SEBI Eases Arbitrage Fund Rules, Allows 1% Temporary Unhedged Holdings
- SEBI now allows arbitrage mutual funds to temporarily hold up to 1% of scheme assets unhedged, aiming to improve liquidity in the closing auction.
- The closing auction has struggled to attract participation since its launch on August 3. Previously, arbitrage funds had to remain fully hedged.
- The earlier framework allowed arbitrageurs to capture price dislocations between spot and futures during the final 30 minutes. The shorter auction window increased the risk of temporary mismatches.
- Arbitrage funds managed around ₹3 trillion ($31 billion) at the end of August, making them a significant potential source of liquidity for the closing auction.
🔴 Breaking
China’s Crude Imports Rise as Hormuz Supply Shock Deepens
- China’s crude imports rose for a second straight month to roughly 8.9 million barrels per day in August, after a 32% drop in Q2 as Beijing drew on stockpiles.
- UBS strategist Bhanu Baweja said only about one third of normal Hormuz traffic is getting through, leaving roughly 14 million barrels per day missing from normal flows.
- Brent crude hit $108 and WTI topped $103, while China’s yuan denominated crude futures reached their highest level since 2018. U.S. diesel also hit record levels.
- Saudi Arabia’s East West Pipeline is expected to remain mostly offline for weeks after drone strikes from Iraq, removing a key alternative to Hormuz. Libya outages are adding further pressure.
- Freight costs from the Persian Gulf to North Asia have surged roughly fivefold since the conflict began, squeezing import heavy economies such as Japan. UBS warns markets remain “complacent” as supply stays severely constrained.
🔴 Breaking
Indian Bond Traders Brace for 7.25% 10 Year Yield
- ICICI Securities and IDFC First Bank expect India’s benchmark 10 year government bond yield to breach its May 2026 high and reach 7.25% by Dec. 31, a three year peak.
- Citigroup has brought forward its RBI rate hike call from December to October as inflation risks increase.
- RBI liquidity withdrawal, rising inflation and the global bond selloff are adding pressure to Indian debt markets.
- DBS Group’s Ashhish Vaidya said conditions have changed sharply, with traders repositioning for tougher supply and higher inflation.
Markets Brace for Fed Decision as Volatility Risks Rise
- JPMorgan sees the S&P 500 falling 1.25% to 1.75% if the Fed holds, while a 25 bps hike without forward guidance could lift it 0.25% to 0.75%.
- Yardeni expects 2 to 3 more hikes, while MacroRiskAdvisors warns a full hiking cycle could trigger an 8% to 10% S&P drawdown. Goldman says 25 to 50 bps of hikes are unlikely to derail capex or market resilience.
- A Fed hold could weaken the dollar, while a 25 bps hike could support the USD. TD Securities says the dot plot’s signal on further hikes will be more important for dollar direction than the 25 bps move itself.
- ING sees the 10 year Treasury yield retesting 5%. BofA sees a hawkish outcome lifting the 2 year by 5 to 10 bps, while a dovish outcome could push it down about 5 bps.
- Sprott expects any gold pullback from tightening to be limited and short lived, while UBS says resilient growth and AI led investment demand continue to support equities.
🚨 SoftBank CDS hits near three year high as OpenAI exposure draws scrutiny
🔴 Breaking
US House Advances Bill That Could Enable 100% Tariffs on India Over Russian Oil
- The US House of Representatives advanced the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 by a 214 to 211 vote, clearing a procedural hurdle for a final vote.
- The legislation could authorize President Donald Trump to impose tariffs of up to 100% on countries including India that purchase Russian oil and gas. A House amendment specifically lists India, China, Türkiye, Azerbaijan, Hungary, Slovakia, UAE, Singapore, Kazakhstan and Kyrgyz Republic as eligible for duties of up to 100%.
- The bill also targets Russia’s leadership, energy sector and “shadow fleet” vessels involved in sanctions evasion, while extending sanctions related to Iran. The US Senate previously passed the measure 86 to 11.
- A final House vote is expected this week. If passed, the legislation would then move to the President for consideration.
India’s Current Account Deficit More Than Doubles to $7 Billion in July
- RBI preliminary data showed India’s current account deficit widened to $7 billion in July from $3.2 billion a year earlier, driven by a larger merchandise trade gap.
- Imports grew faster than exports, pushing the goods trade deficit to $31.7 billion. Strong net services receipts and remittances partially offset the wider gap.
- Net capital inflows surged to $27.7 billion in July, with FDI, portfolio flows and NRI deposits all rising sharply.
- The strong capital inflows more than cushioned the wider trade gap, leaving India with an overall balance of payments surplus of $20.8 billion.
AWS Says Bahrain Cloud Region Cannot Be Restored After Iranian Strikes
- AWS said Tuesday it has exhausted all options for restoring its Bahrain cloud region after Iranian missile and drone strikes in March and April.
- Damage across Bahrain affected multiple availability zones beyond what AWS’s architecture was designed to withstand. One of three UAE availability zones also remains inaccessible.
- The disruption is raising fresh questions over the resilience of critical Gulf cloud infrastructure and its ability to withstand large scale attacks.
- The UAE is now reconsidering its AI data center plans, exploring dispersed, underground and blast resistant facilities, according to Reuters.
🔴 Breaking
Saudi Arabia Halts Oil Loading at Yanbu as Pipeline Shutdown Deepens Supply Fears
- Oil loading at Saudi Arabia’s Yanbu port stopped Tuesday after a Houthi attack forced the kingdom’s main East West oil pipeline to close for several days.
- Saudi Aramco had increased its use of Yanbu since US Iran hostilities began on Feb. 28. The pipeline bypasses the Strait of Hormuz and could carry up to 7 million bpd.
- Brent crude rose to $105.74 a barrel as the shutdown heightened global supply concerns. The disruption could threaten up to 4% of global oil supply and potentially exhaust Saudi export capacity within days.
- Market analysts warn a prolonged outage could push Brent above $120, with prices potentially reaching $130 if alternative export routes remain limited.
- Further supply pressure is coming from attacks on Russian refineries, which have reduced diesel production.
Hackers Demand 10,000 Bitcoin From Revolut After Customer Data Exposure
- Hackers are demanding 10,000 Bitcoin from Revolut after the fintech was tricked into handing over sensitive customer data through fraudulent government style email requests.
- The exposed data reportedly includes passports, verification selfies, home addresses, IBANs and full transaction histories, potentially stripping pseudonymity from affected users’ crypto activity.
- Around 680 customers were affected, with attackers threatening to leak additional data every day unless their demands are met.
- The UK Information Commissioner’s Office and Financial Conduct Authority have both confirmed they are reviewing the incident, according to Insurance Business.
Ukrainian Drones Strike Russian Oil Refinery Hours After Trump’s Claimed Energy Truce
- Ukrainian drones struck Russia’s Syzran oil refinery early Tuesday, less than 24 hours after President Trump announced that Ukraine and Russia had agreed not to strike each other’s energy infrastructure.
- Neither Ukraine nor Russia confirmed the agreement, raising fresh doubts over the claimed truce.
- Zelenskyy questioned whether Russia would honor any deal and said Ukraine would pause strikes only if its partners secured a genuine Russian commitment to spare critical infrastructure.
- The latest attack threatens to undermine efforts to establish a broader pause in strikes on energy facilities.
BofA Raises Semiconductor Growth Forecast to 18% CAGR Through 2030
- Bank of America raised its semiconductor industry growth forecast to 18% CAGR from 2026 to 2030, up from 14%, driven mainly by stronger memory and data center demand.
- BofA now expects the semiconductor market to reach $3.2 trillion by 2030, up from its previous $2.7 trillion estimate. The market is currently around $1.7 trillion, implying it could nearly double within four years.
- Wafer fab equipment spending is forecast at $156 billion in 2026, up 33% YoY, $210 billion in 2027, up 34%, and $360 billion by 2030.
- DRAM equipment spending alone is expected to reach $61 billion in 2026 and $85 billion in 2027.
- BofA cited strong AI and data center orders, capacity commitments and higher memory investment. Nvidia B200 GPU rental pricing remains firm at about $5.72 per hour, less than 10% below its March peak.
Global Bond Markets Turn Volatile as US and Japan Yields Hit Multi Year Highs
- US 10 year Treasury yield rose above 5.02%, the highest since 2007. The 2 year yield jumped 4.4 bps to 4.676%, while the 30 year topped 5.4%, its highest since June 2007.
- Japan’s 5 year JGB yield hit a record 2.315%. The 10 year rose 4.5 bps to 3.03%, the highest since September 1996, while the 30 year climbed 5.5 bps to 4.12%.
- India also saw sharp moves, with the 5 year yield spiking as much as 13 bps and the benchmark 10 year yield rising 6 bps.
- South Korea’s finance minister nominee said he will closely monitor the bond market, while the Bank of England is prepared to stop selling 20 and 30 year gilts.
- Global bond markets are facing renewed pressure from inflation, heavy debt issuance and rising concerns over fiscal sustainability.
US Oil Executives Warn Global Fuel Crisis Has Arrived
- US oil executives warn the global fuel crisis has arrived as inventories fall, strategic reserves run low and attacks disrupt Middle Eastern energy infrastructure.
- Chevron CEO Mike Wirth said the buffers that had protected the market “have largely now played out,” adding that it is difficult to see any reason for conditions to ease right now.
- US crude has jumped 19% in three weeks to around $101 a barrel, while diesel hit a record $6.23 per gallon and gasoline rose to $4.32.
- The Trump administration continues to insist the disruption is temporary.
- Source: WSJ
US Space Force claims it has on-orbit weapons. On Sept 15, Chinese spokesperson Guo Jiakun urged the US to stop building up outer-space forces and preparing for war. China supports peaceful space use, opposes weaponization and arms races, and called for concrete US steps to maintain global strategic stability.
RBI likely intervened as rupee hit a one-month low of ₹95.79/$, with state-run banks seen selling dollars on the central bank’s behalf.
Russian forces attacked a logistics hub in Ukraine's Odesa region on the 15th. They used drones to hit a center for military supplies, two ships at Chornomorsk port, and rail lines in western Ukraine that carry Western aid.
China Foreign Ministry: Xi and Modi agree China and India should be partners
Chinese Foreign Ministry spokesman Guo Jiakun said that Xi Jinping and Narendra Modi have held successful meetings for three consecutive years and reached a key consensus that China and India should be partners.
Xi said the two countries’ different national conditions allow them to complement each other’s strengths, support one another and pursue common development. He called for an objective and rational strategic assessment, win win cooperation, mutual respect and political wisdom to reduce interference, and stable, long term China India relations through open and inclusive multilateral cooperation.
🚨 10 year US Treasury yield hits 5.025% as Fed hike bets top 92%.
US Strikes on Iran Trigger Strategic Munitions Shortfalls, Pentagon IG Says
- Pentagon officials told the DoD Inspector General that US strikes on Iranian targets during the initial months of Operation “Epic Fury” consumed so much ammunition that they caused strategic stockpile shortfalls and exposed industrial base bottlenecks.
- An IG report released Monday, covering operations through June 30, said procurement officials are working to simplify acquisition, shorten production and delivery cycles, and preposition key materials, components and selected munitions for rapid response.
- The Pentagon estimates roughly $22.3 billion of munitions were consumed, while total costs exceeded $33 billion through late June.
- The report provides official confirmation of munitions and production capacity problems that the Trump administration had repeatedly downplayed.