Fed Holds Interest Rates at 3.75%–4% as Two Officials Push for a 25-Basis-Point Hike
- The Federal Reserve kept its benchmark interest rate unchanged at 3.75%–4%, with the decision passing by a 10–2 vote.
- Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, favouring a 25-basis-point rate increase. It was Cook’s first dissenting vote since joining the Fed’s Board of Governors.
- The decision gives policymakers more time to assess whether rising energy costs and the AI infrastructure investment boom could fuel broader inflation.
- The Fed’s policy statement maintained its focus on bringing inflation back to its 2% target, saying additional economic data would help determine the appropriate policy stance.
- The decision leaves the possibility of another rate hike in December open, with policymakers continuing to assess inflation risks.
- Cook’s dissent comes as the White House investigates her personal mortgage history amid President Donald Trump’s efforts to remove her from the Fed.
Iran Says It Is Ready to Defend Itself as Diplomacy Continues; US Reaffirms Military Cooperation With Israel
- Iranian Foreign Minister Abbas Araghchi said Iran’s armed forces are fully prepared to defend the country at any time, while Tehran continues to pursue a diplomatic solution.
- Araghchi said Iran remains in close contact with mediators, is reviewing proposals and aims to implement a proposed “Seven-Day Plan” in less than a week.
- A senior US diplomat said American-Israeli military, intelligence and diplomatic cooperation would continue regardless of Israel’s election results, the timing of government formation or the US midterm elections.
- Washington said any decision to strike Iran would be based on professional assessments and shared US-Israeli interests. The stated objectives include eliminating Iran’s military nuclear programme and addressing threats to the Strait of Hormuz and neighbouring countries.
- The US has indicated support for a broad Israeli unity government that excludes extremist groups, while election results have left coalition options unresolved.
- Israel has assured its partners that the process of forming a government will not obstruct regional diplomatic efforts, according to the report.
Oil Prices Rise as Middle East Tensions Threaten to Reverse Diplomatic Progress
- Crude oil futures rose as concerns about a potential escalation in the Middle East outweighed ongoing diplomatic efforts.
- Citigroup analyst Francesco Martoccia warned that post-election political deadlock in Israel has increased uncertainty surrounding US-Israel-Iran relations and raised the risk of renewed military conflict.
- A fresh escalation could push the geopolitical risk premium in oil prices higher, while credible progress towards an agreement could partially unwind it.
- Citigroup’s baseline forecast remains a negotiated agreement by the end of the year, but the analyst said the election outcome has increased the risk of a more volatile and potentially damaging scenario.
- Oil markets remain sensitive to developments in regional diplomacy, with any renewed military confrontation potentially disrupting supply expectations.
- WTI crude was above $102/bbl, up 2.51%. Brent crude rose nearly 2%.
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Bank of America Clients Sell US Stocks for Second Straight Week as Tech and Media Outflows Surge
- Bank of America clients withdrew $3.5 billion from US equities last week, following $15 billion in outflows the previous week.
- Retail investors were the primary drivers of the selling, according to BofA analysts Jill Carey Hall and Trey Brown.
- Communication services recorded the largest sector outflow, marking its biggest single-week withdrawal since records began in 2018. The sector includes telecom, media and technology companies such as Meta.
- Industrial stocks posted the second-largest outflow, extending their streak of net outflows to 13 consecutive weeks.
- The latest figures point to continued selling pressure in US equities, although the pace of withdrawals eased compared with the previous week.
Citadel Securities Warns AI Credit Boom Could Strain Markets as Data-Centre Borrowing Costs Rise
- Citadel Securities has warned that major technology companies financing AI projects could face growing exposure as credit markets approach saturation, Bloomberg reported.
- At least 18 data-centre financing deals in the junk-bond and leveraged-loan markets now carry double-digit yields, as investors become more concerned about project cancellations and repayment risks.
- Moody’s warned that AI-linked private credit maturing between 2027 and 2029 will test whether weaker borrowers can refinance their debt at higher interest rates.
- Credit default swaps linked to Oracle, Meta and Nvidia have reportedly reached levels associated with junk-rated credit, signalling increased investor concern about credit risk.
- Citadel Securities stressed that it is not predicting an imminent credit crunch, but the growing scale of AI financing is raising questions about debt sustainability and lenders’ exposure.
China Drafts Export Restrictions on 23 AI Technologies as Chip and AI Stocks Slide
- China has drafted rules that would restrict exports of 23 AI-related technologies, adding regulatory uncertainty for technology companies amid a sell-off in Chinese AI and semiconductor stocks, Reuters reported.
- The STAR 50 Index, which tracks major technology companies listed on Shanghai’s STAR Market, has fallen sharply from its July peak, wiping out hundreds of billions of dollars in market value, according to the report.
- Goldman Sachs estimates that AI-related stocks account for approximately 42% of China’s stock-market value, highlighting the sector’s importance to broader market performance.
- Retail-favourite robotics company Unitree has reportedly lost around half its value, reflecting the pressure on high-profile technology investments.
- Fund manager Wang Zhuo told Reuters that “all bubbles inevitably burst,” as investors reassess valuations across China’s AI and chip sectors.
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Wolf Research Sets $250 Target for SK Hynix, Sees Potential Buybacks Equal to 28% of Shares
- Wolf Research reiterated its Outperform rating on SK Hynix and set a $250 price target, citing strong demand for high-bandwidth memory (HBM) used in AI infrastructure.
- Analyst Chris Kasso highlighted rising HBM prices, increased memory production and the stock’s valuation as potential drivers of further upside.
- SK Hynix trades at approximately 4.5 times earnings under Wolf Research’s optimistic earnings scenario, according to the report.
- Wolf estimates that, if SK Hynix executes its expected shareholder-return plan, projected free cash flow over the next two years could fund share buybacks equivalent to approximately 28% of shares outstanding.
- Strong AI infrastructure spending and demand for advanced memory remain central to the bullish investment case.
Wolf Research Sets $250 Target for SK Hynix, Sees Potential Buybacks Equal to 28% of Shares
- Wolf Research reiterated its Outperform rating on SK Hynix and set a $250 price target, citing strong demand for high-bandwidth memory (HBM) used in AI infrastructure.
- Analyst Chris Kasso highlighted rising HBM prices, increased memory production and the stock’s valuation as potential drivers of further upside.
- SK Hynix trades at approximately 4.5 times earnings under Wolf Research’s optimistic earnings scenario, according to the report.
- Wolf estimates that, if SK Hynix executes its expected shareholder-return plan, projected free cash flow over the next two years could fund share buybacks equivalent to approximately 28% of shares outstanding.
- Strong AI infrastructure spending and demand for advanced memory remain central to the bullish investment case.
Netanyahu’s Likud Leads in Preliminary Israeli Election Count; Neither Bloc Secures Majority
- Preliminary reports from Israel on October 28 indicate that Prime Minister Benjamin Netanyahu’s Likud party remains the largest party and leads in valid votes after ballot-box counting.
- Neither Netanyahu’s right-wing bloc nor the opposition bloc led by Gadi Eizenkot has secured a parliamentary majority, leaving the government-formation outcome uncertain.
- Tens of thousands of special ballots, including votes from military personnel and diplomatic staff, remain to be counted and could affect the final distribution of seats.
- Israel’s Central Elections Committee has not yet officially confirmed the reported results, so the final seat tally remains uncertain.
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US Goods Trade Deficit Widens to $134.9 Billion in September as Imports Surge
- The US goods trade deficit widened 2.1% month-on-month, or $2.8 billion, to $134.9 billion in September, exceeding economists’ expectations of $130.2 billion.
- Goods imports rose by $8.1 billion to $344.1 billion, while exports increased by $5.3 billion to $209.2 billion.
- The wider deficit suggests international trade could weigh on US third-quarter GDP for the third consecutive quarter, even as AI-related capital investment supports economic activity.
- Economists expect the preliminary third-quarter GDP report, due Thursday, to show annualised growth of approximately 3.2%, driven mainly by AI investment and consumer spending.
- The US economy grew at an annualised rate of 2.2% in the second quarter.
🔴 Breaking
US Military Advises Ships to Avoid Unnecessary Transit Through Strait of Hormuz Amid Rising Tensions
- The US military has advised vessels to avoid the Strait of Hormuz and nearby waters unless passage is absolutely necessary, citing the current geopolitical situation.
- The US Naval Forces Central Command issued the advisory on Wednesday through the Joint Maritime Information Center, recommending that ships not transiting the area maintain a safe distance to avoid unnecessary delays.
- Vessels planning to pass through the area have been urged to allow extra time for potential congestion and the implementation of military blockade operations.
- The military did not specify the immediate reason for the latest warning, leaving uncertainty over the extent of the operational risks facing commercial shipping.
- A similar notice was issued in mid-July when the US began a blockade of Iranian shipping. At that time, the military said neutral vessels could still transit the strait but should be prepared for questioning about their routes and intentions.
- UAE official says the country got a US warning to be on alert from Friday noon.
Saudi Oil Exports Stay Near Wartime Highs Despite Houthi Attacks and Strait of Hormuz Risks
- Saudi Arabia’s oil exports have remained near wartime highs in October despite reported attacks on regional energy infrastructure and heightened risks to tanker traffic, according to preliminary shipping-tracker data.
- Vortexa estimates Saudi exports averaged 6.5 million barrels per day through the country’s eastern and western coasts so far this month, compared with 6.6 million bpd in September.
- TankerTrackers.com puts October exports at an average of 6.99 million bpd, suggesting a recovery to pre-war levels.
- Kpler, however, estimates exports at 5.4 million bpd, below September levels, highlighting significant discrepancies between tracking agencies.
- The differences partly reflect difficulties tracking tankers, some of which are reportedly switching off satellite transponders to conceal their locations and reduce the risk of attacks.
- The data broadly suggests that oil exports from the Persian Gulf region are gradually recovering toward pre-conflict levels, although security risks remain elevated.
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SEBI Not Actively Reviewing Ban on Stock Exchanges Listing Their Own Shares, Says Chairman
- SEBI Chairman Tuhin Kanta Pandey said the regulator is not actively reviewing its ban on stock exchanges listing their own shares, Business Standard reported.
- The issue resurfaced following the reported public listing of the National Stock Exchange (NSE). Pandey had previously said on September 17 that NSE cannot trade its own shares on its platform, according to IANS.
- Pandey explained that stock exchanges perform regulatory functions and allowing them to oversee trading in their own shares could create conflicts of interest.
- However, SEBI remains open to studying safeguards and regulatory models used in the United States and Europe.
- Separately, Pandey announced plans for a consultation paper on simplifying compliance requirements for foreign portfolio investors (FPIs), CNBC-TV18 reported.
Goldman Sachs Sees DRAM Price Rally Extending Into 2028; HBM Revenue Forecast to Surge Over 230% in 2027
- Goldman Sachs expects the memory-chip market to remain strong in 2027, with server demand and limited supply expansion supporting further price increases.
- TrendForce forecasts that DRAM prices could continue rising through the first half of 2028, even as consumer electronics demand remains weak.
- Long-term supply agreements could cover 60%–70% of the market, reflecting tight availability and growing demand for memory used in AI infrastructure.
- The report projects HBM average selling prices will rise 122% year-on-year to $3.70 per gigabit in 2027, with global HBM market revenue expected to grow more than 230% to above $200 billion.
- Goldman Sachs reiterated its Buy ratings on Samsung Electronics and SK Hynix, setting 12-month price targets of ₩500,000 and ₩3.5 million, respectively.
- The brokerage maintained its ₩380,000 target price for Samsung Electronics preferred shares.
Spark Capital: India’s 13% Market Decline Is Not Yet a Buying Opportunity
- A senior executive at Spark Capital Advisors said India’s equity market correction may not yet be deep enough to attract investors back into the market.
- The Nifty 50 has fallen around 13% this year, putting it on track for its weakest annual performance in more than a decade, according to the report.
- Slowing economic growth, elevated crude oil prices and stretched valuations could limit the potential for a sustained market recovery.
- The correction follows a decade in which the Nifty 50 nearly doubled in value, highlighting the contrast between its previous strong performance and the current market downturn.
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SEBI to Seek Public Feedback on Simplifying FPI Rules; Beneficial Ownership Disclosures Under Review
- SEBI Chairman Tuhin Kanta Pandey said on Wednesday that the regulator will issue a consultation paper on simplifying foreign portfolio investor (FPI) compliance and onboarding, CNBC-TV18 reported.
- Pandey said FPI onboarding timelines have improved, but India’s compliance requirements remain more demanding than those in other markets.
- The proposed review follows earlier measures, including SWAGAT-FI, a single-window access mechanism for trusted foreign investors introduced in January, and digitally signed powers of attorney enabled in August.
- Separately, The Economic Times reported that SEBI is considering easing beneficial ownership disclosure requirements introduced after the Hindenburg controversy for certain concentrated FPIs.
- Potential changes could include exemptions for some public sector undertaking (PSU) holdings, although no final decision has been announced.
Wall Street Divided on US Treasury Outlook as Inflation, Fiscal Deficits and Fed Policy Pressure Yields
- UBS sees Treasury yields potentially nearing a cyclical peak and expects modest declines over the next 12 months. However, persistent inflation, geopolitical risks and fiscal deficits could keep long-term yields elevated.
- Standard Chartered said safe-haven demand following Middle East tensions and AI-related equity selling supported Treasuries after the October 22 move pushed the 10-year yield to 4.97%. It warned that rising oil prices and expectations of further Fed hikes could limit any recovery.
- Goldman Sachs expects upward pressure on long-term yields from higher energy prices, heavy government bond issuance and weak institutional demand. Inflation concerns could keep the term premium elevated as investors hesitate to lock in long-term rates.
- BlackRock upgraded short-dated Treasuries to overweight and downgraded long-dated securities to neutral. It sees attractive yields in shorter maturities and believes markets may be overstating near-term Fed hikes, while fiscal and inflation uncertainty warrant caution on longer bonds.
- DBS expects continued pressure for the yield curve to steepen. Short-term yields already reflect multiple Fed hikes, while 10- to 30-year yields remain sensitive to term premiums, bond supply and long-term inflation risks.
- State Street reported that US two-year and 10-year Treasury yields rose approximately 57 basis points and 49 basis points, respectively, in September. Investment-grade credit spreads remained broadly stable, while high-yield spreads widened.
- PIMCO said rising Treasury yields have already tightened financial conditions, partly offsetting stimulus from equity-market gains and AI investment. A 25-basis-point Fed hike in December remains possible, but higher long-term rates could encourage policymakers to proceed more cautiously.
AI Investment Boom Fuels US Growth but Raises Inflation Risks and Complicates Fed Policy
- Asset managers and the San Francisco Federal Reserve warn that surging AI investment and wealth effects from rising equity markets are supporting US demand, potentially making inflation harder to control.
- PIMCO says AI-related capital spending is relatively insensitive to interest rates, meaning further Fed hikes could hit real estate and traditional industries harder before significantly slowing AI investment. It favours a more gradual tightening approach.
- The San Francisco Fed says AI infrastructure demand is pushing up technology-equipment demand and prices, although evidence of broader AI-driven inflation spillovers remains limited. Longer-term productivity gains could eventually help ease inflation.
- Goldman Sachs Asset Management estimates that approximately $1 trillion in AI capital expenditure, alongside government spending, has supported economic activity. Its tracked estimate puts US third-quarter GDP growth at around 3.4%.
- Goldman expects one more Fed rate hike this year but says further tightening into 2027 is uncertain if inflation moderates. It also warns that higher technology prices are contributing to goods inflation.
- Morgan Stanley highlights rising financing costs for data-centre projects. The US five-year Treasury yield has climbed more than 100 basis points since January, while wider credit spreads are adding to funding pressures.
- BlackRock warns that investors need to scrutinise AI project returns and financing sustainability, while growing demand for electricity and other resources could create supply bottlenecks and additional inflationary pressure.
- Citi Wealth Management and US Bank say AI investment is increasingly supporting the broader economy, corporate spending and consumption. However, persistent inflation, elevated interest rates and geopolitical risks remain concerns, while a sharp AI investment slowdown could amplify economic weakness.
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Merck and Moderna’s Personalised Cancer Vaccine Cuts Melanoma Recurrence Risk by 42% in Phase 3 Trial
- Merck and Moderna said their personalised mRNA cancer vaccine, combined with Keytruda, reduced the risk of melanoma recurrence or death by 42% in a Phase 3 clinical trial.
- The treatment is designed to work alongside Keytruda, Merck’s immunotherapy drug, to help the immune system fight cancer after surgery.
- Researchers told Science that the benefit may partly result from a broader immune-system boost rather than solely from the vaccine’s ability to target tumour-specific mutations.
- Experts raised concerns about the treatment’s potential cost and the approximately six-week manufacturing period required to produce personalised doses, which could affect accessibility and delivery.
- AstraZeneca CEO Pascal Soriot reportedly told analysts that his company believes it can also make progress in the field, according to Quartz.
Nomura Initiates Coverage on Jio Platforms With Buy Rating, ₹1,340 Target; Prefers Bharti Airtel
- Nomura has initiated coverage of Jio Platforms with a Buy rating and a ₹1,340 price target, implying approximately 20% upside from its ₹1,119 IPO price.
- The brokerage cited potential telecom tariff hikes, broadband subscriber growth and stronger cash flow as key drivers of Jio’s outlook.
- Nomura expects Jio Platforms to become net debt-free by FY2029, supported by improving cash generation.
- The approximately ₹30,200-crore IPO is described in the report as India’s largest public offering, with trading scheduled to begin on Wednesday.
- Despite its positive view on Jio, Nomura named Bharti Airtel as its top telecom-sector pick, calling Airtel’s valuation discount to Jio “unjustified.”
- Motilal Oswal also recommends holding Jio Platforms for the long term.
US War Costs Against Iran Top $47 Billion as Ammunition Stockpiles Come Under Pressure
- A Refinitiv review of Pentagon data estimates that the US military has spent more than $47 billion on operations against Iran, exceeding the Pentagon’s July estimate by over 25%.
- More than $29 billion has gone toward replenishing expended ammunition, while over $6 billion has been spent replacing military equipment. The estimate does not include repairs to US bases damaged by Iranian missile and drone strikes.
- According to The New York Times, the conflict has depleted supplies of key weapons, including Patriot air-defence interceptors, and prompted the diversion of military equipment from US commands in Asia and Europe.
- More than 50,000 US military personnel have reportedly been assigned to the operation, according to US Central Command figures cited by the newspaper.
- The reported service-level costs include $7.6 billion for the Air Force, $1.5 billion for the Navy’s deployment of more than 20 warships, and $2.1 billion for the Army’s regional troop deployment.
- Despite President Donald Trump’s suspension of renewed large-scale military operations, the Pentagon reportedly incurred approximately $3.5 billion in additional costs over six weeks following its previous estimate to lawmakers.
OpenAI Reportedly Plans to Buy Google’s AI Chips to Reduce Reliance on Nvidia
- OpenAI is reportedly planning to purchase Google’s Tensor Processing Units (TPUs) as it seeks to diversify its AI computing infrastructure and reduce dependence on Nvidia, The Information reported.
- The potential deal would represent a significant win for Google’s AI chip business, which competes with Nvidia’s GPUs in the market for AI computing.
- OpenAI is recruiting an engineer to lead the optimisation of its frontier AI models for TPUs, suggesting that the work may still be at an early stage.
- The financial terms, purchase volume and implementation timeline have not been disclosed.
- The Information previously reported that OpenAI had begun using Google TPUs last year, prompting renewed attention to competition in AI chips and reportedly preceding a new Nvidia–OpenAI agreement.
- An OpenAI spokesperson said the company had “currently no plans to use TPUs exclusively,” indicating that any potential adoption would not necessarily replace Nvidia hardware entirely.
Major Banks Expect Fed to Hold Rates in October, With December Hike Widely Forecast; BofA Dissents
- Most major banks expect the Federal Reserve to hold interest rates steady at its October FOMC meeting and deliver a 25-basis-point hike in December.
- Goldman Sachs, Citigroup, Crédit Agricole, Nomura, TD Securities, Huatai Securities, Morgan Stanley and BNY Mellon broadly support the October pause followed by December tightening.
- TD Securities and Morgan Stanley expect two additional 25-basis-point hikes—in December and March, while BNY Mellon sees the peak policy rate moving slightly above 4.5%.
- Further tightening remains conditional on inflation. Several forecasters expect the Fed’s next moves to depend on incoming economic data and price pressures.
- Citigroup warned that a sustained equity-market decline that sharply tightens financial conditions could increase the likelihood of the Fed shifting toward rate cuts.
- Moody’s also argues against an October hike, citing rising economic risks and bond-market signals that suggest less need for immediate tightening.
- Bank of America is the notable outlier, arguing that an October rate hike would preserve flexibility for December and help address persistent inflation risks.
Oil Prices Rise as Houthis Claim Missile Strike on Saudi Arabia’s Largest Refinery
- Brent crude rose 1.00% to $110.85 per barrel, while US WTI crude gained 0.90% to $100.43, as renewed Middle East tensions lifted supply-risk concerns.
- Houthi rebels claimed they had fired missiles at Saudi Arabia’s largest refinery. Saudi authorities have not confirmed the attack or reported any damage or operational disruption.
- The price increase reflects a renewed geopolitical risk premium, despite expectations of a modest rise in US crude inventories.
- Traders are also monitoring speculation that Israel could resume strikes on Iran, alongside developments ahead of Sunday’s OPEC+ meeting and this week’s US inventory data.
- The key uncertainty is whether the reported attack caused lasting damage to refining capacity. Until damage or disruption is confirmed, the market reaction remains driven primarily by geopolitical headlines rather than verified supply losses.
China’s CSI 300 Hits 14-Month Low as $6.8 Billion State Buying Fails to Revive Sentiment
- China’s CSI 300 index fell to a 14-month low on Tuesday as technology stocks resumed their decline following a brief rebound, The New York Times reported.
- The index entered a bear market on October 22, the same day state-backed investors reportedly injected $6.8 billion into the market.
- The purchases marked the largest state-fund buying in more than a year, but failed to restore investor confidence or reverse the broader sell-off.
- Morgan Stanley warned that Chinese stocks could fall another 10%–15%, while UBS said a sustained recovery in market sentiment was unlikely in the near term.
SK Hynix Posts Record Quarterly Results as AI Boom Fuels Chip Shortages Through 2030
- SK Hynix reported record quarterly operating profit of KRW 83.3 trillion and revenue of KRW 104.6 trillion, exceeding consensus estimates of KRW 76.7 trillion and KRW 98.3 trillion, respectively.
- Quarterly operating profit increased more than sevenfold year-on-year, reflecting strong demand for memory chips used in AI infrastructure.
- The company expects memory-chip supply shortages to persist through 2030, citing rising manufacturing complexity at advanced process nodes and lengthy timelines for building new fabrication facilities.
- SK Hynix said its DRAM and high-bandwidth memory (HBM) capacity through 2029 is fully sold out, while server DDR5 DRAM shipments increased more than 40% quarter-on-quarter.
- The company expects enterprise and consumer AI adoption to drive near-term demand, with autonomous vehicles and robotics supporting longer-term growth.
- SK Hynix announced an additional KRW 100 trillion shareholder-return programme for 2026. Separate market reports also said the company plans to cancel recently repurchased shares.
- South Korea’s KOSPI climbed as much as 5% intraday, with Samsung Electronics rising 7% and SK Hynix gaining 5.8%, amid optimism over AI-related semiconductor demand.
- The company plans to return at least ₩90 trillion to shareholders in 2026 through dividends and share buybacks, alongside a special dividend linked to Kioxia.
- The Nvidia supplier expects memory demand to outstrip supply through 2030, with long-term agreements already covering more than 50% of its production capacity for 2027–28.
WSJ: US Warns Gulf States of Possible Intense Strike on Iran After Midterm Elections
- The United States has reportedly asked several Gulf Arab states to prepare for a possible short but intense military operation against Iran after the US midterm elections, The Wall Street Journal reported, citing people familiar with the matter.
- Washington and Israel are reportedly preparing for potential new strikes intended to weaken Tehran and pressure Iran into negotiations, raising the risk of a wider regional escalation.
- The US military is reportedly deploying a Patriot air-defence system from Texas, repositioning troops away from vulnerable bases and replenishing ammunition supplies.
- Bombers and fighter jets are reportedly preparing for potential operations, while another aircraft carrier strike group and a Marine expeditionary unit are expected to join US forces in the Middle East next month.
- The report said roughly 20 warships are already operating in the region, although some could be rotated out as additional forces arrive.
- President Donald Trump has not made a final decision, according to the report. Sources said he favours a possible large-scale operation after the elections, potentially targeting Iranian infrastructure and nuclear facilities.
US Durable Goods Orders Rise 1.8% as Treasury Yields Climb Ahead of Fed Decision
- US durable goods orders rose 1.8% in September, slightly exceeding expectations, with transportation equipment leading the increase.
- Treasury yields moved higher ahead of the Federal Reserve’s policy decision, with the 10-year yield reaching 4.997% versus 4.987% on Monday and the 2-year yield rising to 4.731% from 4.712%.
- Markets expect the Federal Open Market Committee (FOMC) to hold rates steady at its upcoming decision, while market expectations point to a possible resumption of rate hikes in December.
- At the October 27 five-year Treasury auction, the stop-out yield fell to 4.845% from 5.03%, while the bid-to-cover ratio improved to 2.33 from 2.21. The US Treasury’s buyback of 20- to 30-year securities reached its $6 billion cap.
- The six-week Treasury bill auction recorded a 3.95% high rate, down from 3.98%, while its bid-to-cover ratio rose to 2.83 from 2.74. The one-year Treasury auction stop-out yield declined to 4.29% from 4.40%.
- Standard Chartered strategists said rising US equities alongside higher Treasury yields can support risk-sensitive currencies such as the Canadian dollar, Australian dollar, Norwegian krone, Mexican peso and New Zealand dollar—provided rising yields reflect stronger growth rather than inflation fears or a higher term premium.
US Core Capital Goods Shipments Jump 1.2% in September, Signalling Strong Business Investment
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Trump Says US to Receive 1 Million Barrels of Venezuelan Oil, Signals Much Larger Supplies
- US President Donald Trump said the United States will receive an initial shipment of 1 million barrels of Venezuelan crude oil, with further supplies potentially reaching billions of barrels.
- Trump described the shipment as part of an expanded US-Venezuela relationship and claimed the oil would come at no cost to American taxpayers.
- He said the initial delivery could be followed by what he called the largest oil deal in history, although specific volumes, timelines and contractual terms were not disclosed in the statement.
- Trump linked the move to his administration’s energy policy, saying it would strengthen US energy dominance across the Western Hemisphere.
- He also predicted that gasoline and diesel prices would fall, but provided no timeline or supporting price projections.
Russian Crude Oil Exports to Fall in November as Refinery Processing Rebounds 25%
- Russian crude oil exports from Baltic and Black Sea ports are expected to decline by 100,000–200,000 barrels per day in November compared with October, Reuters reported, citing traders.
- The anticipated decline is attributed to refineries ending maintenance, increasing crude processing and raising diesel production to meet demand under a reported US-Russia diesel supply agreement.
- Russian refinery crude processing rebounded to approximately 5 million barrels per day in the second half of October, up around 25% from the beginning of the month, according to Reuters sources.
- Daily diesel production increased by at least 50,000 tonnes in October to 225,000 tonnes, with approximately 80,000 tonnes per day available for export.
- Ukrainian drone attacks on Russian refineries had previously disrupted production, contributed to domestic fuel shortages and prompted temporary restrictions on exports of refined petroleum products.
- Export plans remain uncertain because of continuing risks to Russian energy infrastructure, loading delays at the Black Sea port of Novorossiysk and declining Russian crude oil production.