What If Warsh Shocks The Market And Keeps Rates On Hold

Ahead of today's FOMC announcement at 2pm, the prevailing consensus is that Warsh will raise rates but he doesn't need to, as tariff inflation is now fading fast, the bulk of headline inflation is driven by one-time supply shocks from the Iran war which the Fed is powerless to fix, and the upcoming change to the PCE methodology will trim the YoY print by about 0.3%, suggesting that the Fed will be hiking at a time when core inflation is the lowest in years.

In fact, as Goldman and many others suggested, the only reason why Warsh will hike is because the market is now certain Warsh will hike as the Fed does not want to disappoint the market and spark a rout ... thereby making a mockery of his prior statements that he won't be led by the market (we previewed all this in great detail here), to wit:

The CPI report had little impact on our inflation view but pushed market pricing of the probability of a hike to nearly 90%, which puts pressure on the FOMC to deliver a hike to avoid the market reaction that would likely follow from remaining on hold... We expect the FOMC to make only the minimum necessary change to its statement, which will likely note that the FOMC is hiking in support of the goal of returning inflation to 2% but will likely avoid providing guidance on the path forward or the criteria for further hikes. - Goldman

But what if Warsh does precisely what he warned he would, and - ignoring market certainty and expectations of a 25bps rate hike, not to mention the resulting tantrum - he keeps rates on hold? 

To be sure, it's hard enough to go against the market, so one can only imagine how hard it is for Fed Chair Warsh and the FOMC to stare it down. Yet as Standard Chartered's Steven Englander writes, "there seems to have been a market echo chamber pushing up expectations despite a limited amount of incoming data, little sign that inflation is going up, some indications that underlying inflation is much lower if tariffs and other factors are removed and the prospect of more informative data within a couple of meetings."

As Englander notes, much of Warsh’s discussion has focused on the Fed influencing the market too much, but the move from the pre-Jackson Hole ‘Warsh has to show that he is willing to hike’ to ‘Warsh will hike if inflation doesn’t come down’ to ‘Warsh has to hike unless the next CPI is really soft’ to ‘Now the debate is on how many hikes he has to do’ in two weeks suggests that the influencing pattern can go both ways.

To be sure, while the path of least resistance may be to hike, the Std Chartered strategist sees a real cost down the road if the hiking turns out to be unneeded and the FOMC has to reverse. As a result, and setting aside market pricing, Englander believes that there is a very low cost to waiting.

Ok, assume Warsh does not "rip the bandaid" simply because the economy does not merit it, and keeps rates on hold? We already noted that according to JPMorgan this outcome would shock the market and send stocks sliding:

Not surprisingly, Englander has been asked by his readers how Warsh could manage disappointing the market in such a major way. Well, as he discusses in his latest note, it would be hard for Warsh to avoid accusations of being the President’s man and have his credibility questioned harshly, but that is the Day 1 reaction.

At the press conference he could stress that he is opposed to giving forward guidance but not opposed to backward guidance, i.e. explaining precisely the rationale behind the decision and warning the market that the Fed will not be afraid to wrong foot them if it feels pricing is wrong.

Subsequently if others like Waller and Williams who are not tainted with Trump independence issues, defend the hold the market is likely to calm down. And, as a hedge, it wouldn't be forward guidance to say that the FOMC can’t do a 50bp move if it becomes clear that underlying inflation is stubbornly high or rising.

As Englander concludes, in theory this is a second-tier meeting – there is no urgency about moving or not moving. But it is a first-tier meeting because it can define how much stomach Warsh has to be independent of the market. The long game is that if Warsh makes a strong defense of his stance then the credibility crisis is short term. By year-end he can be hiking or holding with more information and moving decisively if a hold is wrong.

But if the perception emerges that Warsh is afraid to face down the market this will be the beginning of a wash, rince, repeat cycle. Market participants will assess the weak side of the Fed stance and press that weakness knowing that the FOMC will bend.  

More in Englander's full note "Hiking is the wrong choice."

Tyler Durden Wed, 09/16/2026 - 11:25

EU Opens Door For Canada To Become Bloc's First-Ever "Associate Member"

Thanks to how mean President Trump has been, Canada could become the first-ever "associate member" of the European Union under a proposal unveiled Wednesday by European Commission President Ursula von der Leyen, as Ottawa looks to reduce its economic dependence on the United States.

Speaking during her annual State of the Union address in Strasbourg, with Canadian Prime Minister Mark Carney in the front row as the first foreign head of government ever to attend the speech, von der Leyen said Brussels wants to take its relationship with Canada to an unprecedented level.

"We must urgently reimagine our partnerships," von der Leyen said, before telling Carney she wanted to work with him on "opening the door for Canada to be the first associate member of the EU."

There is just one complication: no such status currently exists.

EU treaties allow European countries to apply for full membership, while Brussels maintains an assortment of trade, association and single-market agreements with countries outside the bloc. But "associate membership" would be something new, meaning its rights, obligations and legal structure would have to be negotiated essentially from scratch.

Reuters notes that any serious move toward such a status would also face the politically difficult task of winning support from all 27 EU member states.

And Carney himself has stopped short of calling for full EU membership. On Sunday, after a Wall Street Journal report that Canada was exploring membership, he described what Ottawa is seeking as a "unique alliance" with Europe. He addresses the European Parliament on Thursday.

The substance of what Brussels is proposing, however, goes considerably beyond another trade agreement.

Canada and the EU already have CETA, their comprehensive free-trade deal. Von der Leyen said Wednesday that the two sides now want to move "from CETA to an Alliance for the Future" encompassing manufacturing, technology, defense, energy, critical minerals, batteries, artificial intelligence, quantum computing, cybersecurity and Arctic security.

"We will integrate defence industrial bases," she said.

That process has already begun.

Canada became the first non-European country allowed to participate in the EU's €150 billion SAFE defense procurement program under an agreement signed in February and formally concluded by the EU Council in June. The arrangement allows eligible Canadian companies and Canadian-origin products to participate in procurement financed by the program.

The EU-Canada defense relationship has also expanded into military mobility, interoperability, maritime and space security and defense-industrial cooperation.

Then there's the economics of the idea. Roughly 70% of Canadian exports go to the United States, making any rapid decoupling unrealistic. At the same time, Trump's tariffs and repeated talk of a 51st state have given Ottawa a powerful incentive to diversify. Europe, meanwhile, needs resources. 

Von der Leyen warned Wednesday that Europe remains more than 80% dependent on China for many critical raw materials, with dependence reaching 90% for some rare earths.

"No country can do this alone," she said.

Canada possesses significant reserves of nickel, uranium, potash, cobalt, lithium and rare earth elements, among other commodities increasingly regarded as strategic inputs for batteries, semiconductors, defense equipment and energy infrastructure.

That makes a deeper Canada-EU relationship potentially complementary: Europe gets another source of strategic commodities and energy while Canada gets a large alternative market, industrial investment and greater access to European defense and technology programs.

There is nevertheless a potentially uncomfortable tradeoff for Ottawa. If "associate membership" eventually includes meaningful access to the EU's roughly €18 trillion single market, Canada could be required to align portions of its regulatory regime with EU rules. Reuters notes that this could leave Ottawa accepting European regulations without receiving the voting rights enjoyed by actual EU members.

Canada could gain market access while becoming, at least in some areas, a rule-taker rather than a rule-maker.

Tyler Durden Wed, 09/16/2026 - 11:05

House Votes To Pass Iran War Powers Resolution

Authored by Timothy Frudd via The Epoch Times,

The House of Representatives voted on Sept. 15 to pass a war powers resolution that calls for President Donald Trump to end U.S. military action against Iran.

Following a floor debate on a war powers resolution aimed at directing Trump to remove U.S. forces from hostilities against Iran without congressional authorization, the House voted 220-204 to pass House Concurrent Resolution 93.

Rep. Seth Moulton (D-Mass.) initially introduced the resolution in April.

During Tuesday's floor debate, Rep. Gregory Meeks (D-N.Y.) said the war with Iran has been a "strategic failure," leaving the United States with depleted weapons stockpiles and a "tab of more than $100 billion that taxpayers will have to cover."

Meeks, who introduced a war powers resolution passed by the House in June, said on Tuesday that the resolution "made clear what the Constitution makes clear: Congress, not the president, has the power to decide when the United States goes to war."

In his remarks, Meeks asked if the war had produced any of its promised objectives.

"The Strait of Hormuz remains a source of enormous risk to global energy markets, and Iran's nuclear and missile capabilities, despite what the administration claims, clearly remain."

The House previously passed two war powers resolutions in an effort to limit Trump's authority to direct U.S. military actions against the Iranian regime.

However, the resolutions have only acted as a symbolic rebuke of the president's military campaign against Iran.

The War Powers Resolution of 1973, also known as the War Powers Act, is a federal law that aims to limit the authority of the president to authorize military actions without congressional approval.

The Trump administration has disputed the War Powers Act as unconstitutional and not binding.

The House voted 215-208 in favor of a war powers resolution directing Trump to end the war in Iran on June 3.

Reps. Tom Barrett (R-Mich.), Thomas Massie (R-Ky.), Brian Fitzpatrick (R-Pa.), and Warren Davidson (R-Ohio) joined all voting Democrats in supporting the resolution.

The vote drew a rebuke from Trump, who criticized the Republicans for joining Democrats to pass the resolution.

"Yesterday, in a meaningless vote, the House voted, 4 bad Republicans and all of the Dumocrats, to limit my War Powers, right in the middle of my final negotiations to end the War with the Islamic Republic of Iran. Who would do such an unpatriotic thing," Trump wrote in a June 4 statement on Truth Social.

On June 23, the Senate voted 50-48 in favor of the concurrent resolution to limit Trump's ability to direct U.S. military action against Iran.

However, the resolution was reversed the following day after Trump confronted Republican senators.

The House also voted 214-208 on July 23 to pass a war powers resolution directing the president to remove U.S. military forces from hostilities with Iran.

The same four Republican representatives joined Democrats in supporting the measure.

Just hours after the House approved the second war powers resolution, the Senate voted 47-49 against a similar resolution.

The United States launched Operation Epic Fury against Iran on Feb. 28, conducting strikes on thousands of Iranian military targets.

Trump announced a ceasefire in early April before the United States and Iran signed a memorandum of understanding outlining a plan for peace on June 17.

Following the collapse of the memorandum of understanding, the United States resumed strikes on Iran in July, carrying out nearly two weeks of daily attacks.

As peace talks have stalled over the past couple of months, the Trump administration has also launched Operation Economic Outcast to increase pressure on Iran through sanctions.

On Monday, Trump suggested that his administration was open to possibly resuming negotiations with Iran.

"The failing Nation of Iran wants to make a deal, quickly and badly," Trump wrote in a statement on Truth Social.

"I will determine whether or not the U.S.A. will choose to engage - the concept of which we are open to."

Tyler Durden Wed, 09/16/2026 - 10:50

WTI Holds Losses As Crude Production Hits Record High, SPR/Cushing Near 'Tank Bottoms'

Distillates have gone vertical again and physical markets remain incredibly tight, according to Goldman's Rich Privorotsky.

Saudi’s East-West pipeline disruption forced the suspension of Yanbu loadings and cancellation of some European cargoes, with European physical crude trading north of $130 in places yesterday.

Despite all that, there are reports of more visible signs of cargoes moving through the Strait.

"Iraq's seaborne crude oil exports from its southern Gulf terminals averaged 3.16 million barrels/day in the first 10 days of September, nearing the prewar levels of 3.335 million b/d recorded in February" - Platts.

But for now, the market is watching inventories...

API

• Crude +7.1mm

• Cushing -246k

• Gasoline +1.5mm

• Distillates +1.6mm

DOE

• Crude -640k (-1.4mm exp)

• Cushing -342k

• Gasoline +794k

• Distillates +1.58mm

US crude stocks drew down inventories for the 3rd week in a row (though only by a de minimus 640k) but drastically different from the 7.1mm build that API reported.. 

Cushing stocks fell again, putting tank bottoms in view...

The Trump admin drained the SPR once again, but the 403k draw was the smallest since the war began...

...as 'tank bottoms' loom for the reserve...

US crude production was steady at record highs...

Refiner crude runs fell in most US regions last week but remain at the highest seasonal level since 2018. Runs last week were less than 100,000 barrels a day below reaching the highest seasonal level ever, continued evidence of how hard the US fuel-making fleet is running.

WTI was trading around $103 ahead of the official data

To close, we go back to where we started with Goldman's Rich Privorotsky noting that while he admits to having no special insight in Energy, like everyone else, he's trying to focus on incentives.

"Economically, it is rational for all sides to try to find a pathway toward a deal, but I have very little certainty around timing/outcome...it does seems more is getting out of the strait then people appreciate."

With gas prices at record highs for this time of year, President Trump has lots of incentives...

Especially with the odds of a Democratic Sweep in November soaring...

China increasingly feels like an important potential catalyst.

Araghchi is in Beijing for talks with Wang Yi today, while Bessent meets He Lifeng this weekend ahead of the planned Trump-Xi summit on September 24. Iran is expected to feature in those discussions. China has meaningful economic leverage with Tehran and a direct channel into Washington... if Beijing wants to use both, that creates a credible bridge toward an off ramp.

Feels like the key potential diplomatic pathway to watch...

Tyler Durden Wed, 09/16/2026 - 10:40

SK Hynix Explores First US Memory Chip Production With Intel

Intel’s unfinished Ohio manufacturing buildout could wind up getting an unexpected tenant: SK Hynix, according to Reuters.

The Korean memory giant is exploring several ways to establish chip production in the United States, including a possible arrangement involving Intel’s Ohio facilities. One concept would give SK Hynix access to unused factory capacity there. A more ambitious structure could bring Intel, SK Hynix and major cloud companies together in a new partnership aimed at increasing the supply of memory needed for AI infrastructure.

Reuters reports that nothing has been finalized, and exactly what SK Hynix might produce in Ohio remains an open question. The company makes everything from conventional DRAM and NAND storage to high-bandwidth memory, where it has become a critical supplier to the AI industry.

The timing makes sense for both companies. AI data-center construction has created enormous demand for memory, while SK Hynix is being pushed by customers and governments to increase production. Intel, meanwhile, has billions of dollars tied up in an Ohio expansion that has taken much longer than originally planned. The first factories there are now expected around 2030 and 2031.

Building memory chips in America would carry a higher price tag than doing so in Asia, where SK Hynix already benefits from an established semiconductor ecosystem. But economics are no longer the only consideration. Washington has been aggressively trying to move more semiconductor manufacturing onto American soil, including by threatening steep tariffs on overseas producers that fail to expand U.S. capacity.

That creates an awkward balancing act for SK Hynix.

South Korea also wants more semiconductor investment at home and treats some advanced chip technologies as strategically important.

Moving production of sophisticated memory such as HBM or DRAM overseas could therefore face additional scrutiny from Seoul.

SK Hynix says it is examining different options for expanding its manufacturing base but has made no final decision regarding Intel or U.S. memory production. Intel has declined to discuss the reported negotiations while reiterating that work on its Ohio site continues.

For Intel, even an exploratory deal offers an intriguing possibility: turning part of a delayed and enormously expensive manufacturing project into capacity for one of the biggest beneficiaries of the AI boom. Investors liked the idea.

Tyler Durden Wed, 09/16/2026 - 10:25

Pivots

By Bas van Geffen, senior macro strategist at Rabobank

The situation in the Middle East remains on an escalatory path, with Houthi attacks on Saudi Arabia now a regular event. Attacks have already damaged the east-west pipeline, which allowed Saudi Arabia to bypass the Strait of Hormuz.

The damage to the pipeline increases Iran’s leverage. It forces Saudi Arabia to pivot back to oil exports through the Strait of Hormuz. Bloomberg reports that the country is already increasing sales of spot cargoes for ship-to-ship delivery in the Gulf of Oman, which means that the Saudis are taking the responsibility and risk of transporting the crude through Hormuz.

Saudi Arabia has been loading 8.7 million barrels of crude oil today (2026-09-15) at its east coast terminals.#OOTT #IranWar #Tankers pic.twitter.com/Md6iM6ehgi

— TankerTrackers.com, Inc. (@TankerTrackers) September 15, 2026

Further supply risks follow from the Houthis taking key areas around the Bab el-Mandeb strait and rumors they have laid mines in the waterway, which puts new constraints on tanker movements. Following the unfolding escalation in the Middle East, we have updated our energy forecasts.

The energy market had already shifted higher on the news of re-escalation, and prices of crude and refined products are drawing new attention from motorists and lawmakers. Yesterday, US Senate Majority Leader Thune said he is “open to exploring” a diesel export ban if that helps ease domestic price pressures. If this idea gets more traction, it would predominantly be at the cost of Europe and South America. Or could these new supply chain disruptions be the catalyst for more countries to send military assets to the region?

The energy supply shock is also creating an increasingly difficult situation for central banks. Interest rates continue to rise in tandem with energy prices. Our US strategist still believes that the nature of the shock does not warrant a hike, but a credibility problem is pushing the Fed into a corner.

Markets expect much more than a one-and-done hike, but the same goes for expectations embedded in curves where central banks have shown a more proactive response. Yesterday, EUR money markets priced more than four additional rate hikes on top of the two the ECB has already delivered.

Policymakers probably do not mind some financial tightening that follows from rate hike expectations, but markets have probably gotten a bit too far ahead of the central banks – which are increasingly struggling to balance inflation and growth risks, and growing uncertainty.

If rate setters do not give any pushback, the market could wag the central bank into further rate hikes and more restrictive policy than they may deem necessary. Yet, pushing back is difficult. Inflation risks remain to the upside, and central bankers don’t want to sound complacent since this could affect inflation expectations.

In her press conference last week, ECB President Lagarde already refused to reaffirm that markets “understand the ECB’s reaction function well,” which we construed as a hint that the market may be moving faster than the policymakers like. Even though energy-driven inflation is set to increase further, price pressures are still mostly driven by that supply shock and there is no evidence that inflation is spreading.

Yesterday, anonymous sources “leaked” to MNI News that any next move would probably not be in October, but in December. Market-implied odds for the October meeting dropped from a likely hike to a coin toss after the news broke. And interestingly, the story also suppressed pricing for the next 12 months – suggesting that the pushback helped to dampen expectations of a more forceful response across the board. We imagine there may be more leaks in the coming weeks to at least lessen the expectations for the October meeting.

Likewise, the market pared back expectations for the Bank of England somewhat after today’s inflation data. UK inflation was in line with expectations, with higher energy and fuel prices the main cause of the rise to 3.1% y/y. Beyond that, there is very little that may alarm the MPC ahead of their meeting: core CPI and services CPI are both unchanged, and food CPI is also not doing what was expected.

Combined with yesterday’s labor market report, which showed slack continuing to rise, and survey evidence from the DMP that showed relatively muted selling price expectations, this all suggests that second-round risks remain contained. The data clearly support a hold tomorrow at 3.75%, which is already around 50bp above economists’ estimates of the UK’s neutral rate.

Whereas the ECB provided some hints about their next move, the central bank has yet to provide clarity on its leadership. The central bank’s staff have reportedly urged President Lagarde to state whether she does or does not intend to serve her full term, so that uncertainty does not undermine the institution. Rumors of Lagarde’s early departure still rampant, and Ms. Schnabel has also been tipped to leave early to fill a vacancy at the IMF.

In addition to personal motivations, the prospect of Le Pen winning the French presidential elections is fuelling speculation that European leaders want to fast-track key decisions to avoid that the Eurosceptic can delay or derail them.

Indeed, France may have started horse trading for the three soon-to-be-vacant seats in earnest. Reuters reported that President Macron may support Klaas Knot’s candidacy for ECB president if the chief economist job goes to a French candidate. We can certainly name a couple of French economists who would be suitable. However, Germany may also eye the economist role instead of Schnabel’s current focus on market operations.

Internal divisions already complicate decision making on multiple fronts. European diplomats poured some cold water on PM Carney’s hopes to strengthen the ties between Canada and the bloc, to strengthen the countries’ position versus the US and China. Unsurprisingly, the countries that rely most on NATO’s deterrence are wary of the damage this could do to EU-US ties.

Tyler Durden Wed, 09/16/2026 - 10:05

Diesel Crack Spread Explodes To Record As Russia Weighs Longer Export Ban, US Eyes Its Own

Diesel futures and refining spreads climbed to record highs as worsening supply disruptions in the Gulf and Russia tightened availability of the industrial fuel that powers the global economy.

Potential export restrictions, or at least extending risk, are compounding the squeeze: Moscow is reportedly considering extending its diesel export ban, while Senate Majority Leader John Thune told reporters Tuesday he was "open to exploring" a US diesel export ban.

Nymex heating oil futures, the US benchmark for diesel, jumped 6.1% Tuesday to their highest settlement in records dating to 1986. European gasoil futures climbed 6.2% to a record in data going back to 1989. 

The squeeze was even more severe in refining spreads. The US heating oil crack, which measures the difference between fuel and crude prices, surged to $117 a barrel on Wednesday morning, the highest level in Bloomberg data going back to 2009.

Moves in diesel and refining spreads show the energy shock isn't necessarily in crude available on global markets but is, in fact, festering deep inside the industrial fuel market as a global refining crisis. 

Russia is considering extending its diesel export ban through October, potentially adding pressure as the Northern Hemisphere approaches winter.

Barclays refining and midstream analyst Theresa Chen commented to clients on Tuesday about Thune's comments on a potential US diesel export ban. She said, "Given renewed discussion surrounding a diesel export ban, we discuss the potential implications across our refining coverage. We continue to view the possibility of an export ban as both detrimental to the US refining complex and unlikely to provide the intended price relief."

At the start of the week, Bloomberg Intelligence senior commodity strategist Mike McGlone warned that the diesel price shock echoes similar moves gasoline made during the 2008 energy shock.

Tyler Durden Wed, 09/16/2026 - 09:45

Rep. Mace Demands Public Execution For Lindsay Clancy

Authored by Steve Watson via Modernity News,

Speaking to TMZ DC on Monday, the South Carolina Republican called Clancy a "serial killer" and demanded the death penalty as a public spectacle.

"Her children are dead. She should be dead too," she said. "She should get the death penalty. It should be public. It should be a public execution."

I didn't know you could bleep the word retarded?

— Nancy Mace (@NancyMace) September 15, 2026

When the reporter asked what that would look like, Mace did not retreat. "It could be by a firearm; it could be the electric chair. I don't really care. Not an injection."

Pressed again on whether she wanted Clancy in the electric chair in front of a crowd, she answered, "A hundred percent." Then she put the point in the plainest English available: "She's a serial killer. She should get the electric chair. She should get the death penalty. It should be public. It should be a warning to women everywhere. You don't kill your kids."

She later posted on X that Clancy "doesn't deserve to live." After TMZ bleeped a slur she used for Clancy's lawyer, she posted again: "I didn't know you could bleep the word retarded?"

Massachusetts has not carried out an execution since 1947. Its highest court struck down the state's capital statute in 1984. First-degree murder there means life without parole.

Clancy's lawyer, Kevin Reddington, has spent the trial arguing postpartum psychosis and a lack of criminal responsibility for the murders. Prosecutors said she cleared the house, chose a method (strangulation) that worked on the children, and chose a different method for herself that failed.

After 21 days of testimony, more than 80 witnesses and roughly 38 hours of deliberations, the jury hung. Judge William Sullivan declared a mistrial on September 4. The defense has said the split was 11-1 for not criminally responsible.

One juror - described in coverage as a Black man in his 30s - would not sign that finding. Reddington tried to have him ejected. The judge refused. The Massachusetts Supreme Judicial Court denied an emergency appeal. Outside court, Reddington said the other jurors had been "robbed by one man, for whatever his agenda was," and added, "I hope that guy can sleep well at night."

In mid-August, hundreds of women in pink gathered outside Plymouth Superior Court for a "Stand in Peace." They cheered when Clancy's transport arrived. Organizer Renee Kimball said, "I think that every one of us women believe that it could be any one of us." Another supporter put it more bluntly on camera: "It could be me."

Online, the same cohort poured money into a GoFundMe for Clancy's parents that raced toward seven figures. TikTok mothers filmed themselves "relating" to the confessed killer while holding their own infants. Some insisted Patrick must have done it, in spite of Lindsay's admissions, her lawyer's opening, the 911 tape and the lawsuit that says she killed the children.

After the mistrial, Patrick Clancy's lawyers said he and his family had been hit with "a relentless, escalating and destructive defamation campaign" from "minor celebrities, so-called influencers and outright conspiracy theorists" selling the lie that the father was involved.

Attorney Howard Cooper said the smear sat "at a fever pitch," with real threats to Patrick's reputation, livelihood and life. "Enough is enough - this spread of blatant and baseless falsehoods must stop," Cooper said.

Law enforcement was notified. Patrick has said before that he forgives Lindsay and calls her ill rather than evil. That distinction has not interested the people targeting him.

While the Clancy jury was still out, an Illinois mother named Corie Walsh hanged her 2-year-old son, Barrett, from a basement rafter in Frankfort. She told police the boy was the "devil" and the "anti-Christ." Witnesses said she had become "very invested" in the Clancy trial and was still texting friends about it hours before the child was found.

Her lawyer reached for the same word the pink shirts have been rehearsing: psychotic episode. Prosecutors said she spoke of harming the remaining children and her husband.

Then Oprah flew in for a "watershed" taping branded as understanding postpartum psychosis. A doctor in the room demanded "the same passion for people who don't look like Lindsay," complained about "melanin" and "privilege," and asked the audience to keep "the pink shirts and the energy" for other women in prison "for this same thing." The room cheered.

When a young woman stood up and said, "I do believe she's a murderer," Oprah answered: "After all you've heard today?"

That is the moral arithmetic this case has been selling. The children are scenery. The mother is the cause. The man who will not play along is the problem.

Last week Reddington went on Good Morning America and asked President Trump to pardon his client. "Mr. President, I would hope that you would consider this young lady and the person she is, what she's been through, and consider a pardon," he said. A president cannot wipe away a Massachusetts murder case. Reddington knows that. Mace called the stunt "nasty" and "ugly."

Trump has not played chaplain to the fan club. After the mistrial he said Clancy "did a horrible, horrible thing," that "there'll be a price," and that it would be "mental institution or jail or something."

Asked again after the pardon plea, he said it is "a state situation, not a federal one." "There is no winner there," he added. "There's no win no matter what you do. Three children are dead."

Mace added child rapists to her list of public executions and asked the only follow-up that matters in a culture that medicalizes everything except the bodies in the basement: "If people can get away with murdering children, what else can they do? ... There are no rules. There are no laws."

Tyler Durden Wed, 09/16/2026 - 08:45

WTF Chart Of The Day: Retail Sales Record High, Consumer Sentiment Record Low

Following last month's ugly decline ("see the consumer is getting crushed because of Trump"), August's retail sales is expected to rebound strongly ("see, Trump's war is causing Americans to spend more on gas and less on Louboutin shoes"). BofA's omniscient analysts agree with consensus, seeing a 0.8% MoM jump...

Quick reality check - July retail sales weakness was driven by a plunge in non-discretionary spending by higher income households...

So, what did August bring?

Headline US retail sales rose a shocking 1.2% MoM - the biggest jump since March, pulling sales up 6.0% YoY...

...driven by a big reversal in non-store retailer (online) sales...

Core (Ex-Autos & Gas) soared 1.4% MoM - its strongest month since Sept 2024

The Control Group - which feeds into the GDP calculation - jumped almost triple expectations (+1.4% MoM vs +0.5% exp).

Under the hood, Building Materials Sales were the only component that declined MoM...

Finally, Real retail sales - admittedly roughly adjusted for CPI - continues to trend higher...

"August’s retail sales mirror the strong payrolls report, dispelling worries about a slowdown anytime soon. Even if higher prices are making consumers unhappy, they’re not doing much to hurt the economy yet. Higher important and export prices also showed inflationary pressures," says David Russell, head market strategist at TradeStation.

"The data is hawkish and the case for a rate hike keeps growing."

So, the consumer is strong and spending after all... despite near record low sentiment?

Real data versus Democrat-biased sentiment? Is it really worse than the very trough of the COVID pandemic?

Tyler Durden Wed, 09/16/2026 - 08:38

Futures Rise, Oil And Yields Dip Ahead Of First Fed Hike In Three Years

Futures are higher into Fed Day where consensus is for a 25bp hike, the first since July 2023, with unknown levels of communication, and the question is what the dot plot shows (see preview here). S&P 500 futures are up by 0.3%, finding relief after days of selling as traders wait Kevin Warsh to deliver an expected interest-rate hike that will help ease fears that inflation may spiral. Nasdaq futures are up 0.6%, with Intel shares jumping 3% in pre-market trading on a report it’s in talks with Korea’s SK Hynix on making memory chips in the US; Software is lower; cyclicals are outperforming defensives as the AI theme is pushing both Tech and Industrials higher. As JPM notes, the market looks to climb the latest Wall of Worry across Fed, AI, and Iran-induced energy inflation. Bond yields are down 2-3bp with USD flat. Commodities are higher led by Metals (Precious over Base) and Ags while crude/fuels are seeing some profit-taking (don't expect it to last). US economic data slate includes September New York Fed services business activity, August retail sales and import/export price indexes (8:30 a.m.), July business inventories and September NAHB housing market index (10am) and July TIC flows (4pm). 

In premarket trading, Mag 7 stocks are mostly higher: Meta shares are up 0.6% after Citi opened a 90-day upside catalyst watch on the Facebook parent, seeing a positive roadmap ahead, especially on AI-related products (Alphabet +0.02%, Amazon +0.2%, Apple +0.1%, Microsoft -0.3%, Nvidia +0.4%, Tesla +0.1%)

• Cryptocurrency-linked stocks are soft a day after the Clarity Act’s failure in a procedural vote sent them tumbling.
• Alvotech (ALVO) rises 7% as Barclays double upgrades the biotech company to overweight ahead of the FDA’s upcoming decision.
• Intel (INTC) is up 3% after Reuters reported that SK Hynix is in talks with the chipmaker about a deal that ​would see it manufacture memory chips in the US for the first time.
• JB Hunt (JBHT) slides 11% after the trucking company flagged rising costs and issued a rare earnings warning at a Morgan Stanley conference.
• Rocket Pharmaceuticals (RCKT) rises 4% after Needham upgraded the drug developer to buy, citing the FDA’s alignment to continue its rare-disease trial.
• SimilarWeb Ltd. (SMWB) gains 4% after Needham upgraded the web services firm to buy, citing recent meetings with the company’s management team.

In other corporate news SK Hynix is in talks with Intel about a deal that ​would see it manufacture memory chips in the US for the first time, Reuters reports. Brookfield has agreed to buy Reliance Worldwide in an all-cash deal that values the Australian plumbing supplies company at around A$4.1 billion ($2.9 billion). OpenAI is holding early talks with investors about a fresh funding round that would value the company at more than $1.2 trillion ahead of an IPO.

Bond markets are steady and stocks are nudging higher as traders prepare for the Federal Reserve decision later.

The Fed is expected to lift rates for the first time since 2023, with policymakers increasingly doubtful that inflation will cool sufficiently without tighter policy (see our preview here). Spiking oil prices have added to fears that price pressures are accelerating, contributing to a rise in bond yields to the highest in decades and weighing on stocks.

Money markets see a more than 90% chance of a quarter-point hike, with another move fully expected by December. The combination of above-target inflation, rising energy prices, strong employment and a robust economy all call for policy tightening, wrote Kevin Thozet at Carmignac.

“The Federal Reserve has little choice but to hike rates on Wednesday, especially since the bond market has been signaling for weeks that higher rates are warranted,” said Carol Schleif at BMO Wealth Management. “The stock market would be disappointed if the Fed didn’t hike.”

The Fed’s guidance has “boxed it” into a rate increase that may do relatively little for inflation, according to Bloomberg Economics. The hot August CPI report cemented market expectations of a hike, though much of the inflation gain was due to a single category, wireless phone services. At the same time, Chair Warsh’s preferred gauge suggests inflation breadth has narrowed. The Fed’s quarterly outlook will prove more interesting, with updated economic forecasts and interest-rate projections. However, don’t hold your breath for Warsh’s input as he didn’t join in when officials last submitted expectations in June.

Iain Stealey, fixed-income international chief investment officer at JPMorgan Asset Management, said he would be watching for dissent among policymakers, even though his base case is that officials will put up a united front.

“If you started to see some dissenters it might call into question how much credibility they’ve got around this sort of fight against inflation,” Stealey told Bloomberg Television.

Energy could be back in the headlines later, with the EIA crude oil inventory report due at 10:30 a.m. New York. Norfolk Southern’s CFO compared fuel prices to something out of “science fiction” as the rail freight company warned of a huge cost headwind from diesel.

The cost of hiring VLCC tankers to ship US crude to Asia has surged to fresh records this week. The energy shock is becoming a political hot potato — from natural gas prices caught in a perfect storm to AI becoming a midterm test as data centers suck up power supplies. BNEF expects 2035 power-sector gas demand to jump around 50% from 2025 levels.

Debates around AI continue at pace. BlackRock’s Larry Fink warned delays in the build-out of AI because of public opposition will make the technology the “domain of large firms,” limiting access. Meanwhile, South Korea’s deputy prime minister said the country can’t afford to slow down the pace of AI development. Intel Corp. outperformed in US premarket trading, rising 3%. The firm is in talks with SK Hynix Inc. for the South Korean chipmaker to produce memory chips in the US for the first time, Reuters reported. Software makers and oil producers lagged.

Equity markets will remain choppy over the next few weeks until earnings season arrives, giving investors something more fundamental to trade on, said BMO’s Schleif. 

“In the meantime, investors will only have the angst kicked up by midterm election rhetoric and inflation data to watch for hints about whether or not we might see additional rate hikes,” she said.

Elsewhere, the US and China are discussing slashing tariffs on goods including American energy and agricultural products ahead of the leaders’ summit next week, while Nvidia’s CEO is slated to attend Trump’s state dinner with China’s Xi.

Retail sales data before the US market open will likely give the Fed little reason to worry about demand, according to Bloomberg Economics. The August report is expected to show a strong rebound in nominal sales, with higher prices and seasonal effects adding to the strength, wrote economist Eliza Winger.

The Stoxx 600 rises 0.2% as banks bounced back from two days of declines, with miners and utilities leading the way, while autos and consumer stocks are the laggards. Here are the biggest movers Wednesday:

• Soitec gained as much as 14% as JPMorgan upgraded the shares to overweight and more than doubled the price target, saying raised expectations for the company’s photonics business more than compensate for concerns in mobile
• Barratt Redrow shares rose as much as 9%, the most since April, after the homebuilder delivered annual adjusted profits ahead of expectations
• European banks advanced after two days of declines as JPMorgan forecast third-quarter gains for trading revenue and investment-banking fees, a contrast from Bank of America’s warning earlier this week
• Engcon gained as much as 7.9% after Danske Bank initiated coverage of the Swedish construction equipment firm with a buy rating, saying it is well-positioned to benefit from a recovery in demand as it refocuses on core European markets
• ISS gained as much as 3.6% after Danske Bank raised its recommendation on the Danish facility services firm to buy from hold, saying it is “well prepared to continue its current strong organic growth trajectory, while also being in a position to lift margins further.”
• Marks & Spencer fell as much as 4.7% to its lowest since June after BNP Paribas cut its 1H profit before tax estimates
• Moonpig shares fell as much as 8.5%, weighed down by the UK online gift retailer’s comments on experiences revenue and broader weakness in the country’s retail stocks after inflation rose to a five-month high
• WH Smith shares slipped as much as 4.7%, before paring the drop, after the travel retailer reduced its profit guidance amid margin pressures

Earlier, Asian stocks rose, helped by a rebound in the heavyweight technology sector, with attention turning to the Federal Reserve’s highly anticipated rate decision that’s set to influence the near-term path for global equities. The MSCI Asia Pacific Index was up 0.6%, poised to snap a four-day losing run. Chipmakers SK Hynix, Samsung and MediaTek were the biggest boosts. A subgauge of tech names climbed 1.3% to be the top performer among sector groups. Sentiment also got a boost as oil dipped, though inflation concerns remain elevated with Brent still trading around $108 a barrel. The Fed is widely expected to raise interest rates, marking the first increase since 2023. Stocks are gaining because investors “know there is going to be a move — the Fed aren’t exactly catching investors off guard here,” said Josh Gilbert, lead APAC analyst at Etoro. “A hike looks likely, so the focus shifts to whether this is a one-and-done move.”

In FX, the Bloomberg Dollar Spot Index was little changed as traders see the Fed raising borrowing costs for the first time since 2023 to address inflation risks that have risen from booming capital investment and higher energy prices

• USD/JPY +0.1% to 154.92
• EUR/USD little changed at 1.1551 
• GBP/USD little changed at 1.3481 

In rates, treasuries are little changed and the picture in Europe is mixed, with a small rise in yields in Germany but a decline in the UK following inflation data.  Treasuries hold small gains, keeping 10-year yields just below 5%, ahead of an expected Fed rate hike at 2 p.m. New York time and Chairman Warsh’s news conference at 2:30 p.m. Falling oil prices are a main driver after a US industry report pointed to a rise in stockpiles. Gilts outperform led by front-end tenors after UK August inflation data sparked a drop in expectations for Bank of England rate hikes.  US yields lower by 1bp to 3bp with curve spreads narrowly mixed; UK 2-year yield is lower by nearly 9bp, 10-year by about 6bp. IG dollar issuance slate is empty so far and expected to stay muted by the impending Fed decision. Six offerings totaling about $9 billion were priced Tuesday with issuers paying about 3bps in new issue concessions on deals that were 6.3 times covered. Treasury auctions resume Thursday with $19 billion 10-year TIPS reopening

In commodities, oil is lower for the session, with Brent is just below $108/barrel, while gold prices have rallied back above $4,300/oz and Bitcoin is slipping below $76,000. WTI crude futures around $103 a barrel are down more than 2% from highest closing level since mid-May, supporting bonds globally; Brent crude fell toward $107 after rising 4% over the previous two sessions

US economic data slate includes September New York Fed services business activity, August retail sales and import/export price indexes (8:30 a.m.), July business inventories and September NAHB housing market index (10am) and July TIC flows (4pm)
Fed speaker slate resumes Friday with Governor Bowman (9:30am) and Kansas City’s Schmid (11:45am) scheduled so far

Market Snapshot

Top Overnight News

• Markets Anticipate Fed’s First Rate Hike Since 2023: WSJ
• Warsh's words may matter more than the anticipated Fed rate hike: RTRS
• Bond traders have piled into bearish positions ahead of Wednesday’s Federal Reserve meeting, betting that the Treasury selloff driving yields to their highest in almost two decades will continue: BBG
• Saudis pound Yemen as Houthis solidify gains in new theatre of Middle East war: RTRS
• U.S. Is Burning Through Its Supply of Interceptors to Counter Iran’s Attacks: WSJ
• European Commission President Ursula von der Leyen proposed Canada becoming the first associate member of the European Union: BBG
• OpenAI Considers Pre-IPO Funding Round at More Than $1.2 Trillion Valuation: WSJ
• OpenAI's rogue agents probed Hugging Face two months before major hack: RTRS
• Apple Finally Built a Smarter Siri. It Still Hasn’t Caught Up in the AI Race: WSJ
• Even as Donald Trump blasts Anthropic PBC’s Dario Amodei over his call to hit the brakes on AI development, the two agree on the need to prevent China from catching the US. But doing that remains difficult in practice: BBG
• The UK’s strategy to prop up its long-maturity debt by selling less in the wake of the Liz Truss-era crash is failing to pay off.
• American Businesses Have No Idea How to Set Prices Right Now: WSJ
• Deep in Trump country, a revolt against corporate money could reshape political spending: RTRS
• Former Kosovo president Thaci sentenced to 25 years for war crimes: RTRS
• Support acts quit Ed Sheeran tour in solidarity with pro-Palestinian rapper: RTRS

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed in choppy trade, albeit with sentiment gradually improving, following the declines on Wall St and recent upside in oil, while participants now await the major central bank rate decisions, beginning with the FOMC later. ASX 200 eked slight gains with strength seen in the commodity-related sectors and with sentiment also helped by M&A news after reports that Brookfield is to acquire Reliance Worldwide for USD 2.8bln, although gains are limited amid weakness in tech, real estate and consumer stocks. Nikkei 225 traded indecisively after mixed data from Japan, in which Exports and Imports topped forecasts, but Machinery Orders disappointed. KOSPI edged higher in two-way trade after swinging between gains and losses, while the tech heavyweights have shown some resilience with SK Hynix mildly underpinned after its union approved the tentative wage agreement in a re-vote. Hang Seng and Shanghai Comp were mixed in range-bound trade, with the Hong Kong benchmark lacklustre as the special administrative region unveiled its first-ever Five-Year plan to align more closely with China, which some fear could be a step away from a free market, while the mainland pared initial losses with the PBoC upping its liquidity efforts.

Top Asian News

• Hong Kong unveiled its first Five-Year Plan to align more closely with mainland China and stated it will adhere to the one country, two systems principle, as well as strengthen the role of the global offshore renminbi business hub. Hong Kong will hold an executive-led system, adopt a holistic approach to development and security, while it will attract China financial firms to the city for business and develop a commodity trading ecosystem. Furthermore, it aims to speed up the Northern Metropolis development and targets GDP growth within a reasonable range in the Five-Year Plan.
• PBoC Governor Pan said slower loan growth may become a 'new grateful' and that slower credit growth can stabilise debt levels, while China will support local government financing vehicles to resolve debt risks. Furthermore, Pan said they will improve the short-term interest rate adjustment mechanism and further refine policy rates, as well as strengthen the role of policy interest rates.
• China's Defence Minister said global security governance must be strengthened and they must build an equal and orderly multi-polar world, as well as find a new path to security featuring collaboration rather than confrontation and should uphold multilateralism. Furthermore, he stated that they support regional countries to decide their own future without external interference, while risks should be anticipated and diffused early to prevent minor friction turning into major disputes.

European bourses (STOXX 600 +0.3%) are firmer across the board, rebounding from Tuesday's losses. The pullback in bond yields have helped support equities, with energy prices also lower today. Constructive commentary by Iranian FM Araghchi adds to the positive tone, stating that the MoU with the US is in effect and looks forward to returning to a diplomatic solution. Sectors lack a clear bias. Basic Resources top the sector pile, with Utilities and Banks rounding out the sector gainers. To the downside lie Autos, with Optimised Personal Care and Media the sector laggards.

Top European News

• EU Commission President von der Leyen delivered her annual State of the Union address. On the trade front, she said the EU's trade deficit with China has reached its tipping point and are engaged with dialogue with China to rebalance trade, however warns of the use of all tools possible to rebalance trade. With Canada, she announced that they will create a common prosperity and economic security space covering manufacturing, technology, energy, AI, defence and the Arctic and proposed that Canada becomes the first associate member of the EU. For EU defence, she said that it is time for an Article 4-style EU security protocol and announced plans to establish a new European Instrument for military strategic enablers. She also announced that the EU will establish a new European cooperation to help obtain and stockpile critical raw materials.
• UK Chancellor Healey is said to be considering budget tax rate on higher stakes slot machines, according to FT.
• Senior German lawmaker Frei said that an energy price relief must come quickly and thinks that energy relief measures should come into effect in October, adding that lower sales tax on gasoline would be an obvious step to take, RTL TV reported.
• Germany's Economy Ministry said it is continuously assessing the situation and maintaining ongoing dialogue with all market participants in the natural gas sector and welcomed SEFE's intention to step up efforts to fill gas storage.

FX

• G10s trade tentatively against the USD ahead of a key FOMC policy decision later today. EUR and JPY hold marginally afloat, whilst the Loonie slightly lags vs peers.
• DXY currently holds towards the lower end of a 99.53-99.73 range. Action has been lacklustre throughout the overnight session and for much of the European morning, with traders ultimately awaiting Retail Sales and the Fed policy decision later today. The former will likely spark little reaction given the close proximity to the Fed. On that note, expectations are for a 25bps hike; attention will be on if it is accompanied with hawkish rhetoric/guidance. This could either be provided through a hawkish set of SEPs, a unanimous hike or overt hawkish language at Warsh’s presser. At least one of these would likely be required to give bond traders enough confidence in market stability, to allow yields to edge off highs.
• Note: A full Fed preview can be found on the Newsquawk Research Suite.
• GBP had regional inflation metrics to digest this morning. Whilst headline rose from the prior (in-line), Core Y/Y and Services was unchanged from the previous month, indicating no signs of second-round effects. Therefore, the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. Following the data, Cable saw some two-way action, before eventually moving lower as traders curtailed their rate hike bets.

Fixed Income

• Global fixed benchmarks are mixed. USTs (-1 tick) are essentially flat, whilst Bunds (-6 ticks) are under mild pressure. Gilts (+38 ticks) outperform vs peers, following the region’s inflation metrics, which keeps a hold at tomorrow’s BoE meeting in play.
• USTs are trading lacklustre within a 105-27+ to 106-02+ range. Ultimately, focus remains on the FOMC announcement later today, where rates are expected to be raised by 25bps. Attention for bond traders will be on whether there is a hawkish aftertaste (decision aside), which would likely allow yields to ease off best levels, given that hawkish commentary would signal that the Fed is offering some stability. Currently, the US 10-year sits around the 5% mark, and towards multi-decade highs.
• Gilts outperform vs peers, benefiting from lower energy prices and following the region’s inflation report. On that point, whilst headline rose from the prior (in-line), Core Y/Y and Services were unchanged from the previous month; there is also a lack of evidence of second-round effects. Therefore, the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. As such, traders curtailed their bets of a rate hike tomorrow, with money markets assigning a c. 30% chance of such a move.
• Germany sells EUR 2.12bln vs Exp. 2.5bln 3.40% 2047 and 2.90% 2056 Bund.
• Australia sells AUD 1bln in 3.75% April 2037 bonds: b/c 3.85x, avg. yield 5.3910%.

Commodities

• WTI Oct and Brent Nov futures are softer after yesterday’s renewed rally. WTI trades around USD 104.90/bbl within a USD 103.76-105.63/bbl range (vs yesterday’s USD 101.21-106.75/bbl range), while Brent trades around USD 108.43/bbl within a USD 107.15-108.59/bbl range (vs yesterday’s USD 105.10-109.45/bbl range). Energy benchmarks have come under modest pressure in recent trade following constructive commentary by Iranian FM Araghchi, stating that the MoU with the US is in effect and looks forward to returning to a diplomatic solution.
• Dutch TTF was initially flat but is now posting mild gains. The Middle East conflict continues to sustain concerns around regional energy flows and European supply security. The contract trades around EUR 80/MWh within a EUR 79.93-83.28/MWh range at the time of writing, with Europe also looking ahead to the winter period.
• Precious metals are firmer as the pullback in oil and Treasury yields provides some relief ahead of today’s FOMC decision, where markets lean heavily towards a 25bps hike. Spot gold has reclaimed USD 4,300/oz and trades around USD 4,330/oz within a USD 4,276-4,341/oz range, breaking above yesterday’s USD 4,317/oz high (vs yesterday’s USD 4,262-4,317/oz range). The Fed remains the key catalyst, with updated projections and Chair Warsh’s guidance set to provide the space with some impetus.
• Base metals are modestly firmer as risk sentiment improves and Treasury yields ease ahead of the Fed, although the fundamental backdrop remains less supportive, with this week’s Chinese activity data showing continued weakness in domestic demand despite stronger industrial production, albeit upping calls for support. 3M LME copper resides in a narrow range above USD 14k/t, currently within USD 14,074.40-14,216.15.
• US Private Inventory Data (bbls): Crude +7.1mln (exp. -1.8mln), Gasoline +1.5mln (exp. -1.2mln), Distillate +1.6mln (exp. +0.8mln), Cushing -0.2mln.
• Russian plans to expand its diesel-export ban through October, according to Russian press.
• CBRT Governor said global central banks are rediscovering gold.
• Aluminium Bahrain CEO Al Baqali said damage to the smelter from the Iranian strike in March has already been repaired.
• A gold mine collapsed in West Kordofan, Sudan, on Sunday, according to sources.

Trade/Tariffs

• US is pressuring Mexican officials to accept new rules for exports of AI hardware to prevent Chinese companies and other foreign firms from circumventing tariffs, according to WSJ.

Geopolitics: Iran

• Iranian FM Araghchi said "The memorandum of understanding with America is in effect and we want to return to a peaceful solution", adding that Iran is not interested in continuing the conflict and looks forward to returning to a diplomatic solution.
• Iran's Major General Rezaei said "there will be no negotiations until Iran's conditions are met".
• IRGC Navy political deputy said no vessel in the Persian Gulf, Strait of Hormuz or Sea of Oman moves outside the supervision of the IRGC Navy, and added that Iran can target any vessel anywhere if it wishes, IRNA reported.
• Iran said only a single-digit number of ships are currently passing through the Strait of Hormuz, disputing US claims that traffic through the strategic waterway is increasing. It was separately reported that Strait of Hormuz vessel transits fell to four, according to data.
• Pakistan's military spokesperson said the Mekkah agreement with Saudi Arabia and Turkey will not affect Pakistan's strategic relationship with Iran, and reiterated that the pact is defensive in nature.
• China's Foreign Minister met with their Iranian counterpart. China encouraged Iran and the US to exercise rationality, urged all parties to take effective measures to reopen the Strait and supported dialogue between Iran and Gulf states.
• Explosions were heard in Iran's Qeshm which originated from the sea, according to IRNA.

Geopolitics: Other

• Ukrainian President Zelensky said if Russia is prepared to agree to an energy ceasefire, it must bar any attacks on energy infrastructure in any form.
• Ukrainian media reports explosions in Kyiv, while Polish military aircraft have been activated amid Russian strikes on Ukraine.
• US mulls purchasing warships from Japan and South Korea to counter China, according to Nikkei.

US Event Calendar

• 7:00 am: Sep 11 MBA Mortgage Applications, prior -2.7%
• 8:30 am: Aug Retail Sales Advance MoM, est. 0.8%, prior -0.6%
• 8:30 am: Aug Retail Sales Ex Auto MoM, est. 0.55%, prior -0.3%
• 8:30 am: Aug Import Price Index MoM, est. 0.5%, prior -0.4%
• 2:00 pm: Sep 16 FOMC Rate Decision est. 3.75%, prior 3.5%
• 4:00 pm: Jul Total Net TIC Flows, prior 133.5b
• 4:00 pm: Jul Net Long-term TIC Flows, prior 172.7b

DB's Jim Reid concludes the overnight wrap

It’s been a familiar story for markets over the last 24 hours, with a fresh selloff as higher energy prices led to mounting fears about stagflation. Various oil supply issues were the main catalyst, which collectively pushed Brent crude (+2.90%) up to its highest closing level since May, at $108.75/bbl. And in turn, that kept up the pressure on bonds, with the 10yr Treasury yield (+1.5bps) breaking above its 2023 intraday peak in trading, to briefly reach a post-2007 high of 5.04%, before falling back to 5.00% by the close. All that meant it was a rough day for equities too, with the S&P 500 (-0.45%) falling to a 6-week low. To be fair, markets have begun to stabilise a bit overnight, but the Fed are now set to take centre stage, with markets pricing in a 94% chance this morning that they deliver their first rate hike today since 2023. 

At the Fed’s last decision in July, markets went into that pricing a roughly 30% chance that the Fed would hike. But even though the decision to hold was broadly expected and in line with the baseline market expectation, there was still a sharp steepening in the Treasury yield curve afterwards given the relative lack of detail from Chair Warsh. Since then, however, Warsh delivered a fairly hawkish message at Jackson Hole in late August, saying that “underlying trends” in inflation had not meaningfully improved, and that if underlying inflation wasn’t getting back to target, then they had “work to do”. So that raised expectations that the Fed would hike at this meeting, which was solidified by the upside surprise in the August jobs report, along with Friday’s core CPI print, which came in higher than expected at +0.3%. 

Our US economists are also expecting that the Fed will hike today, as growth remains solid, the labour market has rebounded, and PCE inflation has demonstrated limited evidence of falling back to target. Moreover, forward-looking indicators suggest the inflation overshoot is likely to persist for some time. Nevertheless, with a hike mostly priced in by markets, the key question for them is how Chair Warsh and the latest dot plot frame the tightening cycle. Their view is that forward guidance is unlikely, but they think the median dot should show another rate increase this year, with several officials projecting more than that. 

Ahead of the Fed’s decision, there was no let-up in rising oil prices, as fresh supply fears continued to push prices higher. First, Reuters reported that shipping industry sources had said that oil loadings at the Yanbu export terminal in Saudi Arabia had been suspended, leading them to cancel September loadings to some European refiners. And separately, we also had some headlines from Libya that output at three oil fields had been suspended. So that added to fears about wider supply disruption, particularly with no sign of the Strait of Hormuz reopening soon either. In turn, that meant Brent crude (+2.90%) moved up to $108.75/bbl by the close, its highest level since May, while WTI crude (+4.38%) saw an even larger increase to $105.83/bbl. And in a sign that investors were pricing in longer disruption as well, the 6-month Brent future (+1.65%) moved up to its highest since May as well, at $92.06/bbl. 

That inflation momentum helped to push up yields to fresh multi-year highs around the world. So in the US, the 10yr yield (+1.5bps) finally closed above 5% for the first time since 2007, at 5.00%. And in trading, it also managed to hit a post-2007 intraday high of 5.04% as well. Moreover, the 10yr real yield (+1.3bps) moved up to a post-2008 high of 2.62%, so this wasn’t just an inflation story. Meanwhile for other maturities, the 30yr yield (+2.2bps) also edged up to a post-2007 high of 5.37%, whilst the 2yr yield (+0.4bps) saw a very modest increase to 4.66%. Long-end yields also weren’t helped by a weak 20yr auction that saw $13bn of bonds issued +2.0bps above the pre-sale yield at 5.42%. 

That steepening pattern was even clearer in Europe, partly because investors pared back the chance of an ECB hike in October. So yesterday, market pricing for an October hike came down from 69% on Monday to 56% by the close. That meant front-end yields also came down a bit, with the 2yr German yield (-0.9bps) falling back to 3.25%. But for 10yr yields it was another day of records. So by the close, the 10yr bund yield (+1.9bps) was at a post-2009 high of 3.53%, the 10yr OAT yield (+3.1bps) was at a post-2008 high of 4.50%, and the 10yr gilt yield (+2.0bps) had hit a post-2007 high of 5.39%. 

That backdrop of rising energy prices and stagflation fears meant the pressure on risk assets continued yesterday. For instance, the S&P 500 (-0.45%) fell to a 6-week low, although there was a stabilisation in chip stocks after Monday's slump, with the Philly semiconductor index (+0.40%) rising slightly. Nevertheless, the decline was a broad-based one, with two-thirds of the S&P 500 lower on the day. A similar picture was clear in Europe as well, where the STOXX 600 (-0.28%) fell to a 3-month low. Now it’s worth noting this still leaves the S&P 500 within 3% of its record high, and the STOXX 600 less than 4% beneath its high, but there’s been a clear shift in momentum relative to early August. Meanwhile, Bitcoin (-4.06%) saw its biggest decline in three months as well as a digital asset market structure bill failed to pass a procedural vote in the Senate. 

Otherwise yesterday, US Treasury Secretary Scott Bessent appeared before the House Financial Services Committee. There weren’t many new headlines, but he did say he’d be meeting his Chinese counterpart, He Lifeng, this weekend.

Overnight in Asia, we have seen markets begin to stabilise again ahead of the Fed's decision. In part, that's been helped by a pullback in oil prices, with Brent down -0.77% this morning to $107.91/bbl. So that's helped equities to advance, including the KOSPI (+1.16%), the Nikkei (+0.40%), the Shanghai Composite (+0.50%), CSI 300 (+0.60%) and the Hang Seng (+0.12%). Moreover, US equity futures are also pointing to a positive start, with S&P 500 futures up +0.22%, and the 10yr Treasury yield down -1.6bps at 4.99%.

Finally, we had a few data releases out yesterday, including on the UK labour market. That showed the number of payrolled employees was down by -26k in August (vs. -5k expected), although the unemployment rate remained at 4.9% over the three months to July. Otherwise, the German ZEW survey showed expectations rising to a 7-month high of 34.7 in September, although that was beneath the 40.0 reading expected by the consensus. That said, the current situation component rebounded more than expected, up to its highest since mid-2023 at -47.1 (vs. -52.1 expected). 

Looking at the day ahead now, the main highlight will be the Federal Reserve’s policy decision and Chair Warsh’s subsequent press conference. Otherwise, we’ll hear from the ECB’s Vujcic and Nagel. Meanwhile, data releases include US retail sales for August, the NAHB housing market index for September, UK CPI for August and Euro Area industrial production for July. Finally, European Commission President Ursula von der Leyen will deliver her State of the Union address.

Tyler Durden Wed, 09/16/2026 - 08:29

Hormuz: Rare US Strike On Iranian 'Small Boats' Caught Trying To Seize Surface Drone

President Trump and the Iranians have been issuing competing claims over who has 'control' over the Strait of Hormuz and the degree to which it is 'open' to global energy transit.

The situation on the ground remains dire, given almost daily hostile confrontations between Iranian and US naval forces there. According to the latest: "The U.S. military destroyed two Iranian small boats Monday after the Islamic Revolutionary Guard Corps tried to steal a Navy drone patrolling the Strait of Hormuz," US officials were quoted in Axios as saying.

Example image of likely surface drone in question: The US 5th Fleet has been operating operating the Saildrone Explorer. via AFP

The confrontation is being dubbed "unusual" for the fact that it involved small boats, and not the larger tankers which have been closely watched by international maritime monitors.

Iranian media reports emerged on the incident Monday, but state sources presented it as a US attack on "fishing boats" - which occurred off the port city of Kargan and near Larak Island.

Here's how US officials and Axios present the he said, she said competing accounts...

Iranian side:

Nafisi said an unspecified number of fishermen were missing and that search-and-rescue operations were underway, according to Iran's semi-official Mehr News Agency.

Pentagon side says:

• A U.S. official said the IRGC used the boats to try to capture a naval drone that the U.S. military uses to patrol the Strait of Hormuz.
• After U.S. forces identified the attempt, an American drone fired two missiles at the boats, destroying them and killing most of those on board.

Judging by videos that widely circulated Monday which appear to show the same incident, the surface drone may have suffered some damage. But again, it's unclear whether the released footage (apparently via the Iranian side) depicts the same incident or possibly a prior episode:

Iran's Islamic Revolutionary Guard Corps (IRGC) says its navy struck a US-operated surface drone at the entrance of the Strait of Hormuz, claiming to have "thwarted an aggressive mission" using the sailboat-shaped device. Washington has yet to comment. pic.twitter.com/lyDDM5Hrfg

— Al Jazeera English (@AJEnglish) September 11, 2026

Further, US Central Command spokesman Capt. Tim Hawkins said of the alleged attempted seizure, "Iranian small boats recently attempted to take possession of a U.S. unmanned surface vessel, but they were unsuccessful after CENTCOM forcefully responded."

Meanwhile...

A U.S.-contracted vessel was hit during an Iranian attack earlier this week, two sources told Fox News.

The incident occurred "around the Strait of Hormuz," and involved four Iranian drones, and at least one missile.

One of the projectiles struck the vessel and caused minor…

— Trey Yingst (@TreyYingst) September 16, 2026

He then noted that the intercept wasn't successful and the the surface drone remains under the operation of US forces. As for aerial drones, the Iranians have downed, captured, or disabled dozens of aerial UAVs throughout the over six-month long conflict. Many have been expensive MQ-9 Reaper drones.

Tyler Durden Wed, 09/16/2026 - 08:05

NATO's 'Collective Defense' Rhetoric Escalates Amid Now Weekly Aerial Incursions

Ukraine war spillover into NATO 'eastern flank' members' airspace is now becoming a weekly reality, which presents added pressure and dangers which could potentially lead up to a major Russia-Western military confrontation. Lead NATO powers like Germany have of late also alleged Russian intelligence 'sabotage' campaigns involving drones near aviation hubs in central Europe.

Over the past years of war, an errant (or intentioned?) drone or missile crossing over into Poland or the Baltic states might have happened once every few months, generating significant headlines and media coverage. But now barely a week passes and NATO leadership points the finger at Russia for alleged aerial incursions.

The latest happened overnight as Lithuania's foreign minister confirmed Tuesday that NATO jets were scrambled and intercepted and destroyed a drone that entered Lithuanian airspace from neighboring Belarus.

NATO image

Belarus is part of a 'Union State' with Russia and hosts its military assets, and also coordinates logistics with Moscow in support of the 'special military operation' in Ukraine.

Lithuanian President Gitanas Nauseda announced on X, "A drone that just entered Lithuanian airspace was destroyed by NATO fighter jets."

"With Russia intensifying its aggression against Ukraine, such readiness is vital for our region," he added. An investigation is on to determine the drone's origins.

One might be tempted to view these incidents as now 'routine' - but what's important is to observe the escalated rhetoric and threats surrounding them. As an example, the following European media report based on 'answering' these incursions in the name of allied common defense is alarming, given the atmosphere of confrontation:

From the Baltics to Poland, Europe's eastern edge is monitoring Russia's war to prevent it spilling over its own borders.

NATO stands "vigilant, committed, and ready," Lithuania's foreign minister said Tuesday, after an allied fighter jet destroyed a drone that crossed into the country's airspace from Belar

Kestutis Budrys credited the interception to the strength of collective defense, thanking the allies whose air presence, he said, protects Baltic skies and reinforces regional security.

But the message lands beyond Vilnius: as Russia's war on Ukraine grinds on, the alliance's eastern members are increasingly treating airspace violations — deliberate or not — as tests of NATO's resolve, and Tuesday's response was framed as proof the system works.

Given there have been instances where Russian-crewed jets have either briefly violated European airspace or come close to it, we are possibly one jet intercept and downing away from something that triggers a shooting war between Russia and NATO.

Lithuania said an Italian NATO fighter jet shot down a stray drone over its airspace, and that it is investigating its origin pic.twitter.com/MpaZljwPnr

— Reuters (@Reuters) September 15, 2026

This underscores the urgency of finding a roadmap toward negotiating an end to the Ukraine war. However, this month's Kushner-Witkoff trip to Moscow to meet with President Putin resulted in little of significance.

Tyler Durden Wed, 09/16/2026 - 07:45

Saudis Threaten Retaliation After Alleged Houthi Drone Attack On Mecca Crosses "Red Line"

Escalation in the Gulf area conflict certainly appeared overnight after Saudi Arabia accused Iran-backed Houthi rebels of targeting Mecca with a one-way attack drone, raising the risk of a deeper conflict as the kingdom's East-West pipeline was knocked offline last week.

Bloomberg quoted the Saudi-led coalition, which said an attack drone was intercepted heading toward Islam's holiest city and warned that protecting religious sites was a "red line."

"The security of the Two Holy Mosques and the pilgrims is a red line, and the Joint Forces Command of the coalition will not hesitate to take the necessary and deterrent measures against the Terrorist Houthi Militia," the kingdom said. 

Rep. Joe Wilson (R-S.C.) wrote on X, "If the Mecca Alliance means anything, then Turkiye and Pakistan must work with Saudi Arabia to destroy the foreign Houthi terrorists and liberate Yemen from Iran."

The Iranian puppet foreign Houthis occupying Yemen now attack the Muslim holy sites of Mecca in Saudi Arabia.

We stand with our partners in Saudi Arabia against the hateful Houthi aggression.

If the Mecca Alliance means anything then Turkiye and Pakistan must work with Saudi…

— Joe Wilson (@RepJoeWilson) September 15, 2026

Hazem al-Assad from the Houthi politburo responded to the incident, saying that "claims about targeting Mecca are a worn-out lie that has been used before and no longer fools anyone."

In any case, the red line that was drawn by the Saudis may only suggest a broadening conflict could be on the horizon, as rebels seized control of Yemen's Red Sea coast and the narrow Bab al-Mandeb Strait. Compounding pressure on another maritime chokepoint, a drone attack last week knocked out Saudi Arabia's East-West pipeline, used to divert 7 million barrels per day of crude from the Strait of Hormuz to Yanbu on the Red Sea.

The disruption forced the Saudis on Tuesday to cancel September-loading crude cargoes bound for Europe, which will only pressure the energy-stricken continent ahead of the Northern Hemisphere winter as a twin energy crisis unfolds, with seasonally low natural gas stockpiles and a deepening diesel crisis.

With crude tanker rates topping $1 million per day through the Strait of Hormuz to Asia, TankerTrackers reports that the Saudis are ramping up crude loadings from their east coast terminals to transit the critical waterway.

Saudi Arabia has been loading 8.7 million barrels of crude oil today (2026-09-15) at its east coast terminals.#OOTT #IranWar #Tankers pic.twitter.com/Md6iM6ehgi

— TankerTrackers.com, Inc. (@TankerTrackers) September 15, 2026

Brent crude trades at $107 per barrel, while WTI is around $104. Meanwhile, US diesel crack spreads topped a record $115 overnight as the refining crisis prompted Senate Majority Leader John Thune on Tuesday to tell reporters he is "open to exploring" a diesel export ban. Earlier, a report said Russia was mulling extending its diesel export ban through October.

Tyler Durden Wed, 09/16/2026 - 07:20