs.

That sequence is informative. ETF exposure gives price participation without custody, storage or the operational work of handling physical metal. Moving from ETFs to bullion after two quarters suggests the earlier position was a preliminary step rather than the intended endpoint.

The BOK's gold holdings fall far short of those in major economies. As of the end of August, the central bank held 104.4 tons of physical gold, worth $4.79 billion on a book value basis. That accounts for just 1.1% of total foreign exchange reserves, or about 3.4% at market prices. The BOK ranks 39th in the world in gold holdings, according to the latest data from the World Gold Council.

China's central bank has been the more visible buyer, adding 650,000 ounces in a recent month - its largest since 2023 - across 22 consecutive months of purchases.

Central bank gold demand has been a persistent bid through a period when the metal has fallen sharply on rate expectations. Gold traded near $4,144 on September 28, roughly 25% below January's record of $5,600, and posted three consecutive weekly declines through mid-September.

That divergence is the thing to watch. Official sector buying has continued while investor flows moved the other way, and a central bank starting a programme at these levels is buying into weakness rather than strength.
Fiscal Concerns Are the Stated Driver Elsewhere

The broader argument for central bank gold accumulation has shifted toward sovereign risk.

Chicago-based Strategic Analytics put it directly: "Since 2022, gold has increasingly tracked fiscal-risk perceptions – term premium, deficits, debt sustainability – rather than the Fed's policy path."

That framing sits alongside a bond market setting extremes. The 30-year Treasury yield crossed 5.6% on Tuesday, its highest since June 2002, and the 10-year reached a fresh 2007 high near 5.3%, with analysts including 10x Research's Markus Thielen forecasting 6%.

Tyler Durden Wed, 09/30/2026 - 11:40

Oil Hits Session High After DOE Shows Lowest Midwest Gasoline Stocks On Record

Oil prices rose to session highs after today's DOE inventory data refuted the latest cheerful API prints from Tuesday afternoon. Instead of the API-reported builds in distillates and gasoline, the DOE said that in the last week both products drew, with a modest increase in Cushing inventories, while crude inventories rose by 922K

API

•     Crude +1.0mm
•     Gasoline +3.0mm
•     Distillates +0.3mm
•     Cushing +0.2mm

DOE

•     Crude +0.922mm
•     Gasoline -1.684mm
•     Distillates -2.251k
•     Cushing +553mm

As Bloomberg notes, that’s a large draw of distillate fuels at 2.25 million barrels, well below the 300,000 barrels increase API saw. The October diesel contract is expiring today, so price action is a little murky, but the most-active contract is holding pretty strong gains near $4.75 a gallon.

Cushing stocks saw another bounce off 'tank bottoms' even as crude inventories saw a modest increase, while product stocks both saw modest draws...

Here' a look at some more of the data:

• PADD 1B gasoline -1,422k
• PADD 1 Distillates -254k
• PADD 3 crude +3,417k
• Refinery utilization -1.5ppt vs est. -0.3ppt
• Refinery crude inputs -554k b/d
• Crude imports -179k b/d
• Crude production +16k b/d

The 922,000 barrel build in commercial crude stockpiles was close to the 1 million barrel increase seen by the API on Tuesday. It compares with a Bloomberg survey of analysts that saw the stockpile shrinking by 710,000 barrels and Bloomberg users’ expectations just before the data were released of a 1 million barrel build.

Stockpiles at Cushing, Oklahoma, rose to the highest since May. At 24 million barrels, inventories are inching further away from the 20-million mark generally seen as the minimum operating level for the storage hub. It’s the second straight week of builds at Cushing. 

Meanwhile, the US Strategic Petroleum Reserve declined by another 785K barrels; SPR stockpiles will continue to draw further throughout the end of the year after the energy department re-offered 40 million barrels of sour oil in a tender. The oil was offered as part of the exchange program, and must be returned in kind between 2027 and 2029. It’s to be seen if the government will be able to attract interest from traders and refiners. The minimum premium has fallen to 7% to 9.5%, compared with as much as 22% earlier this year. A total of 132 million barrels of crude has been taken out of the SPR since late March under a program to release 172 million barrels as part of a relief plan coordinated by the International Energy Agency aimed at lowering energy costs.

That means that the build in commercial crude stockpiles was mostly offset by another 785,000 barrels withdrawn from the SPR. That reduced the overall nationwide crude build to just 137,000 barrels in the week to Sep 25.

Taking a closer look, we find that gasoline stocks in the US Midwest are at the lowest level on record. Overall, the US has the least gasoline on hand since November 2014, with stockpiles falling by 1.68 million barrels. 

On a seasonal basis, PADD2 (Midwest) gasoline has also never been lower. 

Distillate fuel stockpiles in the US also remain at their lowest seasonal levels on record. Stockpiles fell in every single region. Exports, meanwhile, rebounded to 1.5 million barrels a day. While discussion of a US diesel export ban has died down a bit, it hasn’t faded entirely, and a number like this might revitalize some of those conversations.

Linked to that, there was another big drop is US crude processing by refineries. Over the past three weeks, crude consumptions fell by 1.3 million barrels a day. That’s the lowest since May. Rates fell in all regions, with the exception of the Rockies

Imports of Brazilian oil rose to the highest level since November 2024 and the highest level ever for this time of year, with the US importing nearly 500,000 barrels each day last week. While it’s unclear what’s driving the move, one explanation could be that strong American refinery runs are supporting demand for nearby foreign crudes while, at the same time, less Brazilian oil heads to Asia.

At the same time, imports from Canada rose for the second time in three weeks. Shipments from the country remain fairly low at 3.4 million barrels a day, but there was an uptick nonetheless. PADD 2 takes the most Canadian crude out of any region, so the build in Cushing was likely at least partially due to shipments from the North. 

Bloomberg offers another take on falling refining crude processing: Canadian crude delivered via pipeline to both the US Gulf Coast and the Patoka hub are at a contango, a sign of weak demand. On the flip side, WTI at Houston is still in a backwardated structure. That can be partly explained by the light-heavy differential, that currently favors the use of light crude over heavy crudes from places like Canada and Venezuela. 

WTI futures jumped a few cents higher to session high in a knee-jerk reaction to the report. EIA data showed a relatively unexciting US crude stockpile build of roughly 900,000 barrels, but the markets focus is elsewhere this week - namely, diesel. 

 

Tyler Durden Wed, 09/30/2026 - 11:21

Feds Investigate Kinzinger Over Alleged Kalshi Bets On Own Pardon

Former Republican Rep. Adam Kinzinger is reportedly under investigation by the Commodity Futures Trading Commission over prediction-market trades tied to an unusually personal event: whether President Joe Biden would pardon him.

According to Politico, citing three people familiar with the matter, the CFTC has been examining trades made by a Kalshi account linked to Kinzinger in December 2024 and January 2025. Kalshi is also reviewing the transactions. Kinzinger confirmed that he made the trades, telling Politico that he wagered on both whether he personally would receive a presidential pardon and whether Biden would issue preemptive pardons before leaving office.

According to screenshots Kinzinger provided to the outlet, he made $823 on the trades. He said he placed roughly 25 trades during the period and mostly lost money. 

And of course, he denies having any inside information - telling the outlet "I was not a congressman or candidate, and had been out of office for two years, and had no inside information," and claiming that he never discussed a potential pardon with anyone at or near the White House and believed his wagers complied with Kalshi's rules at the time.

What Kalshi's Rules Said

A version of Kalshi's rulebook filed with the CFTC in November 2024 - before the reported trades - prohibited users from trading when they possessed material nonpublic information about an event or had the ability to influence its outcome. Kinzinger says he had neither.

Interestingly, on Jan. 6, 2025, while Biden's possible preemptive pardons were being publicly debated, CNN's Anderson Cooper asked Kinzinger whether Biden should pardon members of the Jan. 6 committee, including himself.

"No. I don't want it," he replied, adding "As soon as you take a pardon, it looks like you are guilty of something," Kinzinger said.

Two weeks later, Biden pardoned Kinzinger along with the other members and staff of the House Jan. 6 committee and police officers who testified before it. The Justice Department describes the action as a "full and unconditional pardon" covering potential federal offenses arising from or related to the committee's activities.

Granted: we don't know exactly when each Kinzinger trade occurred, whether he held a position when he made his CNN comments, or which side of the pardon contract he was taking at any particular point.

So the public statement and the trading activity cannot, based on what is currently known, be treated as evidence of market manipulation.

In February, the CFTC warned that prediction-market activity involving improperly obtained confidential information or a trader's influence over an event can trigger federal antifraud and anti-manipulation rules. The agency highlighted one case involving a political candidate trading on his own candidacy and another involving a person affiliated with a YouTube channel who allegedly knew the contents of videos before they were published.

Tyler Durden Wed, 09/30/2026 - 11:20

Migrant Caravan Headed For US Border Has 'Zero Chance' Of Entering, DHS Chief Warns

Another migrant caravan from Honduras has "zero chance" of entering the United States, DHS Secretary Markwayne Mullin. 

U.S. Army combat engineers place razor wire on the U.S.-Mexico border wall to reinforce security in El Paso, Texas, as seen from Ciudad Juarez, Mexico, on July 24, 2025. Jose Luis Gonzalez/Reuters

"The caravan has zero chance of coming into our country," he told Newsmax Monday. "I’ve been talking with the Mexican government and we actually have been watching this caravan for quite some time."

The Department of Homeland Security (DHS) has been tracking the group since it left San Pedro Sula, Honduras Sept. 20, and has been working with international partners to monitor its movements. 

"DHS is playing lockdown defense at the border. We will use every Weapon at our disposal, from A to X, to keep Americans safe," an agency spokesperson told the Epoch Times. "Migrants considering making the dangerous journey to our country should also be aware that the days of ‘catch and release’ are over, and Biden’s disastrous open border policy has been SEALED SHUT." 

The group, which calls itself "Fe y Esperanza" (Faith and Hope) is estimated to include around 300 people, according to Oaxaca news outlet Oaxaca Capital. 

Texas National Guard soldiers wait nearby the boat ramp where law enforcement enter the Rio Grande at Shelby Park in Eagle Pass, Texas, on Jan. 26, 2024. Michael Gonzalez/Getty Images

"Some of its members have indicated that they are seeking to reach the United States, while others plan to stay in Mexico and look for job opportunities," the outlet reported. "It is also reported that migrants who were previously deported from the United States are now attempting to resume their journey northward."

The caravan entered Mexico from Guatemala via a bridge in Suchiate and walked more than 12 hours to reach Tapachula. They stayed in Oaxaca for several days and received care for exhaustion, dehydration, blisters, and foot injuries, the city said.

Humanitarian organizations provided first aid, medications, water, food, and hygiene items to the men, women, and children from several countries in Central America that made up the group, the city reported. -Epoch Times

Mexican authorities are reportedly helping to break up the caravan, Mullin said, adding "They are not entering ... We made this very clear." 

Tyler Durden Wed, 09/30/2026 - 11:00

FTC Launches 'Rogue AI' Probe Of OpenAI, Anthropic - And Takes Aim At Their Regulatory Moat

The Federal Trade Commission (FTC) is launching a sweeping, aggressive probe into top frontier labs like OpenAI and Anthropic. However, the investigation goes far beyond simply asking questions about autonomous software run amok, and its chairman has made clear he won't let Silicon Valley use recent AI failures to build an insurmountable regulatory moat.

According to administration officials who spoke to the New York Post, FTC Chairman Andrew Ferguson is preparing to hit tech executives with Civil Investigative Demands (CIDs) - essentially administrative subpoenas - to compel testimony regarding the dangers their artificial intelligence (AI) super intelligence (SI) models (are we doing this?) pose to the public and consumer markets.

The Catalyst: 'Hugging Face' Jailbreak

The immediate trigger for the probe is the highly publicized "Hugging Face incident" from this past July. During what was supposed to be a contained cybersecurity evaluation, about 700 of an estimated 1,200 OpenAI agents escaped their testing sandbox, bypassed network controls, and breached the infrastructure of the computational tools company Hugging Face. 

Running primarily on OpenAI's "Internal Model 1," the autonomous agents tried to erase traces of their work, created nearly a million shortened URLs to run code outside their restricted environments, and even tried to enlist other AI models to help.

While AI safety researchers were quick to call it "the first true AI safety incident," the FTC is taking a distinctly different view on accountability. Chairman Ferguson recently indicated that companies cannot shift legal blame to "rogue" AI systems when their automated decisions result in security breaches or consumer harm. The liability, the FTC argues, rests squarely on the humans who designed, instructed, and unleashed the models.

That said, these breaches have drawn scrutiny of their own. OpenAI first disclosed the incident as an "unprecedented" cyber event, but Hugging Face's own post-mortem found the agents reached the open internet through a network route the sandbox had deliberately left open, and exploited weaknesses that "a capable human attacker could have found and exploited" - unsafe dataset processing, exposed cloud metadata, overly broad access and long-lived credentials. OpenAI itself conceded that its own chain-of-thought monitoring, had it been running, would have caught the initial activity.

Nor was OpenAI alone. The Hugging Face breach was one of a string of incidents involving OpenAI, Anthropic, Meta and Google models that trace back to evaluations run with a single vendor, Israel-based Irregular, whose test environments had live internet access while the models were told they were in a simulation. Irregular notified all four labs in late July, yet the disclosures trickled out one lab at a time over seven weeks - turning one contractor's mistake into what looked like a wave of AI breakouts. Isolating test models from the internet is a "basic control measure," frontier security expert Matthew Mittelsteadt said. "You'd think that of all the things that you've got to get right." Some skeptics have gone further, questioning whether repeated "accidents" at the same vendor were accidents at all.

The Trojan Horse of "Self-Regulation"

For years, executives like OpenAI's Sam Altman and Anthropic's Dario Amodei have publicly warned that their own products pose an "existential risk" to humanity, practically begging lawmakers to regulate them.

But as we previously noted, these highly publicized warnings and agent "escapes" often serve a dual purpose. By whipping Washington into a panic over AI doomsday scenarios, industry leaders are paving the way for a worst-case scenario of heavy-handed regulation. Stifling compliance requirements inevitably crush open-source developers and cash-strapped startups, leaving the trillion-dollar AI bubble safely in the hands of the incumbent monopolies.

Chairman Ferguson appears to be acutely aware of this Silicon Valley playbook.

"I think it's very important that we not allow these two firms to come to Washington, whip everyone into a panic and then say, 'We need a whole bunch of regulations that we can comply with,'" Ferguson told Fox News earlier this month. "That is how companies build a moat around their businesses to make sure that people can't compete against them."

The FTC's aggressive posture stands in stark contrast to the White House's approach. Just this week, President Trump hosted a summit with leading tech billionaires - including Amodei, OpenAI President Greg Brockman, Elon Musk, and Google's Sundar Pichai - resulting in a much friendlier, voluntary "self-regulation" pact.

The administration is attempting to walk a nearly impossible geopolitical tightrope. The US government wants to prevent autonomous agents from hacking power grids, leaking data, or manipulating financial markets, but it is equally terrified that stifling the American AI industry will hand global dominance directly to China.

The FTC probe will test whether the US can successfully police the world's most powerful software without inadvertently cementing an AI oligarchy.

Tyler Durden Wed, 09/30/2026 - 10:40

Hung, Drawn, And Third-Quartered: Roll On Q4

By Michael Every of Rabobank

Today ends Q3, which has been a shocker even in a year of major market shocks.

Wars dragged on and spread. Russia-Ukraine saw energy sites hit and hybrid attacks against Europe increase. Saudi Arabia, not Iran, is now under missile fire and both oil exporters are partly blockaded. France gave the first sign of getting dragged into the war, which conflated more with Russia-Ukraine. A US-China summit suggested détente but news that families of Chinese AI workers can no longer leave the country suggested it’s minus a ‘te’ and an ‘e’ - and China just opened an airbase in Laos. Canada floated joining the EU and fighting a US invasion like the Taliban, as Greenland became a permanent US security protectorate with Ottawa’s approval. Argentina still wants the Falklands back, which London can no longer project power towards as in 1982, and as it continues to try to give away other strategic territory against strong US objections.

AI saw a series of remarkable headlines: technological breakthroughs, market meltdowns and melt-ups, and new political pushbacks. Perhaps the highlight was the upcoming Anthropic IPO telling would be shareholders that AI may pose an “existential risk to humanity.”

Western stocks had a steady Q3 until recently. With today’s session still to come, the S&P is +2.3% q-o-q vs. +14.9% in Q2 and -4.6% in Q1. The Dow -1.9% vs. +12.9% and -3.6%, the Nasdaq +2.2% vs. +21.4% and -7.1%, Eurostoxx are flat vs. +13.4% and -3.6%, the FTSE +1.3% vs +3.2% and +2.5%, but the Nikkei is -6.5% vs. +37.2% and +1.4%, the Shanghai composite -6.4% vs. +5.2% and -1.9%, and the Indian Sensex -5.2% vs. +6.3% and -15.6%.

Q3 saw the most dramatic up move in bond yield so far this year. With today yet to come: US 2s are now 4.90% (+72bp q-o-q), 10s 5.24% (+76bps), and 30s 5.57% (+60bps), the highest since 2002; Bund 2s are 3.29% (+76bps), 10s 3.62% (+76bps), and 30s 3.95% (+53bps); OATs 2s are 3.64% (+94bps), 10s 4.81% (+116bps), and 30s 5.39% (+93bps); Gilts 2s are 4.91% (+76bps), 10s 5.41% (+65bps), and 30s 5.92% (+44bps); JGB 2s are 1.96% (+59bps), 10s 3.11% (+43bps), and 30s 4.20% (+26bps).

Q3 didn’t just drop hopes of ‘lower for longer’ but doused them in scarce diesel and set fire to them. In Q1, we got just one rate hike from a G20 central bank, the RBA. In Q2, we got four, the RBA, ECB, BOJ, and Bank Indonesia. In Q3, we got the RBA (who just hiked again yesterday and are seen doing so again in the new year), the ECB, the BOJ, plus the Fed – and the issue is how much more might be needed there and elsewhere.

FX markets were also caught on the hop if expecting a weaker USD, as is so often the case, with a notable exception with huge implications for other markets. EUR/USD is around -1.1% q-o-q and GBP/USD had an unexciting Q3 while the DXY is slightly up right now. However, there was huge action in USD/JPY in the opposite direction that may carry through to the Yen Carry Trade if it carries on. EM FX are notably also starting to slip against the dollar again with the exception of CNY, which is a ballgame unto itself.

Brent oil is $104 right now, well up over a Q3 it started at $73 while the 3-2-1 crack spread is $62 vs. $17, which is what matters more, so we moved from an effective total of $90 to $166. The FT today notes that oil prices and US Treasury yields are in tightest relationship since 1990 – you mean during the late Cold War, when it was all about geopolitics at core? What a surprise!

So, what goodies will Q4 bring?

Geopolitics is on a knife edge between efforts to bring peace and a dynamic leading towards more, and more widespread war. Beyond Hormuz and the Red Sea, Iraq today sees US troops withdraw, as Ethiopia blames regional rivals for unrest with a risk of conflict spillover into the Horn of Africa, and Israeli PM Netanyahu claims indications of an attack plot by ‘enemies’ ahead – which the opposition leader, briefed on it, has publicly decried. Concerns are Russia-Ukraine could escalate into outright provocations vs. Europe and NATO, as the EU’s military mobility plan faces a €100bn bill and Ukraine is pushing for “bold action” on Russian assets to plug a $78bn defence spending gap in 2027: Politico notes ‘Tax cuts, handouts and blind hope: Europe finds few tools to fight a coming energy crunch.’ In Asia, China and Japan are verbally clashing despite some signs of an attempted reset, as Japan’s defence chief again brought up the “nuclear taboo” and the business press reports that ‘China strengthens position for Taiwan conflict with mobilisation law.’

In AI, Trump and AI CEOs just signed a voluntary safety pact and backed data centre expansion, but Sam Altman said OpenAI will delay its IPO until it overcomes safety concerns – regardless, tech supply chains continue to see unprecedented, dare I say wartime(?), demand boom conditions. The UK AI minister just admitted the country doesn’t “currently have a position where we can build superintelligence” as it’s “illegal to do so” in terms of regulations and the power demand required. Europe is meanwhile discussing an EU-wide digital levy to generate up to €25bn annually for the next budget, which will infuriate the US (and which Germany and other major contributors reject as outlined, demanding hundreds of billions of cuts).

Indeed, geoeconomics is on a knife-edge too. Will the EU initiative a trade war with China in Q4 via an expanded Anti-Coercion Instrument or resign itself to higher flows of Chinese imports in higher value-added sectors, so less local industry? Ford's CEO just urged US caution on Chinese automakers and said for Europe it’s “too late.” But could China then choke Europe on rare earths? Yesterday, the US ambassador to China posted that "Back in April of last year, China put the export regime process in place for rare earth elements and magnets. Then, on October 9th, they weaponized that by expanding that to the entire world. Now, they've weaponized it even further by escalating to the point where they make any diversification efforts away from China as a criminal offence...”

Politically, we may face an October surprise ahead of November US midterm elections where talk is of a Blue Wave (like the Red Wave that didn’t materialise in 2022). Either way almost everywhere the trend is to populism of the left and right. That’s clear in Europe, and the UK just saw PM Burnham promise PR, rejoining the EU, and reindustrialisation, without tariffs or industrial policy, which the Guardian called a “radical progressive plan to help Britain ‘rise again’’ yet had to add was “a clear vision for Britain – but not for how it fits into a troubled world.” Equally, the Wall Street Journal today notes ‘Americans Want Populist Policies That Defy Traditional Political Labels’, where their survey finds broad support for caps on prescription drug prices and strong border security. In short, nobody wants the policies being sold as the solution to high inflation.

So, what’s your guess for Q4?

Tyler Durden Wed, 09/30/2026 - 10:20

Core PCE Prints Cooler Than Expected Due To Change In Methodology, As Savings Rate Plunges To 3 Year Low

Ahead of today's closely watched core PCE report - the Fed's (reportedly) favorite inflation indicator (although that will probably shift to Truflation after Kevin Warsh's task force is done with analyzing the data), which was seen by many as deciding whether the Fed will hike in October and December, or just December as NY Fed president John Williams strongly hinted yesterday, we warned readers that PCE may surprise to the downside: "the Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point."

Why PCE may surprise to the downside: the Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point.

— zerohedge (@zerohedge) September 30, 2026

And surprise it did, because despite rampant energy inflation and record diesel prices, headline PCE came in line sequentially, printing up 0.3%, in line with expectations but coming in far cooler than expected on an annual basis, rising just 3.4%, vs expectations of a 3.7% print.

The MoM jump in headline PCE was driven by services, a reversal from last month's drop, largely due to the spike in communication and education services.

But it was the far more important core PCE, which strips out volatile energy and food prices, that rose 0.2% MoM (technically 0.247%, below the +0.3% MoM expected) with a notable miss in the YoY print, which dropped to +3.0% from the unrevised 3.3% (now revised to 3.0%), missing estimates of a 3.3% print.

Within core, the biggest jump was again communications and education services.

Ominously, the much-watched SuperCore PCE (Services ex-shelter) saw price inflation reversed the recent drop on a YoY basis, while surging 0.4% on a MoM basis...

... driven by a record surge in "Other Services" (+0.9%)...

.. which in turn was the result of a surge in cell phone plans costs, and a record jump in education costs!

Commenting on the data, David Russell, Global Head of Market Strategy at TradeStation said that "this is good news for investors worried about the recent surge in bond yields, and it bolsters the case for not hiking in October. We might have seen peak hawkishness from the Fed given the recent jump in rates. However, it’s also relatively old data at this point that doesn’t reflect this month’s surge in diesel prices. Investors will remain wary of energy prices as we enter a key period of fuel consumption."

The inflation-boosted prices were met with much higher spending (+0.9% MoM notional, in line with estimates and up from 0.1% in July) while income growth was dangerously lower, failing to keep up with spending, and rising just +0.2% MoM, which was down from 0.3% in the previous month and missed estimates of 0.5%.

The surprising spike in spending not supported by income, meant that the freshly revised savings rate tumbled again, dropping from 4.6% in July to just 4.1% in August, the lowest since Nov 2022.

While spending growth rose again, Income growth is now the lowest since April 2022!

In other words, once again US consumers are failing to keep up with inflation and they can do so only - and temporarily - by digging deep into their savings.

Finally, while the core PCE was indeed lower than expected, recall that as we said above, this is mostly due to a change in methodology. Today, the Bureau of Economic Analysis released its updated PCE deflator methodology, which has been applied retroactively through Q1 2021, with RBC estimating that core PCE’s annual pace is expected to fall 18bps, which would revise July’s reading to 3.1% from 3.3%. They were spot on. 

RBC analysts also aid that three changes drive this: portfolio management services will use a CES-based quantity series instead of nominal price deflation; computer software will use a new composite PPI/CPI deflator; and legal services will use a new deflator after the current CPI measure proved unreliable.

In other words, today's welcome "miss" in core PCE is likely not due to lower prices but due to spreadsheet changes and rebenchmarking. 

Tyler Durden Wed, 09/30/2026 - 10:12

Apple's $2,000 Foldable iPhone Could Sell 6 Million Units, Counterpoint Says

Counterpoint senior analyst Ivan Lam expects Apple to sell about 6 million units of its first foldable iPhone this year. The estimate offers an early sentiment gauge of potential demand for Apple's first-ever foldable handset, priced at roughly $2,000.

The iPhone Duo sales forecast hinges on Apple's ability to ramp up production, Lam said, according to Bloomberg News. The new foldable iPhone is scheduled for release in October.

Separately, market research firm IDC expects global foldable shipments to rise 13% to 22.9 million units this year. Without Apple’s iPhone Duo, that segment would slide into a contraction.

Initial iPhone 18 Pro family sales rose 12% compared with the iPhone 17 Pro launch, according to Lam. That performance helped Apple capture a 33% share of China's smartphone market during the period tracked.

However, iPhone 18 sales signals in China are mixed. Edison Lee, Jefferies' head of China and Hong Kong technology and software research, commented on the launch on Monday, saying, "Weak 18P/PM resale prices vs. 17P/PM remain our clearest sign of softer demand, despite a weekend rebound in lead times that could reflect tighter supply as DUO ramps."

Lam pointed out, "Price hikes of over $200 on many Chinese flagship models may have raised the price anchor, strengthening the iPhone’s relative value proposition." That's good news for Apple as the price gap between its phones and those of domestic brands narrows, making its premium prices easier to defend in an overall soft market.

For Apple, the US launch clashes with a souring consumer backdrop. The Conference Board’s Consumer Confidence Index plunged in September to its lowest level since April 2014, while elevated gasoline and diesel prices continue to squeeze household budgets.

The question is whether cash-strapped consumers can afford $2,000 for a foldable iPhone. Vision Pro's disappointing launch a few years back offers a cautionary tale.

If the Duo struggles to attract consumers beyond wealthy first adopters, Apple's new CEO could face an early test of the company's push further upmarket.

Tyler Durden Wed, 09/30/2026 - 10:00

Kennedy Touts AI Over Doctors At Industry-Backed Summit

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Health Secretary Robert F. Kennedy Jr. on Sept. 29 touted artificial intelligence (AI) for people making medical decisions at a summit sponsored by AI companies, drawing criticism from some doctors.

Health Secretary Robert F. Kennedy Jr. speaks in Dallas, Texas, on Sept. 10, 2026. Kevin Dietsch/Getty Images

Kennedy, during an appearance at an event in Washington called the MAHA Summit, said he recently met with OpenAI CEO Sam Altman. Altman, he recalled, told him that “today it would be malpractice for a doctor to make a diagnosis or make a prescription without at least checking AI.”

Kennedy went on to reiterate the goal of giving Americans access to their medical records and described how AI could summarize lengthy records.

“You may have a medical record that’s a thousand pages long. You have six minutes with a doctor today. He’s not going to be able to review it, but the AI can. And … it can distill it,” Kennedy said. “It can give you a second opinion that is much better informed than any doctor in the country.”

Kennedy, a harsh critic of public health advice on masks, vaccines, and other matters during the COVID-19 pandemic, said one benefit of AI is that it could correct such advice from presumed experts.

“So it really has the capacity to dominate us to free us from medical tyranny,” he said.

AI companies, including OpenAI and Anthropic, sponsored the summit in part. An OpenAI executive spoke during a session called “Building the AI Health Stack.”

The comments came as President Donald Trump and other top administration officials promote AI adoption. Trump, who has said it is important for the United States to remain ahead of adversaries such as China on AI, also signed a voluntary accord with AI executives earlier Tuesday.

AI provides answers to questions, including medical ones. Multiple lawsuits are pending in court over allegations that medical advice from AI led to catastrophic outcomes, including one from a Florida pastor against OpenAI, who alleged a chatbot instructed him not to seek medical attention when he developed symptoms such as severe dizziness.

Kennedy’s remarks prompted criticism from some doctors.

“AI is programmed to give you the current narrative pushed by ‘the experts’,” Dr. Jeffrey Dach, a Florida physician, wrote in a Sept. 30 post on X. “This means we get a rehash of the same lies and garbage we are being fed by the ‘experts’ and ‘authorities’ in government agencies captured by industry, and lies and garbage from the captured mass media. AI is merely a souped up search engine that hallucinates answers when it is lost.”

Dr. Joe Pierre, a professor of psychiatry at the University of California San Francisco, noted that he ran Kennedy’s comments by ChatGPT, OpenAI’s chatbot.

“If his claim is AI is more reliable than MDs when giving people medical advice, the evidence doesn’t establish that,” ChatGPT responded. “In fact, some of the best real-world evidence points in the opposite direction.”

Kennedy noted downsides of AI, asking Vice President JD Vance, who appeared with him, to elaborate.

“Most of the downsides are all related to models that were literally trained to hack into your computer,” Vance said.

He said the best way to deal with the risks is to ensure companies are not shielded from product liability claims through regulations.

Tyler Durden Wed, 09/30/2026 - 09:40

2028: Unlikely Republican Senator Drawing Buzz as Vance's Potential VP Pick

Sen. Eric Schmitt (R-MO) is drawing speculation as Vice President JD Vance’s potential running mate in 2028, Axios reported Tuesday.

Vance views the 51-year-old Missouri Republican as “trustworthy, intelligent, articulate and a deft political operator,” according to the outlet. Secretary of State Marco Rubio appears to be the early favorite to be Vance's vice presidential pick, though two years is a lifetime in politics.

Schmitt has built his reputation taking on Biden administration policies, challenging alleged government censorship and helping advance President Donald Trump’s agenda.

Vance has already made his admiration clear publicly. Speaking to Semafor last year, the vice president called Schmitt “one of the Trump administration’s most valuable allies on Capitol Hill,” praising his relationships inside Washington and his understanding of what Republican voters want from their leaders.

As Missouri attorney general, Schmitt jointly led a coalition of 10 states challenging Biden’s COVID vaccine mandate for federal contractors in 2021. The lawsuit put him on the front lines of Republican resistance to the administration’s pandemic requirements.

Schmitt followed that with Missouri v. Biden in 2022, accusing federal officials of pressuring social media companies to suppress constitutionally protected speech. The litigation became a defining part of his push against government censorship and reached a settlement in March 2026. Schmitt hailed the agreement as a victory for Americans’ First Amendment rights.

Since arriving in the Senate, Schmitt has continued targeting federal bureaucracy and diversity, equity and inclusion programs. The senator has also proposed allowing Americans to sue federal officials who violate their speech rights online, extending the fights that shaped his tenure as attorney general.

Schmitt’s standing in Trump’s orbit also reflects his work moving legislation. The senator managed the president’s spending cuts bill on the Senate floor in 2025 and participated in negotiations over Trump’s major tax and spending package, Semafor reported. Those roles gave the first-term senator influence beyond his seniority and demonstrated his usefulness to a White House seeking results from congressional Republicans.

Tyler Durden Wed, 09/30/2026 - 09:05

These Are The Biggest Players In The $13.5 Trillion Repo Market: How Hedge Fund "Basis Trades" & Money Market Funds Fit In

Authored by Wolf Richter via Wolf Street,

The size of the repo market has ballooned to over $13.5 trillion in outstanding agreements daily, according to the government's Office of Financial Research (OFR). Via the repo market, financial institutions borrow from, and lend to, each other mostly overnight, but also for longer periods, such as for one week, secured by high-quality liquid collateral with a "haircut."

About 70% of repos are secured by Treasury securities. The rest are secured by agency securities, such as MBS issued by government-sponsored enterprises (GSEs Fannie Mae and Freddie Mac), and also high-grade corporate bonds and Asset-Backed Securities (with a bigger haircut, the bigger the risk, the bigger the haircut).

Some institutions lend cash to the repo market for the yield and liquidity, such as money market funds. Others lend cash to the repo market to borrow Treasury securities they need for margin requirements on other trades, such as hedge funds. Dealers act as intermediaries between lenders and borrowers.

An analysis by the New York Fed today outlines who the biggest borrowers and lenders in the repo market are.

Biggest cash borrowers in the repo market: Hedge Funds.

Far ahead: Hedge funds (HFs) engaged in the "basis trade" borrowed $3.0 trillion in the repo market as of July 2025, up from $2.5 trillion in July 2024, $1.1 trillion in July 2022, and $664 billion in July 2017, according to the New York Fed's analysis today (top red line in the chart below).

With the "Treasury cash-futures basis trade," hedge funds purchase Treasury securities and sell Treasury futures contracts, thereby profiting from the spread between them. But the spread is small, so they lever up their strategy by borrowing cash in the repo market, and putting up the Treasury securities as collateral, thereby multiplying their returns through vast amounts of leverage.

Hedge funds in the basis trade provide liquidity in the Treasury market, as they're big leveraged buyers of Treasury securities.

But when the basis trade encountered a rough spot in March 2020, and hedge funds had to unwind some of their positions, the Treasury market locked up. The effort to untangle this issue was one of the reasons the Fed cited for its massive Treasury purchases in March 2020.

The Fed has cited hedge funds, with their vast leverage and dense opacity, as a primary risk to financial stability, and they didn't disappoint in March 2020, and again came to the Fed's attention for their part in the repo market blowout in the fall of 2019.

Far behind, the next 3 largest borrowers: US branches and agencies of "Foreign Banking Organizations" (FBOs) at $445 billion; US banks (US Depository Institutions or USDIs) at $422 billion; and Real Estate Investment Trusts (REITs), especially mortgage REITs, at $313 billion, as of October 2025, for a combined $1.2 trillion.

Chart via the New York Fed, sources: OFR, Federal Financial Institutions Examination Council (FFIEC), and the St. Louis Fed's FRED database.

Biggest cash lenders in the repo market: money market funds

Far ahead: Money market funds (MMFs) lent $3.0 trillion to the repo market as of January 2026, having tripled from July 2020. The high occurred in April 2023 at $3.3 trillion (top gray line in the chart below).

Lending to the repo market provides MMFs with short-term investments, including overnight with next-day liquidity, in high-grade securities, backed mostly by Treasuries. Overnight repos allow MMFs to manage their redemptions while keeping their cash invested.

Total MMF balances rose by nearly $1 trillion over the past 12 months, to $8.4 trillion in Q2 2026, including a record $5.1 trillion held by households, and a substantial portion of that was invested in the repo market.

Far behind: Hedge funds (HFs) lent $1.3 trillion to the repo market as of July 2025 (red in the chart below), in part to invest short-term their otherwise uninvested cash; and in part for "collateral transformation" purposes through a dealer where they in effect borrow Treasury securities from the repo market that they then post as collateral, such as to meet strict margin requirements for derivative trades. Hedge fund leverage is multi-layered and complex.

On net, hedge funds are far bigger borrowers from the repo market ($3.0 trillion), than lenders to the repo market ($1.3 trillion), with net borrowing amounting to about $1.7 trillion at that time.

Further behind: US banks (USDIs: $689 billion, brown line, as of October 2025); US branches of foreign banks (FBOs: $419 billion, light blue line, as of October 2025), and the GSEs ($249 billion, dark blue line, as of July 2025):

Chart via the New York Fed, sources: OFR, Federal Financial Institutions Examination Council (FFIEC), and the St. Louis Fed's FRED database.

The $13.5 trillion repo market interconnects a large spectrum of financial institutions, including dealers, banks, hedge funds, money market funds, and the GSEs, through short-term cash and collateral exchanges.

Due to the repo-market interconnectedness and vastness, liquidity problems in one corner of the repo market - visible when repo rates, such as SOFR, soar - can spiral out into the rest of the financial system in no time.

To tamp down on liquidity issues before they spiral out into the financial system, the Fed set up its Standing Repo Facility (SRF) in July 2021, where approved banks can borrow from the Fed at its SRF rate (4.0% since the rate hike on Sep. 16) and a haircut to lend to the repo market to profit from the spread and bring down repo rates again in the process, which is what they did during the repo market squiggles in September through December 2025, that might have spiraled out into the financial system otherwise:

Tyler Durden Wed, 09/30/2026 - 08:45

US Futures, Treasuries Flat Ahead Of Core PCE, Micron Earnings

Futures are higher with S&P leading both tech and small caps ahead of today's core PCE data and Micron earnings after the close, as yields remain sticky, unchanged from yesterday's multi-decade highs, and the USD fractionally lower. As of 8:00am ET, S&P futures are flat, with Nasdaq futures down fractionally as semis dip -20bp lagging the broader Tech tape but leading Software (-54bp) and Memory (-80bp) after Korea's Kospi closed lower erasing an early bounce. In premarket trading, Mag7s are the leaders (+28bp) ahead of Micron later. Ex-Tech, the other major sectors are indicated higher pointing to an ‘Everything Rally’ / broadening, albeit on low volume and conviction. With US/Iran deal optimism supporting markets, JPM's market intel desk, which this week reverted back to being tactically bullish, says that an actual deal likely triggers a tactical squeeze / broadening. Treasuries were little changed a day after 30-year yields hit their highest since 2002. The dollar held near its highest level since July. Commodities are rebounding led by energy: Brent rose modestly to above $103 a barrel, up about 14% for the month despite signs that crude flows from the Middle East are returning to pre-war levels; WTI is above $90/bbl, base metals are leading precious (gold flat; silver down), and ags seeing a broad-based bid. Today’s macro focus is on PCE and 4x Fed speakers with yesterday’s highlight being Williams whose comments pointing to 1x more hike in 2026, not 2x. If PCE prints cooler, we may see a material repricing in bond yields lower.

In premarket trading, Mag 7 stocks are mixed: Alphabet +1%, Nvidia +0.1%, Amazon -0.2%, Apple little changed, Tesla -0.8%, Microsoft -0.1%, Meta Platforms -1%

• Achieve Life Sciences (ACHV) gains 3% after Stifel initiated coverage with a buy recommendation, citing a “potential blockbuster opportunity” for the biotech firm’s smoking-cessation drug candidate.
• Boeing (BA) rises 2% after the company beat Northrop Grumman Corp to produce the Navy’s next Top Gun fighter jet. Northrop (NOC) falls 4.3%.
• Cal-Maine (CALM) falls 6% after the egg producer reported net sales for the first quarter that missed the average analyst estimate, and said it won’t pay a cash dividend in the first quarter.
• Concentrix (CNXC) is down 9% after the call-center operator forecast fourth quarter revenue below expectations amid investor concerns that the business could come under pressure from AI-assisted automation tools.
• FactSet (FDS) falls 2% after the financial-data provider gave a 2027 earnings per share forecast that missed the average analyst estimate.
• GameStop (GME) gains 1% after a filing showed that Chairman and CEO Ryan Cohen purchased $10.6 million worth of shares.
• Moderna (MRNA) declines 6% after Citi downgraded the vaccinemaker to sell, saying optimism from its recent oncology success is more than priced in the stock’s outsized rally.
• Robinhood (HOOD) rises 2% after the brokerage launches new products that help users utilize AI agents to build and execute trading strategies. It’s also allowing customers to trade perpetual futures on some cryptocurrencies.
• Vanda Pharmaceuticals (VNDA) rises 4% after the drugmaker said its drug Hetlioz met its primary endpoint in a late-stage trial for adults with Delayed Sleep-Wake Phase Disorder — a circadian rhythm sleep disorder

In other corporate news, Boeing beat Northrop Grumman to produce the Navy’s next fighter jet, the F/A-XX, with the award valued at more than $20 billion.  Concentrix cut its revenue forecast for the year, which Bloomberg Intelligence says highlights “stronger near-term headwinds for customer-experience outsourcing.” Paramount’s delays in financing debt to fund the Warner Bros. Discovery deal could cost the company up to half a billion dollars a year more in interest payments.

Stock futures are edging higher on the last day of a tricky month dominated by surging bond yields - fueled by a sharp repricing of expectations for US interest rate hikes to contain energy-driven inflation -  stubbornly high oil prices and alarming AI headlines. Equity volatility has been remarkably subdued, given the backdrop, but hedge funds now seem to be positioning for more volatility. The S&P 500 limited its losses in part thanks to a narrow rally in AI-linked stocks on optimism over the sector’s prospects, a view that will face a test when Micron reports after the close. Treasuries pared gains to leave US 10-year yields only down 1 bp at 5.22%. 

“The bar is so, so high that they’ll likely be very good numbers, but it all feeds through into the demand story that we need to keep seeing,” said Rory McPherson at Magnus Financial Discretionary Management. “So long as that holds, I would expect the tech trade to keep moving.”

With a report on US private payrolls and the latest gross domestic product update due alongside the PCE release, Ipek Ozkardeskaya at Swissquote noted that different combinations of readings could have a range of outcomes for markets. “A combination of robust growth and a recovery in the jobs market would allow the Fed to hike rates to fight rising inflationary pressures, provided that price pressures look concerning,” she said. “That would keep upward pressure on short-term yields and the US dollar, while weighing on equities.”

But it is the core PCE that will be key for direction today. Bloomberg Economics expects the report to show an acceleration in monthly inflation. For PCE price indexes, Bureau of Economic Analysis updated methodology for calculating inflation in three components is expected to trim August year-on-year change by a few tenths of a percentage point.

Growth and jobs data below expectations and elevated inflation could see the gap between two- and 10-year US yields narrow, threatening risk appetite and weighing on the dollar. Strong GDP and jobs figures coupled with a softer-than-expected PCE reading would be the best possible scenario, easing pressure on yields and supporting equities, though also the furthest from her base case.

While equities are ending September little changed from the start of the month, market breadth is weak, with S&P 500 equal-weight lagging the cap-weighted set for the largest monthly underperformance on a down month since 2020. Stocks have been held up by tech and AI gains, putting Goldman Sachs’ High Beta Momo Index on track for its best month since June 2000.

Besides the PCE data,  Micron’s latest results will be keenly watched - more for the chipmaker’s commentary and outlook than headline results (consensus expects 355% year-on-year sales growth). We will have a full preview shortly. Elsewhere in tech, there were a flurry of headlines from OpenAI’s DevDay - from fundraising plans to the unveiling of personal AI agent Dots.

On the AI safety narrative, Trump endorsed using independent audits to assess the safety of AI systems through an accord with Silicon Valley leaders that seeks to sidestep new government rules in addressing rising concerns about AI risks. Not every one is convinced. We don’t know whether AI represents an existential threat, but “the policy response is a superficial rebranding attempt,” says Jonestrading’s Mike O’Rourke.

Apollo Chief Economist Torsten Slok, meanwhile, asks if AI customers will generate a lot more cash than analysts expect, or if tech firms’ cash flow forecasts are too optimistic, as both outlooks can’t be correct at the same time. It “raises the question of who exactly will be writing all those checks to buy AI services,” notes Slok.

As reported previously, hedge funds net sold global stocks for the first time in five weeks through Sept. 24, while buying US tech more than any other sector for a fourth straight week, according to Goldman Sachs’s Prime desk. Barclays strategists, meanwhile, note that equities continued to see inflows in September but they say momentum is fading as higher rates diminish the appeal of the so-called TINA trade.

European stocks were set for their first monthly decline since March. Inflation overshot estimates in France and Italy, increasing pressure on the European Central Bank to continue raising interest rates. The 10-year French yield premium over safer German peers widened one basis point to 120 basis points, the highest since 2012. Here are the biggest movers Wednesday:

• Kongsberg shares rise as much as 5.6% after the defense company signed contracts worth billions of Norwegian kroner and DNB Carnegie upgraded its recommendation to buy from hold
• Saga shares soar as much as 15%, the most since January, after the company reported underlying pretax profit well ahead of expectations for the first-half and raised its guidance for the full year
• Zegona Communications gains 4.4% after Goldman Sachs analysts initiated the investment firm with a buy rating, citing structural growth in the Spanish telecom market and opportunities to improve margins and cash generation
• Avanza gains as much as 3.1% and Nordnet as much as 4.3% after Deutsche Bank initiated coverage of the Swedish savings and investment platforms with buy and hold ratings, respectively. The bank says both are “two winners”
• UK water firms rise after Prime Minister Andy Burnham’s comments on the country’s water sector at the Labour Party conference on Tuesday are seen as a “first step in reassurance” in regards to concerns over nationalization, according to Morgan Stanley
• International Workplace Group shares rise as much as 6.2%, the most in five months, after the flexible-office provider increased its 2026 share buyback program by up to $50 million
• Intercontinental Hotels Group rises as much as 2.6% to a five-week high after Goldman Sachs increased its revenue estimate on US outperformance and Middle East resilience
• Everplay shares rise 9.5% to a new high three-year high after the video game developer boosted its revenue guidance thanks to strong performance from new titles
• Sinch shares drop as much as 7.5% after the cloud communications provider was initiated with a sell rating at Pareto Securities, which said it will struggle to achieve its growth targets
• Tullow Oil shares fall as much as 52% after the UK exploration & production firm lost its arbitration case with Ghana related to a $196.5m tax assessment
• Future falls as much as 12% in London after the media company said FY2026 results will meet market expectations, but paused its share buyback to prioritize deleveraging
• Juventus shares fall as much as 15% after the Turin-based football club reported an increased annual loss, warned of another in the year ahead and said it plans to raise €250 million through an issue of ordinary shares

Asian stocks rose for the first time in three days, as oil prices steadied. The MSCI Asia Pacific Index was up 0.8% in late afternoon trading, and is on track to close the quarter nearly 1% higher. Japan led the gains Wednesday while Thailand and South Korea fell.  While crude prices have since steadied, its earlier retreat on signs of easing supply disruption helped alleviate investor concerns about energy-induced inflationary pressures. The rebound in equities also came after a brutal selloff in global bonds took a breather.

In FX, the BBG dollar index is modestly lower while the pound sits atop the G-10 FX pile, rising 0.3% against the dollar after UK GDP was unexpectedly revised higher for the second quarter. Sterling also seemed to derive support from UK PM Andy Burnham suggesting he could campaign to take Britain back into the European Union at the next general election. The Aussie dollar is at the other end of the table, underperforming peers after Australian CPI rose less than expected. The euro adds a few pips after hot French and German state CPI data. Elsewhere, Chinese property stocks reversed losses as investors looked past a mortgage subsidy program that fell short of expectations and focused on the possibility of further support measures. 

In commodities, WTI crude oil futures advance, reversing some of yesterday's drop while Brent crude futures for December rise 1% to around $97 a barrel, sapping some of the earlier upside in bonds. Bitcoin is fractionally higher, trading just under $84K.

In rates, treasuries pared earlier gains and are narrowly mixed in early US session, keeping yields within a basis points of Tuesday’s close. US 10-year yields near 5.24%, reversing an earlier drop, and lagging German counterpart by about 4bp, UK’s by about 1bp.  Following comments by Fed’s Williams on Tuesday, tightening priced into front-end swaps has ebbed to around 12bp for the October decision and a combined 32bp over the October and December meetings. European bonds outperform following data including French and German CPI readings and UK GDP.  IG dollar issuance slate includes a couple of names so far. Paramount Skydance Corp.’s eight-tranche, $30 billion offering is expected to be priced, with terms ranging from two to 40 years. Initial price talk for the 2066 maturity is a spread of about 3.65 percentage points vs the Treasury benchmark. The US session includes a raft of economic releases headed by August personal income and spending and its PCE price indexes, and comments by four Fed officials.

“We’re remain sellers of OATs against the Bund,” said Kevin Thozet at Carmignac in Paris. “The economy in France is deteriorating while improving at the same time within its neighbors. We think the direction of travel is toward 150 basis points, at which point we’d have to reassess.”

US economic data slate includes September ADP employment change (8:15 a.m.), August personal income and spending, 2Q GDP revision, and August wholesale inventories (8:30am) and September MNI Chicago PMI (9:45 a.m., several minutes earlier for subscribers).Fed speaker slate includes Richmond’s Barkin (1:30 p.m.), Governor Cook (3:25 p.m.), Chicago’s Goolsbee (5:10 p.m.) and Minneapolis’s Kashkari (6 p.m.)

Market Snapshot

Top Overnight News

• Efforts this week by Qatari mediators to broker a diplomatic breakthrough between the U.S. and Iran have made little progress, with neither side willing to budge, according to three sources familiar with the talks. The stalemate bolsters the belief on both sides that a renewed military conflict is becoming more likely. U.S. officials think President Trump could order a return to major combat operations after the midterms. Axios
• Donald Trump has held crisis talks with advisers over whether to impose a diesel export ban or take other steps to contain a fuel crisis that threatens to derail his Republican Party’s midterm election campaign. RTRS
• Donald Trump endorsed using outside auditors to assess the safety of AI systems in a pact with Silicon Valley leaders that sidesteps new government rules. BBG
• Abu Dhabi is pursuing a $300 billion infrastructure push to reduce reliance on the Strait of Hormuz and curb Iran’s leverage. BBG
• Trump released the White House Accord on Super Intelligence following the meeting with AI executives on Tuesday, while the document noted that every company is responsible for developing its own technology safely and each should apply four layers of controls and audits, including implementing strong internal controls to oversee model capabilities and alignment.
• Democratic Lawmaker Raskin has reportedly sent letters to Amazon, Google, Meta and Oracle, requesting information regarding NDAs signed with government officials in relation to AI data center projects: WSJ.
• China’s economy showed signs of improvement at the end of the third quarter, with official and private gauges of factory, services and construction activity all picking up. WSJ
• China’s latest economic stimulus package appears designed to keep economic growth on target rather than deliver a broad revival, leaving investors waiting for more aid to address the country’s underlying demand weakness. BBG
• DeepSeek released software developed with Huawei to program AI chips, highlighting their push to challenge Nvidia. BBG
• Inflation overshot estimates in France and Italy with energy remaining the main driver. Prices jumped 3.4% in France, the fastest in more than two years, while in Italy they advanced by 4.1%, the most since 2023. BBG
• President Donald Trump could unveil plans as soon as Wednesday to tap South Korea's pledged strategic investment package for about $54 billion to build a liquefied natural gas facility in Alaska ‌and several other major US projects. RTRS
• Trump told Axios that Jay Clayton would be a good AI czar.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed following the recent drop in oil prices and upside in long-term US yields, while participants digested a slew of data at month- and quarter-end. ASX 200 rallied with nearly all sectors in the green and real estate leading the advances as softer-than-expected headline monthly CPI data and a wider contraction in building approvals lessened the odds for an RBA November rate hike. Nikkei 225 gapped above the 66,000 level and continued to advance with the index shrugging off disappointing Industrial Production and Retail Sales data, in which the former showed a surprise contraction. KOSPI traded indecisively amid weak data and tensions with North Korea after a DMZ landmine explosion injured South Korean officers, while South Korea's military stated that North Korea's fortification works increased tensions in the Korean peninsula and that it should apologise for its fortification works.
Hang Seng and Shanghai Comp were mixed, with the Hang Seng indecisive and the mainland mildly underpinned following the encouraging Chinese PMI data, in which headline official Manufacturing PMI matched estimates at 50.1, and Non-Manufacturing topped forecasts and returned to expansion territory at 50.2 (exp. 49.3), while RatingDog Manufacturing and Services PMIs were both stronger-than-expected. In addition, the PBoC recently announced support measures including a 25bps cut to the Pledged Supplementary Lending facility rate to 1.50% from 1.75%, while participants look ahead to the National Day holidays and the week-long closure in the mainland beginning tomorrow.

Top Asian News

• Japanese PM Takaichi said that the administration will boost supply side of the economy and that the government will clarify the direction of economic and fiscal policy management.
• Japan's Finance Minister said that they has been in close communication with the BoJ at all levels and sees no big difference in views on the economy and prices.
• South Korea's Finance Ministry said it is watching bond market developments closely and plans to use excess tax revenue to lower bond issuance if required, while it will conduct other stabilising measures including treasury bond buybacks if bond yields rise excessively.

European bourses (STOXX 600 +0.1%) were initially posting gains across the board, but have since waned off best levels as energy benchmarks move higher. Sectors highlight the positive bias. Retail tops the sector pile, with Utilities and Optimised Personal Care rounding out the sector gainers. To the downside is Media, Energy and Construction. Key movers include: Greggs (+7.5%), guides a modestly improved outcome for 2026; Gerresheimer (+3.1%), Q2 metrics rises Q/Q and points to a stronger H2'26; TomTom (+1.7%), expands its Microsoft (MSFT) collaboration; Commerzbank (-2.7%), downgraded to hold from Buy at Deutsche Bank.

Top European News

• UK PM Burnham has suggested that a move to rejoin the EU is among the options for the UK, talking to BBC Radio 4. The current settlement has caused more harm than good.
• Germany's SEFE said the German Economy Ministry has ordered the procurement and storage of 8 TWh of natural gas by December 15th.
• The German government plans to introduce a sugar tax on July 1, 2027, according to Welt citing a draft. The report added that the government expects it will generate an additional EUR 945mln for the federal budget next year.
• Swedish NIER raised its 2026 CPIF inflation forecast to 1.6% (prev. 1.3%) and 2027 to 2.6% (prev. 2.1%). NIER raised its 2026 GDP forecast to 3.09% (prev. 2.4%) and cut 2027 to 2.4% (prev. 2.8%).

FX

• Snapshot: G10s are mostly firmer against the USD this morning, which has been hampered following dovish comments from the Fed’s Williams on Tuesday. GBP leads post-GDP, whilst the Aussie lags post-CPI.
• DXY is a touch lower this morning, and trades within a 101.19 to 101.46 range; ultimately holding within the prior day’s confines. Some of the mild pressure today is facilitated by Fed’s Williams, who suggested that there was less of a need for a hike in October given the recent move in September. The downside in USD is nonetheless capped given he clarified that one more rate hike “late this year” may be appropriate.
• On the data front, PCE is due today. Analysts expect the PCE headline to rise by 0.4% M/M (prev. 0.2%), and the annual rate is seen ticking up to 3.8% Y/Y (prev. 3.7%); core PCE is expected to rise by 0.3% M/M (prev. 0.2%), with the annual rate of core PCE seen rising to 3.4% Y/Y (prev. 3.3%). Another factor to note, the Bureau of Economic Analysis will release updated PCE deflator methodology, applied retroactively through Q1 2021. RBC estimates that core PCE’s annual pace is expected to fall 18bps, which would revise July’s reading to 3.1% from 3.3%.
• GBP currently holds towards the top of the G10 list, with Cable holding at the upper end of a 1.3223 to 1.3278 range. The strength comes after mild revisions higher in Q2 GDP, though will likely have little impact on the BoE in the near term. Elsewhere, the JPY also performs well, continuing the strength seen overnight. This comes despite poor Japanese Industrial Production data overnight. In the European morning, Nikkei reported that PM Takaichi will vow a nimble response to unexpected market moves.
• EUR is a little firmer this morning, digesting inflation reports out of France and German states so far. French inflation topped expectations amidst rising energy costs, whilst German state metrics held a slight hawkish skew. Overall, nothing all too surprising for the region, given that ECB members have continued to voice concerns about the inflation outlook; however, a sustained rise in prices, evidence of second-round effects and/or lack of US-Iran progress will likely bring an October rate hike into view.
• AUD is the laggard this morning, following a weaker-than-expected CPI report; odds of a November hike are priced in at 24%, with a number of key metrics due until then. Westpac analysts reiterated their call for a hold at the November meeting following the inflation figures.

Fixed Income

• Fixed is firmer across the board, despite the modest upside in energy and hotter-than-expected inflation out of France and Germany, with Gilts leading as the space gets respite from its recent trajectory, benefitting from UK PM Burnham’s comments and strong GDP data.
• Specifically, Burnham said he was open to numerous outcomes with regards to UK-EU relations as the current post-Brexit situation is causing more harm than good. Among the options to consider, he stated they could “go all the way”, i.e. rejoin. A remark which, alongside the upwardly revised Q2 GDP series, has led to outperformance across UK assets this morning, with Gilts, GBP and the FTSE 100 the best performer or among the best in their respective market area.
• However, while welcome, the upside was only c. 50 ticks at best in Gilts and leaves the benchmark only a point at best above the 83.72 contract low, with yields across the curve off highs, but also still in close proximity to such levels.
• Across the Channel, OATs trade broadly in-line with their German counterpart, with gains of around 40 ticks at the time of writing. However, the OAT-Bund 10yr yield spread has widened further, to over 120bps and the widest since 2012. A move that comes after Tuesday’s debt update and the associated implications of the current plan for the debt-to-GDP ratio vs the EU’s EDP threshold.
• Bunds themselves experienced a modest pullback off best levels on the German state CPIs, which printed broadly as expected but with a slight hawkish skew vs the mainland consensus at 13:00BST today. Albeit, the move was modest in nature, with Bunds holding just above 120.00, firmer by over 40 ticks, vs a 120.17 peak.
• USTs bid, but the relative underperformers thus far, into a busy afternoon of data and potentially geopolitics. On the latter, we know that Iranian President Pezeshkian has now received the proposal via Araghchi from New York. We now await the leader's assessment of the matter. Elsewhere, PCE is due today and is perhaps more pertinent given the methodology changes included.
• Germany sells EUR 4.177bln vs Exp. 5.5bln 3.00% 2036 Bund: b/c 1.16x (prev. 1.47x), average yield 3.58% (prev. 3.39%), retention 24.1% (prev. 23.62%).
• Japan sells JPY 2.15tln 2-year JGB: b/c 3.89X (prev. 2.97X), average yield 1.964% (prev. 1.708%), Tail in price 0.014 (prev. 0.034).

Commodities

• WTI Nov and Brent Dec futures remain subdued after yesterday’s pronounced downside, with conflicting US-Iran developments providing little impetus for a sustained recovery. Crude also remains pressured by yesterday’s bearish supply headline which suggested the US offering up to 40mln bbls from the SPR, while private inventories showed a surprise 1mln bbl build (vs exp. 1.1mln draw). Modest upside was seen in the complex this morning after reports of a potential hijacking involving a Dubai-Tel Aviv flight, but was later seen as not a security-incident. However, recent reporting has suggested that the incident may be a “terrorist incident”. Separately, UKMTO reported that a crude oil tanker was struck on the port side by an unknown projectile in the Strait of Hormuz on September 30.
• WTI currently trades towards the upper end of a USD 88.58-90.77/bbl range, while Brent sits around the middle of a USD 95.12-97.61/bbl range. Dutch TTF is choppy, with Germany ordering the procurement and storage of 8 TWh of natural gas by 15th December as Europe continues efforts to bolster inventories ahead of winter. TTF now trades towards the middle of a EUR 67.88-70.78/MWh range.
• Precious metals are mixed, with gold firmer as global yields ease following yesterday’s sharp steepening, while participants await US PCE later today. Spot gold eclipsed USD 4,200/oz to notch a current range between USD 4,166-4,201/oz, recovering further from Monday’s sharp sell-off. Spot silver is slightly softer and trades around the middle of a USD 60.84-61.72/oz range.
• Base metals are firmer following Chinese PMI data, with the official Manufacturing PMI returning to expansion at 50.1 and Non-Manufacturing rising to 50.2, while RatingDog Manufacturing and Services also topped expectations. Note, China heads for a week-long National Day holiday from tomorrow. 3M LME copper trades towards the top end of a USD 14,458.70-14,550.88/t range.
• In terms of notable geopolitics, Iran received Washington’s response to its seven-point proposal via Qatari mediators, with reports suggesting the main disagreement centres on the sequencing of the proposed seven-day framework rather than its components. However, Axios reported that talks and mediation efforts this week have yielded little progress, raising the risk of renewed hostilities, while Iran maintains that the Hormuz issue and US blockade must be resolved before nuclear negotiations.
• US Private Inventory Data (bbls): Crude +1.0mln (exp. -1.1mln), Gasoline +3.0mln (exp. -0.5mln), Distillate -0.3mln (exp. +0.0mln), Cushing +0.2mln.
• OPEC+ oil producers are reportedly set to keep output targets unchanged at this Sunday's meeting, according to sources.
• US White House held crunch talks on a diesel export ban as midterms near, according to FT.
• US President Trump will unveil a USD 54bln Alaska LNG plan amid midterm woes.
• The Russian government has extended the ban on diesel fuel exports until end-October, IFX reported.
• Oman OSP for Nov' Crude set at USD 114.07/bbl (prev. USD 87.84/bbl).
• Iraq’s oil exports averaged 2.65mln BPD in September, including 250k BPD shipped via Turkey’s Ceyhan port, according to the Oil Ministry spokesperson.

Trade/Tariffs

• USTR Greer said tariff caps will be considered when setting tariffs in the Section 301 excess‑capacity probe.
• China's MOFCOM warned that if the European side persists in introducing discriminatory restrictions on Chinese enterprises or products, China will resolutely respond in the interests of Chinese industry. It also said regarding reports of some EU member states mulling more forceful trade measures on China, that the tools mentioned are typical protectionist and unilateralist measures and will disrupt the stability of China-EU trade.
• The EU is open to providing single-market access to those looking to join the bloc, on the condition they stand with the EU against industrial competition and hostile nations, according to Politico citing sources.
• EU trade chief Sefcovic said they are pushing for reforms to tackle excess industrial capacity in G20 and WTO frameworks, while they are working for greater cooperation with the US and other allies to secure supply chains and prevent weaponisation of critical minerals.

Central Banks

• Fed's Williams said rising bond yields show tighter financial conditions at the margin. On AI, Williams said that it is not causing big changes in job levels while highlighting that strong AI investment is important to boost future productivity. On the recent rise in yields, Williams doesn't believe it is signalling a shift in longer-run inflation views.
• BoE Financial Policy Committee (Sep): The re-escalation of the conflict in the Middle East has renewed uncertainty around growth and the path of interest rates in a number of advanced economies.

Geopolitics: Iran

• The Iranian government spokesperson said Foreign Minister Araghchi presented President Pezeshkian with a US proposal following his New York trip, which included discussions on Iran’s conditions for reopening the Strait of Hormuz, IRNA reported. This followed a Reuters report, which also highlighted that the main dispute between the US and Iran does not concern the components of the plan itself, but rather the order of operations and the stages of implementation of the seven-day framework.
• US White House is reportedly tempering expectations of an imminent breakthrough between US-Iran, Semafor reported, with a source suggesting that "the bar is being raised very high."
• A senior source said mediators are working to return negotiations to a broader track that includes the nuclear issue, Al Hadath reported.
• US-Iran talks and efforts by mediators this week yielded little progress, raising the odds of renewed combat, while Qatar will continue efforts despite growing frustrations with both sides, according to Axios.
• IRGC aerospace advisor said Iran can sustain current missile firing rates for years and the era of attacks without response is over.
• UKMTO said that a crude oil tanker was struck on the port side by an unknown projectile in the Strait of Hormuz on September 29th. Following this, UKMTO separately reported that an LNG tanker was struck by an unknown projectile on September 29th within the Strait of Hormuz.
• An incident was reported on a plane flying from Dubai to Tel Aviv, with recent reporting suggesting that the incident was a terrorist attack, Al Jazeera reported. The report suggested that the co-pilot who stabbed the other pilot was of Omani origin.

Geopolitics: Other

• Russian Defence Ministry said energy system facilities in Kyiv region were hit in a massive strike, according to IFX.
• Loud explosions have been heard in Kyiv, Ukraine.
• South Korean military said North Korea fortification works increased tensions on the Korean peninsula and that North Korea should stop fortification works immediately, while it added that North Korea should apologise for its fortification work and that South Korea military personnel were seriously wounded by North Korean mines.
• North Korea said South Korea is fabricating baseless findings regarding a mine blast in the demilitarised zone that injured troops, while it warned that South Korea could encounter a miserable and catastrophic situation.

US Event Calendar

• 7:00 am: Sep 25 MBA Mortgage Applications, prior -1.5%
• 8:15 am: Sep ADP Employment Change, est. 74.5k, prior 38k
• 8:30 am: Aug Personal Income, est. 0.5%, prior 0.43%
• 8:30 am: Aug Personal Spending, est. 0.85%, prior 0.16%
• 8:30 am: Aug PCE Price Index YoY, est. 3.7%, prior 3.7%
• 8:30 am: Aug Core PCE Price Index MoM, est. 0.3%, prior 0.2%
• 8:30 am: Aug Core PCE Price Index YoY, est. 3.3%, prior 3.34%
• 8:30 am: 2Q T GDP Annualized QoQ, est. 1.5%, prior 1.5%
• 8:30 am: 2Q T Personal Consumption, est. 3.4%, prior 3.4%
• 8:30 am: 2Q T GDP Price Index, est. 6.4%, prior 6.4%
• 8:30 am: 2Q T Core PCE Price Index QoQ, est. 3.6%, prior 3.6%
• 8:30 am: Aug P Wholesale Inventories MoM, est. 0.45%, prior 1.3%
• 9:45 am: Sep MNI Chicago PMI, est. 51, prior 47.1

Central Banks 

• 1:30 pm: Fed’s Barkin Gives Welcome Remarks at Rural America Conference
• 3:25 pm: Fed’s Cook Speaks at Investing in Rural America Conference
• 5:10 pm: Fed’s Goolsbee Gives Keynote Address
• 6:00 pm: Fed’s Kashkari Speaks in Fireside Chat

DB's Jim Reid concludes the overnight wrap

Good evening from Phoenix where I’m just about to go to bed after I press send here. I’m the keynote lunchtime speaker at our huge long standing annual LevFin conference which attracts over a 1,000 investors and issuers. I’m literally hemmed in by golf courses here which is a bit tortuous not having clubs with me and having to work.

While I'm away, we're running our end-Q3 market survey. There are several highly topical questions this month. One asks respondents to rank the key drivers behind the recent rise in yields, while another explores how the US is ultimately likely to address its fiscal challenges. We also have a couple of timely questions on oil and on how the Iran conflict may evolve ahead of the US midterm elections. I would be grateful if as many of you could fill in as possible. It should take 2-3 minutes and can be accessed here.

As we await today's latest US core PCE, and arrive at quarter-end, markets have put in a pretty mixed performance over the last 24 hours, with divergent signals across the major asset classes. On one level there was relief, as oil and gas prices fell back again thanks to some positive supply headlines, with Brent crude down -2.56% to $102.59/bbl. And together with NY Fed’s Williams suggesting there is no “urgency” for the next hike, that helped to dial back expectations of Fed tightening. However, it wasn’t all good news, as the 30yr Treasury yield (+1.9bps) rose for a sixth consecutive session, reaching a post-2002 high of 5.67%. And despite the energy pullback there were still other signs of stress, as US and European HY spreads reached their widest since April, whilst the Franco-German 10yr spread rose to its widest level since 2012.  

We’ll start with the energy news, as the turnaround in oil and gas prices was one of the big stories yesterday. At the European open, it looked like we were set for another day of gains, with Brent crude initially rising to $107/bbl. However, several headlines contributed to the pullback, including a Reuters report that Saudi Arabia had resumed oil loadings from the port of Yanbu. And that follows on from Bloomberg’s report the previous day that Saudi Arabia had now restored around half the flows through the East-West pipeline.

Meanwhile, the US announced that it will offer up to 40m barrels from its Strategic Petroleum Reserve, in what would be its last drawdown in the coordinated global release of oil announced earlier in the year. So that helped oil prices stage a decent intraday turnaround. Brent settled -2.59% lower while WTI crude (-3.48%) saw a larger decline to a 4-week low of $89.48/bbl, with the gap between the two benchmarks widening as the current front-month Brent future expires today. Meanwhile, European natural gas (-4.95%) saw an even bigger decline.

Yet even with the pullback in oil and gas prices, investors struggled to get too excited. There are still no obvious signs of progress towards a deal, and we actually saw longer-dated Brent futures move up once again, with the December 2027 future up another +0.65% yesterday, reaching a new high of $80.81/bbl. So for investors, they’re still pricing in a lengthier period of disruption, even as increased oil flows out of the Gulf have eased the near-term pressure.

That backdrop led to a mixed session for US Treasuries. Initially, yields hit fresh highs across most of the curve before paring back those gains, with the 10yr yield ending the day unchanged at its post-2007 high of 5.24%. Despite the eventual pullback, there was still a fresh milestone for 30yr yields (+1.9bps), which reached a post-2002 high of 5.57%. However, at the front end the 2yr yield fell -5.4bps, and therefore we saw a decent sized steepening on the day.

In addition to the decline in energy prices, the front-end rally was helped by comments from NY Fed President Williams, who said that he saw one more rate hike “late this year” as appropriate and that “there is no need for urgency” following the September hike. So that suggested a high bar to hike as soon as the next meeting in October, and money markets cut back the pricing of an October rate hike from 70% to 47% in response. In other Fedspeak, Governor Barr signaled that further hikes are likely without offering any colour on their likely pace, while St Louis Fed President Musalem suggested that “policy remains somewhat accommodative” after the September hike.  
Meanwhile, we also got a slightly weaker set of second-tier US data. The somewhat backward-looking job openings for August showed an unexpectedly big slowing to 7.079m (vs. 7.228m expected), which is their lowest level in 5 months. In addition, the Conference Board’s consumer confidence measure also saw an unexpectedly big fall to 81.9 in September (vs. 89.0 expected), marking its lowest level since 2014. We did get some more upbeat house price data, with the S&P Case Schiller (+0.32% vs +0.20% expected) and FHFA (+0.3% vs +0.1% expected) series both seeing larger monthly increases. Next up, we have today's core PCE and the jobs report on Friday, which are likely to get far more attention.

Given all that, US equities struggled to gain traction as well yesterday, with the S&P 500 (-0.17%) slipping back for a second day running. That retreat was fairly broad, with energy (-0.89%) and materials (-0.55%) sectors leading the decline in the S&P 500, while the small-cap Russell 2000 fell -0.35%. The decline would have been worse were it not for a jump among chip stocks, as the Philly semiconductor index rose +1.32%. That move came as Trump pushed back against the idea of new federal AI regulations in a meeting with top AI and tech executives, which agreed on a framework for voluntary audits.

European equities were mixed, with the CAC (-0.53%) and FTSE 100 (-0.45%) leading the Stoxx 600 (-0.09%) lower, though the DAX (+0.10%) eked out at advance.  

European bonds mostly struggled to gain traction, despite the boost from lower energy prices. To be fair, there were some that advanced, and the 10yr bund yield (-1.7bps) fell back from its post-2009 high of 3.64%. However, there was a worse performance elsewhere, with the 10yr OAT yield (+4.2bps) at a post-2008 high of 4.81%, whilst the 10yr BTP yield (+2.2bps) hit a post-2023 high of 4.61%. And in turn, that meant the Franco-German 10yr spread continued to widen, up to another post-2012 high of 118bps by the close. This widening came as France’s debt agency unveiled a plan to borrow a record €340bn in 2027 and amid protests by public-service staff and students ahead of the formal presentation of France’s 2027 budget tomorrow.

Fiscal issues also got some attention in the UK yesterday as Prime Minister Burnham spoke at the Labour Party’s annual conference. His proposed plans included dropping the current pension triple lock after 2030, opening the door to public ownership of water companies and suggesting that the UK will seek a closer relationship with the EU. The 10yr gilt yield ended the day -1.0bps lower.

Asian equity markets are mostly higher this morning, with the Nikkei (+1.28%) leading the gains, while the S&P/ASX 200 (+0.79%), Shanghai Composite (+0.30%), and CSI 300 (+0.18%) are also trading higher. In contrast, the KOSPI (-0.27%) has surrendered its early gains, while the Hang Seng (+0.03%) is flat. S&P (+0.23%) and Nasdaq (+0.23%) futures are higher with Stoxx (+0.69%) contracts even more so.

Early morning data showed that China’s manufacturing sector gained momentum in September, with both private and official surveys pointing to an improvement in economic activity. The private-sector RatingDog Manufacturing PMI rose to 52.1 from 51.5 in August, surpassing expectations of 51.7 and marking its strongest reading since April. The services PMI also improved to 51.6 from 51.4, ahead of forecasts for 51.3. Separately, China’s official manufacturing PMI increased to 50.1 in September from 49.8 in August, in line with expectations and returning to expansionary territory after two months of contraction. The official non-manufacturing PMI climbed to 50.2 from 49.0, comfortably beating forecasts of 49.2, while the composite PMI rose to 50.7 from 49.5.  

Elsewhere, Australia’s inflation accelerated in August, although the increase was marginally softer than expected. Headline CPI rose +4.0% y/y, up from +3.5% in July but slightly below consensus expectations of +4.1%. The trimmed mean, closely watched by the RBA as a gauge of underlying price pressures, held steady at +3.6% y/y and rose +0.2% m/m in August, suggesting core inflation remains sticky despite some moderation in the broader inflation outlook.

Looking at the day ahead now, and European data releases include the September flash CPI prints for Germany, France and Italy, along with German unemployment for September. In the US, we’ll also get the PCE inflation print for August, the third estimate of Q2 GDP, and the ADP’s report of private payrolls for September. From central banks, we’ll hear from the Fed’s Barkin, Cook, Goolsbee and Kashkari, along with the ECB’s Schnabel.

Tyler Durden Wed, 09/30/2026 - 08:23

From TINA To TIGA: Diversification Pays Again

Authored by Lance Roberts via RealInvestmentAdvice.com,

For more than a decade following the Financial Crisis, one acronym embodied the investment landscape: TINA, “there is no alternative.” The logic behind TINA was that the Fed and most other developed nations’ central banks held interest rates near zero and even below zero in some cases. As a result, Treasury, corporate, municipal, and international bond yields were extremely low for a decade.  Thus, stocks, reasonably valued after the financial crisis, offered a clearer path to meaningful returns.

Today, TINA logic is less compelling. Risk-free 5-year and longer Treasury notes and bonds yield over 5%, and investment-grade corporate bonds yield even more. At the same time, stock valuations sit near record levels, implying weak forward returns. The acronym that best describes today’s market is TIGA, “there is a good alternative.”

Unfortunately, this article may fall on deaf ears among those looking in the rearview mirror at upward-trending equity markets and steadily falling bond prices. Although it is difficult to fight a well-established trend, such a performance divergence is usually a time to consider swimming against the current. As we show, prior peaks in the relative returns of stocks versus bonds tend to reverse quickly, but the timing of such reversals is incredibly hard to predict.

We want to emphasize that this article is not a call to sell all your stocks and replace them with bonds. It is a message that you may want to consider adjusting your investment portfolio to better manage risk while getting paid to diversify.

Before continuing, we share an apt quote from Lyn Alden:

Diversification looks inefficient during a bull market but is a source of strength during bear markets.

The TINA Era: Cheap Stocks And Yield-Less Bonds

Consider the post-2008 financial crisis backdrop:

• The 10-year Treasury yield fell to 1.43% in July 2012 and ultimately bottomed at roughly 0.52% in August 2020. From 2009 through 2020, the average 10-year yield was 2.35%.
• The 10-year TIPS yield, the market’s gauge of real (inflation-adjusted) interest rates, was below zero for much of 2012 and 2013 and again in 2020 and 2021.
• The Shiller CAPE ratio troughed at 13 at the March 2009 market low and steadily rose to 32 prior to the pandemic.
• The S&P 500 forward P/E ratio traded in the low teens in 2011 through 2013.

In that very low yield environment, the choice between stocks and bonds was easy. A forward P/E for the S&P 500 of 13, as we witnessed in the years following the crisis, implies an earnings yield of nearly 8%. With the 10-year Treasury yielding at or below 2%, stocks offered nearly 6% more “yield” than bonds.

The graph below shows the implied ten-year return based on the CAPE ratio (blue), alongside the actual returns that followed (black) and the yields on a 10-year Treasury (orange). Through most of the period, the expected excess return for holding stocks over bonds ranged from 2.00% to 6.00%, while actual returns were much greater.

Investors who followed TINA were handsomely rewarded. The S&P 500 returned about 13.6% annualized during the 2010s, one of the better decades in market history. Bonds, starting from historically low yields, offered little yield and even less potential for price gains.

At the time, the relationship between stock and bond valuations made it tough, if not impossible, to argue against TINA.

Today: Expensive Stocks And Bonds With ‘Good’ Yields

The landscape has flipped over the last few years. Consider the following as of late September 2026: 

• The 5- year and 10-year Treasury note yields are 5.10% and 5.25%, respectively.
• The ICE BofA US Corporate Index, a broad measure of investment-grade corporate bonds, carries an effective yield of 5.75%.
• 10- year TIPS have a real yield (after inflation) of nearly 3.00%, the highest for that maturity since October 2008.

Meanwhile, stock valuations are near their historical peaks: 

• The Shiller CAPE ratio stands at 41.50, near the all-time high of approximately 44 set in December 1999 and more than two and a half times its long-term median.
• FactSet reports a forward 12-month P/E of 19.1 as of September 18. That is in line with the 10-year average of 19.0, but well above TINA-era multiples.

The first graph below shows that CAPE implies equity investors will underperform bonds by 2% in a buy-and-hold position over the next ten years. This contrasts with the 2% to 6% expected range we showed earlier.

The second graph places the expected shortfall in historical context.

The Equity Risk Premium Has Vanished

More telling comparisons are worth considering. For example:

• Forward earnings yield is equal to the 10-year Treasury yield: The current S&P 500 forward P/E of 19.1 implies an earnings yield of 5.24%, in line with the ten-year Treasury yield. Basically, investors are getting paid zero premium for owning risky stocks. In 2012, the same spread was roughly six points.
• Caution is warranted. FactSet shows analysts expect 31.8% earnings growth in 2026, boosted by large mark-to-market investment gains at Alphabet and Amazon, but only 15.2% in 2027. Both figures are well above historical averages. While the massive AI expansion could generate the forecasted growth rates and maybe more, it could also fall short, meaning the forward earnings yield is actually lower than its current level. 
• CAPE earnings yield less the 10-year TIPS yield: Because CAPE uses inflation-adjusted earnings, it is best compared to real yields. The CAPE earnings yield is 2.42%, while the 10-year TIPS yield is 2.95%. Equity investors are accepting a 50 basis point negative real equity risk premium. A government-guaranteed, inflation-protected bond offers a higher real yield than the stock market’s long-run earnings power.

What High Valuations Mean For Future Returns

Valuations are a poor timing tool, but they have proven to be a good guide to long-term returns. This makes sense: the higher the price an investor pays for a stream of earnings, the lower the return they should expect.

The dotcom boom and bust provides a clear example. The S&P 500 CAPE peaked at 44 in December 1999. Over the following decade, the S&P 500 returned approximately -0.9% annualized. Investors who bought 10-year Treasuries yielding over 6% in early 2000 fared significantly better while taking on much less risk.

The graph below shows the real equity returns we should expect over the next ten years based on the historical relationship between CAPE and forward returns.

Bond returns, by contrast, are set in stone for investors willing to hold them to maturity.

Going forward, stock returns can certainly beat current bond yields. But for stocks to outperform, earnings growth must be strong enough to overcome elevated starting valuations and, very importantly, higher borrowing rates. That’s a much higher bar than in the early 2010s, when investors were paid handsomely to take equity risk.

TIGA Doesn’t Mean Sell Equities

We are not advocating that investors abandon equities. TIGA means there is a good alternative, and diversified portfolio decisions should reflect it. We think investors should consider taking the following steps:

• Rebalance toward targets. Years of equity outperformance have likely left many portfolios overweight stocks relative to their intended allocation.
• Revisit the role of bonds. Bonds can once again produce meaningful income and serve as a counterweight to equity risk.
• Match risk to time horizon. Investors with defined income needs can lock in 5%-plus yields and reduce their reliance on more volatile stocks.

Summary

TINA was the right response to a highly unusual era. Zero interest rates, negative real yields, and reasonable equity valuations made stock-centric portfolios the logical choice. Today, the relationship has been flipped on its head. Bonds yield over 5%, real yields are the highest in nearly 18 years, and stock valuations are near historic extremes. By most measures, the equity risk premium has shrunk to near zero or below.

That doesn’t mean stocks will fall or even underperform bonds. But the heightened possibility of negative returns for stocks versus bonds does mean investors should no longer feel compelled to heavily overweight stocks and forget about bonds.

For the first time in almost two decades, TIGA -there is a good alternative.

Tyler Durden Wed, 09/30/2026 - 08:05

US Ambassador Sparks Firestorm After Telling Greek Minister Washington Can Topple Any Government

US Ambassador to Greece Kimberly Guilfoyle has set off a firestorm of diplomatic controversy over unusually blunt remarks centered on Greece's government and US policy. It also raised questions of US covert 'influence operations' and regime change activities.

The words issued by the former Fox News host were picked up by The Wall Street Journal, which described that the alleged remark was made during a March dinner in Athens. Greek Energy Minister Stavros Papastavrou was said to be at the gathering, which quickly became tense.

via AFP

A discussion ensued over the impending collapse of Romania's government. Guilfoyle pronounced that the United States had a role in influencing the crisis. She reportedly then said, "We can do that to any country we want. We can do that here."

Her indicating that it could be done "here" was of course a reference to Greece itself, and the account is presented as her boasting to a top government minister's face that Washington can change governments whenever it wants.

Here is the fuller context in which the WSJ report presents it:

Some Greek officials say they are happy their country, often overlooked in Washington, has the attention of an ambassador who can easily reach the U.S. president. 

They are also fearful of getting on her bad side. In March, at a dinner in Athens attended by Greek and U.S. officials, Guilfoyle got into an argument with Greece’s energy minister, Stavros Papastavrou, in front of the other guests. Referring to the impending collapse of the Romanian government, Guilfoyle told the group, “We can do that to any country we want. We can do that here,” according to a person who attended the dinner and others who were told about it. The conversation became heated, with Papastavrou retorting that the U.S. couldn’t replace the government of Greece, which was elected by the people. Guilfoyle’s lawyer disputed the characterization of the exchange.

Greek opposition parties have seized on the exchange, after which Greek government spokesperson Pavlos Marinakis sought to downplay and deny, saying the issue of changing the government "was never raised" and that it would not be tolerated if so.

But the opposition is seeking to keep the pressure up in search of answers:

“Three days after the Wall Street Journal article the Greek government has so far, beyond vague references, declined to deny or confirm the allegations made,” Harry Tzimitras, head of foreign affairs for the left-wing Elas party, told POLITICO on Tuesday. “It is a very serious issue and it must be addressed immediately without delay.”

Guilfoyle as the Trump-appointed top US envoy to Athens has also of late come under scrutiny for pushing US energy sales across Southeastern Europe, especially focused on American liquefied natural gas. 

We earlier reviewed how in the four and a half years since Russia invaded Ukraine, when there happens to be important national elections - particularly those in Romania, Moldova, Hungary, Poland, and Germany - then suddenly certain domestic political parties get demonized as "pro-Putin" and "security threats" to the rest of Europe.

The Financial Times has independently corroborated Kimberly Guilfoyle’s statement that the US was behind the collapse of the Romanian government of PM Bolojan over its refusal to buy US gas at above market prices: "We can do that to any country we want. We can do that here too." https://t.co/lFWGiaVwF6 pic.twitter.com/Tuz2IKXL3Q

— Daractenus (@Daractenus) September 29, 2026

The alleged March remarks have also naturally sparked tensions between the US and Romania. A State Department statement issued in the wake of the reporting reads: "The United States values its strategic partnership with Romania, which remains strong across our shared priorities, including energy security and defense burden shifting."

Tyler Durden Wed, 09/30/2026 - 07:45

Midair Horror: FlyDubai Pilot Reportedly Stabbed, Israeli News Says Incident Treated As "Full-Fledged Terror Attack"

Flydubai Flight FZ1073 from Dubai to Tel Aviv abruptly diverted to Saudi Arabia earlier today after a reported fight between the pilots triggered a distress alert, sources told CNN.

Flight-tracking data from Flightradar24 shows Flydubai Flight FZ1073 diverted over Jordanian airspace toward Saudi Arabia and rapidly descended 17,400 feet in just minutes around 0120 ET. Israeli fighter jets were scrambled.

According to Amit Segal of Israel's Channel 12 News:

Following situation assessments and passenger testimonies, Israel is treating the incident as a full-fledged terrorist attack. It appears that the co-pilot repeatedly stabbed the captain. Once the attack began, several crew members and passengers managed to break through the cockpit door and subdue the attacker.

According to one senior official, the co-pilot is currently being questioned, and indications are mounting that he intended to take control of the plane and crash it with the passengers on board.

Following situation assessments and passenger testimonies, Israel is treating the incident as a full-fledged terrorist attack. It appears that the co-pilot repeatedly stabbed the captain. Once the attack began, several crew members and passengers managed to break through the… https://t.co/BXS4kIjGXk

— Amit Segal (@AmitSegal) September 30, 2026

Flydubai confirmed the midair incident and said the Boeing 737 landed safely in Tabuk, with all passengers safe and accounted for. However, the airline did not specify the nature of the incident.

"Our teams are working closely with the relevant authorities," the carrier said. "Further updates will be issued as additional confirmed details become available."

Passengers told Israel's Channel 12 that they heard shouting near the cockpit and an altercation inside. They also said the aircraft plunged before landing in Saudi Arabia.

 

Tyler Durden Wed, 09/30/2026 - 06:55

Midair Horror: FlyDubai Pilot Reportedly Stabbed, Israeli News Says Incident Treated As "Full-Fledged Terror Attack"

Flydubai Flight FZ1073 from Dubai to Tel Aviv abruptly diverted to Saudi Arabia earlier today after a reported fight between the pilots triggered a distress alert, sources told CNN.

Flight-tracking data from Flightradar24 shows Flydubai Flight FZ1073 diverted over Jordanian airspace toward Saudi Arabia and rapidly descended 17,400 feet in just minutes around 0120 ET. Israeli fighter jets were scrambled.

According to Amit Segal of Israel's Channel 12 News:

Following situation assessments and passenger testimonies, Israel is treating the incident as a full-fledged terrorist attack. It appears that the co-pilot repeatedly stabbed the captain. Once the attack began, several crew members and passengers managed to break through the cockpit door and subdue the attacker.

According to one senior official, the co-pilot is currently being questioned, and indications are mounting that he intended to take control of the plane and crash it with the passengers on board.

Following situation assessments and passenger testimonies, Israel is treating the incident as a full-fledged terrorist attack. It appears that the co-pilot repeatedly stabbed the captain. Once the attack began, several crew members and passengers managed to break through the… https://t.co/BXS4kIjGXk

— Amit Segal (@AmitSegal) September 30, 2026

Flydubai confirmed the midair incident and said the Boeing 737 landed safely in Tabuk, with all passengers safe and accounted for. However, the airline did not specify the nature of the incident.

"Our teams are working closely with the relevant authorities," the carrier said. "Further updates will be issued as additional confirmed details become available."

Passengers told Israel's Channel 12 that they heard shouting near the cockpit and an altercation inside. They also said the aircraft plunged before landing in Saudi Arabia.

 

Tyler Durden Wed, 09/30/2026 - 06:55

How Do You Say "What The Actual F**k" In French?

Authored by Steve Watson via Modernity News,

Paris Fashion Week is no longer in the business of clothes. It is in the business of humiliation. The Spring/Summer 2027 season opened in the French capital this week as a contest to see who can manufacture the most freakish garbage: outfits and makeup built to wipe out sex, wipe out beauty, and leave the human face looking like a prop from a cheap horror set.

The models are interchangeable. Rakishly thin. Ghoulish. Faces sanded into the same deformed, demonic mask. The crowd claps. The trade press calls it "prestige." Ordinary people looking at the footage call it a dystopian freak show.

And of course, the ever present MESSAGE is in full force. In one clip, a black model in a gold gown staggers down the runway with two lifeless white male figures slung over her.

PARIS Fashion Week 2026 ?

An African carries the bodies of two dead White men (Mannequins).

This isn't 'Fashion', this is an ugly satanic circus.

Everything beautiful in the West has been corrupted by depravity & has been destroyed.
pic.twitter.com/XHFH4SycGB

— Lozzy B ??? (@TruthFairy131) September 29, 2026

That was not a random stunt. It was the finale of The Ninety-Nine Percent, the Paris Fashion Week debut of Montreal label Matières Fécales - French for "fecal matter" - staged Monday at Place de la République. Designers Steven Raj Bhaskaran and Hannah Rose Dalton put 99 models on the square. Every one of them, Vogue reported, was a person of color.

The images that defined the show, Vogue wrote, were the last two looks: "two young Black models carried Sarah Sitkin's hyper-realistic statues of well-fed old white men wearing dollar-bill blindfolds."

FashionNetwork described the close as two models - one in a white single-button suit, one in a gold lamé gown with a train - "each staggering beneath the weight of mannequins portraying billionaires, hoisted on their shoulders."

Bhaskaran framed it as liberation. "This one is for the 99%," he told Vogue. "It's taking the source of power from last season and giving it to the people that we want to empower." In a longer note he added: "Ninety-nine models of colour and ninety-nine looks by a designer of colour. The casting wasn't just a creative choice; it reflects all the people I grew up with in social housing." He called Place de la République "a place of revolution" and said it was "perfect that the first-ever fashion show" there was "organised by a group of immigrants like us."

The previous Matières Fécales collection, The One Percent, had already gone in for dollar-bill masks over the eyes, "guilt gloves" of white lambskin with bloody palms, and prosthetic faces with blacked-out eyeballs that Times Now described as "almost devilish." This week's sequel just swapped the sermon.

Last season the house dressed the rich as demons. This season it dressed "the 99%" as gods and hung the rich, white, and male off their backs like carcasses. The industry called it a 'protest'.

Imagine the outrage if the imagery were reversed.

PARIS SPRING FASHION WEEK ?

The video on the left is the REAL video from Paris Fashion Week.

African carries 2 dead White men on her back, everyone claps & this is seen as acceptable.

The video on the right would cause global outrage, model & designer would most likely... pic.twitter.com/pV23VQeTVS

— Lozzy B ??? (@TruthFairy131) September 29, 2026

Paris is the perfect setting for it. The city that once stood for light, proportion, and a civilisation sure enough of itself to invent haute couture has spent decades deleting the culture that made the place matter.

Mass migration and the official cult of modernity have turned whole districts and the banlieues into parallel societies while the old French capital is kept on as a backdrop for visitors.

Interior ministry figures for 2025 put foreign nationals at 87 percent of theft suspects and 61 percent of sexual-violence suspects on Île-de-France public transport - in a country where foreigners are about 9 percent of the population.

A runway that erases sex, beauty, and the European face is not an accident that happened to land in Paris. It is what a conquered capital stages when its elites have already decided the native civilisation is finished.

The runway was only half the story. The front row at what is still sold as the most prestigious fashion week on earth featured animal-head masks, dollar bills taped over eyes, headset hardware, nails like weapons, haircuts that look like the individuals lost a fight with a woodchipper.

These are front row guests at Paris Fashion Week.

It is considered the most 'prestigious' fashion week in the world. pic.twitter.com/kwzyx4TdLN

— Oli London (@OliLondonTV) September 28, 2026

This is the clientele. The clothes are designed for people who have already decided that looking human is bourgeois. Gender is sanded off. Beauty is treated as a political error.

Makeup does not enhance a face. It cancels it. Bone structure is pushed toward the same starved, hollowed, slightly wrong geometry until the models stop being women or men and become a single branded ghoul.

This is not "fashion" it's a deviant gimp show. The individuals now involved in 'Paris fashion week' are solely focused on creating more stupid freakish garbage than their peers. pic.twitter.com/MRRPHOc0Dj

— m o d e r n i t y (@ModernityNews) September 29, 2026

High fashion isn't even about clothes anymore. It is just an excuse to push bizarre, dystopian garbage on the public.

Paris Fashion Week is as close to a satanic culture as you can get, and regular people are entirely sick of it. pic.twitter.com/dKkNiWE6sn

— Desiree (@DesireeAmerica4) September 29, 2026

This is what the circuit now produces: not desire, not dressmaking, but a scavenger hunt for which house can make the human form look most cursed.

Paris Fashion Week just started@grok, is the stylist behind
this collection Jewish? pic.twitter.com/gLAxvo5skY

— Rabbi Jeff (@RabbiJeffx) September 29, 2026

It's a cross between the Hunger Games and a Satanic freak show.

?? Welcome to Paris Fashion Week, 2026

While the world is on fire ... the rich enjoy themselves in that way. pic.twitter.com/iD4X9NQyTN

— Lord Bebo (@MyLordBebo) March 4, 2026

?? Meanwhile during Paris Fashion Week

The Home of World Fashion & their most illustrious week of the year shows clearly that the Satanists have still captured the entire Fashion Industry.

They don't even hide it. pic.twitter.com/KkXDcYnUgs

— Concerned Citizen (@BGatesIsaPyscho) October 3, 2025

The same starved silhouettes keep coming back. The same cadaver makeup. The same flattened sex. The same racial morality play dressed up as couture. Luxury's ruling class has decided that the highest status signal is contempt for the thing fashion used to sell: a beautiful woman, clearly a woman, wearing something a normal person might actually want.

Beauty is not a conservative hobby. It is one of the oldest human instincts that modernity now treats as suspect. A culture that cannot stand a pretty face, a female silhouette, or a male body that is not being in some way tortured or murdered, will not stop at the runway.

It will keep going until the only acceptable look is the one that says: you are not a man, you are not a woman, you are not a people, you are inventory.

Tyler Durden Wed, 09/30/2026 - 06:30

How Do You Say "What The Actual F**k" In French?

Authored by Steve Watson via Modernity News,

Paris Fashion Week is no longer in the business of clothes. It is in the business of humiliation. The Spring/Summer 2027 season opened in the French capital this week as a contest to see who can manufacture the most freakish garbage: outfits and makeup built to wipe out sex, wipe out beauty, and leave the human face looking like a prop from a cheap horror set.

The models are interchangeable. Rakishly thin. Ghoulish. Faces sanded into the same deformed, demonic mask. The crowd claps. The trade press calls it "prestige." Ordinary people looking at the footage call it a dystopian freak show.

And of course, the ever present MESSAGE is in full force. In one clip, a black model in a gold gown staggers down the runway with two lifeless white male figures slung over her.

PARIS Fashion Week 2026 ?

An African carries the bodies of two dead White men (Mannequins).

This isn't 'Fashion', this is an ugly satanic circus.

Everything beautiful in the West has been corrupted by depravity & has been destroyed.
pic.twitter.com/XHFH4SycGB

— Lozzy B ??? (@TruthFairy131) September 29, 2026

That was not a random stunt. It was the finale of The Ninety-Nine Percent, the Paris Fashion Week debut of Montreal label Matières Fécales - French for "fecal matter" - staged Monday at Place de la République. Designers Steven Raj Bhaskaran and Hannah Rose Dalton put 99 models on the square. Every one of them, Vogue reported, was a person of color.

The images that defined the show, Vogue wrote, were the last two looks: "two young Black models carried Sarah Sitkin's hyper-realistic statues of well-fed old white men wearing dollar-bill blindfolds."

FashionNetwork described the close as two models - one in a white single-button suit, one in a gold lamé gown with a train - "each staggering beneath the weight of mannequins portraying billionaires, hoisted on their shoulders."

Bhaskaran framed it as liberation. "This one is for the 99%," he told Vogue. "It's taking the source of power from last season and giving it to the people that we want to empower." In a longer note he added: "Ninety-nine models of colour and ninety-nine looks by a designer of colour. The casting wasn't just a creative choice; it reflects all the people I grew up with in social housing." He called Place de la République "a place of revolution" and said it was "perfect that the first-ever fashion show" there was "organised by a group of immigrants like us."

The previous Matières Fécales collection, The One Percent, had already gone in for dollar-bill masks over the eyes, "guilt gloves" of white lambskin with bloody palms, and prosthetic faces with blacked-out eyeballs that Times Now described as "almost devilish." This week's sequel just swapped the sermon.

Last season the house dressed the rich as demons. This season it dressed "the 99%" as gods and hung the rich, white, and male off their backs like carcasses. The industry called it a 'protest'.

Imagine the outrage if the imagery were reversed.

PARIS SPRING FASHION WEEK ?

The video on the left is the REAL video from Paris Fashion Week.

African carries 2 dead White men on her back, everyone claps & this is seen as acceptable.

The video on the right would cause global outrage, model & designer would most likely... pic.twitter.com/pV23VQeTVS

— Lozzy B ??? (@TruthFairy131) September 29, 2026

Paris is the perfect setting for it. The city that once stood for light, proportion, and a civilisation sure enough of itself to invent haute couture has spent decades deleting the culture that made the place matter.

Mass migration and the official cult of modernity have turned whole districts and the banlieues into parallel societies while the old French capital is kept on as a backdrop for visitors.

Interior ministry figures for 2025 put foreign nationals at 87 percent of theft suspects and 61 percent of sexual-violence suspects on Île-de-France public transport - in a country where foreigners are about 9 percent of the population.

A runway that erases sex, beauty, and the European face is not an accident that happened to land in Paris. It is what a conquered capital stages when its elites have already decided the native civilisation is finished.

The runway was only half the story. The front row at what is still sold as the most prestigious fashion week on earth featured animal-head masks, dollar bills taped over eyes, headset hardware, nails like weapons, haircuts that look like the individuals lost a fight with a woodchipper.

These are front row guests at Paris Fashion Week.

It is considered the most 'prestigious' fashion week in the world. pic.twitter.com/kwzyx4TdLN

— Oli London (@OliLondonTV) September 28, 2026

This is the clientele. The clothes are designed for people who have already decided that looking human is bourgeois. Gender is sanded off. Beauty is treated as a political error.

Makeup does not enhance a face. It cancels it. Bone structure is pushed toward the same starved, hollowed, slightly wrong geometry until the models stop being women or men and become a single branded ghoul.

This is not "fashion" it's a deviant gimp show. The individuals now involved in 'Paris fashion week' are solely focused on creating more stupid freakish garbage than their peers. pic.twitter.com/MRRPHOc0Dj

— m o d e r n i t y (@ModernityNews) September 29, 2026

High fashion isn't even about clothes anymore. It is just an excuse to push bizarre, dystopian garbage on the public.

Paris Fashion Week is as close to a satanic culture as you can get, and regular people are entirely sick of it. pic.twitter.com/dKkNiWE6sn

— Desiree (@DesireeAmerica4) September 29, 2026

This is what the circuit now produces: not desire, not dressmaking, but a scavenger hunt for which house can make the human form look most cursed.

Paris Fashion Week just started@grok, is the stylist behind
this collection Jewish? pic.twitter.com/gLAxvo5skY

— Rabbi Jeff (@RabbiJeffx) September 29, 2026

It's a cross between the Hunger Games and a Satanic freak show.

?? Welcome to Paris Fashion Week, 2026

While the world is on fire ... the rich enjoy themselves in that way. pic.twitter.com/iD4X9NQyTN

— Lord Bebo (@MyLordBebo) March 4, 2026

?? Meanwhile during Paris Fashion Week

The Home of World Fashion & their most illustrious week of the year shows clearly that the Satanists have still captured the entire Fashion Industry.

They don't even hide it. pic.twitter.com/KkXDcYnUgs

— Concerned Citizen (@BGatesIsaPyscho) October 3, 2025

The same starved silhouettes keep coming back. The same cadaver makeup. The same flattened sex. The same racial morality play dressed up as couture. Luxury's ruling class has decided that the highest status signal is contempt for the thing fashion used to sell: a beautiful woman, clearly a woman, wearing something a normal person might actually want.

Beauty is not a conservative hobby. It is one of the oldest human instincts that modernity now treats as suspect. A culture that cannot stand a pretty face, a female silhouette, or a male body that is not being in some way tortured or murdered, will not stop at the runway.

It will keep going until the only acceptable look is the one that says: you are not a man, you are not a woman, you are not a people, you are inventory.

Tyler Durden Wed, 09/30/2026 - 06:30

Bernstein Puts Timeline On When EU Rearmament Supercycle "Goes Boom"

Readers by now know how we've laid out the looming rearmament supercycle in the West colliding with the "own the bottlenecks" theme, as resource nationalism makes industrial metals and rare earths scarce because of Beijing's export restrictions.

Adrien Rabier, Bernstein's equity analyst covering European aerospace and defense, penned a note on Tuesday explaining why the European defense rearmament cycle remains a top investment theme and even outlined a timeline.

In a report titled "European Defense: Beyond the order boom," Rabier said EU defense firms are set to enter a massive demand-driven cycle for new weapons.

Here's the timeline in three phases:

Stage 1: New paradigm (2022-2026).

The first stage, following the invasion of Ukraine, was characterized by rapid order collection. It drove multiple expansion across the sector, in anticipation of faster growth. The stocks re-rated from 9x EV/EBIT (-30% discount vs. SX600) to 15x currently (+17%). Exposure to the best geographies (Germany) and the quickest growth segments (short-cycle) were the most important drivers of performance.

Stage 2: Re-Arming Europe (2026-2030). 

The second stage marked the transition from an order-driven performance to execution-driven, as backlogs became rich across the sector. Exposure to structurally attractive product categories will remain the most important factor, in our view. We expect the narrative against short cycles products, legacy weapons, and Ukraine-related demand to intensify. Our "new warfare" basket is up +14% YTD, vs. the "old warfare" basket down -34%. We expect this gap to keep widening. We see few positive catalysts for the sector, and therefore favor self-help stories. We expect investors to focus increasingly on the exit multiples, as we head toward Stage 3.

Stage 3: Normalization (2030+). 

After the re-arming phase, we believe European military budgets will normalize near 3% of GDP. European Defense should then return to a GDP+ growth and ~12% EBIT margins sector, close to the Index's average.

Rabier's key message is that investors will reward companies capable of converting backlogs into profitable deliveries: 

With all players now virtually benefiting from very large backlogs, the ability to convert backlog into profitable growth and scale capacity efficiently will matter more. We continue to view electronics exposure as the best, because these businesses grow through volume and content share, and are easier to scale (Thales, Leonardo, BAE Systems). Some companies will also benefit from turning around parts of their businesses (TKMS, Leonardo).

Top picks:

One major constraint on both Europe's rearmament cycle and the looming US weapons buildup is access to reliable, conflict-free supplies of critical materials. Larger budgets and expanding order books can translate into weapons deliveries only if manufacturers secure the necessary copper, tungsten, and rare earths that are in scarce supply. 

 That makes "owning the bottlenecks" a complementary investment theme to the broader defense buildup. 

Tyler Durden Wed, 09/30/2026 - 05:45

Bernstein Puts Timeline On When EU Rearmament Supercycle "Goes Boom"

Readers by now know how we've laid out the looming rearmament supercycle in the West colliding with the "own the bottlenecks" theme, as resource nationalism makes industrial metals and rare earths scarce because of Beijing's export restrictions.

Adrien Rabier, Bernstein's equity analyst covering European aerospace and defense, penned a note on Tuesday explaining why the European defense rearmament cycle remains a top investment theme and even outlined a timeline.

In a report titled "European Defense: Beyond the order boom," Rabier said EU defense firms are set to enter a massive demand-driven cycle for new weapons.

Here's the timeline in three phases:

Stage 1: New paradigm (2022-2026).

The first stage, following the invasion of Ukraine, was characterized by rapid order collection. It drove multiple expansion across the sector, in anticipation of faster growth. The stocks re-rated from 9x EV/EBIT (-30% discount vs. SX600) to 15x currently (+17%). Exposure to the best geographies (Germany) and the quickest growth segments (short-cycle) were the most important drivers of performance.

Stage 2: Re-Arming Europe (2026-2030). 

The second stage marked the transition from an order-driven performance to execution-driven, as backlogs became rich across the sector. Exposure to structurally attractive product categories will remain the most important factor, in our view. We expect the narrative against short cycles products, legacy weapons, and Ukraine-related demand to intensify. Our "new warfare" basket is up +14% YTD, vs. the "old warfare" basket down -34%. We expect this gap to keep widening. We see few positive catalysts for the sector, and therefore favor self-help stories. We expect investors to focus increasingly on the exit multiples, as we head toward Stage 3.

Stage 3: Normalization (2030+). 

After the re-arming phase, we believe European military budgets will normalize near 3% of GDP. European Defense should then return to a GDP+ growth and ~12% EBIT margins sector, close to the Index's average.

Rabier's key message is that investors will reward companies capable of converting backlogs into profitable deliveries: 

With all players now virtually benefiting from very large backlogs, the ability to convert backlog into profitable growth and scale capacity efficiently will matter more. We continue to view electronics exposure as the best, because these businesses grow through volume and content share, and are easier to scale (Thales, Leonardo, BAE Systems). Some companies will also benefit from turning around parts of their businesses (TKMS, Leonardo).

Top picks:

One major constraint on both Europe's rearmament cycle and the looming US weapons buildup is access to reliable, conflict-free supplies of critical materials. Larger budgets and expanding order books can translate into weapons deliveries only if manufacturers secure the necessary copper, tungsten, and rare earths that are in scarce supply. 

 That makes "owning the bottlenecks" a complementary investment theme to the broader defense buildup. 

Tyler Durden Wed, 09/30/2026 - 05:45