Brent slips after Trump waives Graham Act tariffs on Russian Oil buyers

EU mid-market update: French riots push budget risk into OAT spreads and euro crosses ahead of 20th Oct revenue vote and Friday’s Moody’s review; Microsoft drops Nscale’s Loughton anchor deal over grid power not due until the 2030s; Brent slips after Trump waives Graham Act tariffs on Russian oil buyers.

Notes/observations

- France’s weekend riots have pushed its budget fight into OAT spreads and euro, while Washington’s waiver of new Russia penalties takes some premium out of crude. OAT tens add 8bp to 4.87% against a firmer Bund, euro hits a three-month low of 0.922 against the franc, and WTI slips below $97, down 2% on the waiver.

- Friday’s US tape ended at the week’s lows: the Nasdaq fell 2.14% to 26,140.03, its worst day since July 23, the S&P 500 lost 1.09% to 7,659.44 and the Dow 0.34%, with the Russell 2000 down 1.66%. The Philadelphia semiconductor index fell 3.83% to 11,137.29 with all 30 members lower, an eighth straight decline, its longest since October 2008 and a 16% drop since October 6. Micron lost 5.6%, Intel 5.8% and AMD 6%. For the week the S&P 500 fell 1.95%, its worst since late June, the Nasdaq 4.48% and the Russell 2000 3%, while the Dow rose 0.67% and consumer staples gained 5%. The 10-year Treasury closed at 5.097%, 14.6bp lower on the week, the biggest weekly fall since February.

- CoreWeave fell 11.9% on Friday to $61.39, a 25% loss on the week, and Reuters reported that another of its bond issues yielded more than 16%, with the 2031s above 15%. Bloomberg said the Nasdaq 100 had its worst week since April 2025 as investors questioned whether the AI buildout has outrun returns. Nvidia’s Huang said he expects the turmoil to pass, and AWS’s CFO called AI spending sustainable. S3 Partners data showed semiconductor short sellers booked about $32bn of paper gains in the seven sessions to October 15. Power is a second constraint: the Telegraph reported that Microsoft has withdrawn from a UK data-centre deal with Nscale because the Essex site would be unlikely to have power until after 2030, which echoes TSMC’s description of power as a formal planning constraint. FT reported SoftBank is in talks to buy security-services group Allied Universal for $18bn excluding debt, and SoftBank fell 3.6% in Tokyo. SoftBank is committing $18bn to a guard-services business while paying up to 9.75% on its own bonds.

- Brent settled Friday at $109.86, up 3.7% and the highest settlement since May 19, and WTI at $101.41, leaving WTI up 10.4% on the week against 4.9% for Brent and narrowing the spread to $8.45 from $12.87 a week earlier. At least nine commercial ships have been attacked near Hormuz since October 11, and CENTCOM said Iran sank the container ship GFS Pride. Kpler put Hormuz crude flows at 9.4 million b/d in the week to Wednesday, down from 11.62 million the week before. Over the weekend the IRGC claimed two supertankers carrying about 2 million barrels each hit mines on Saturday and Sunday, which neither CENTCOM nor the UKMTO had confirmed. Iran’s seven-day plan to reopen the strait, passed through Qatar, remains on the table, and Trump warned Washington could soon finish the job. Houthi missiles targeted Yanbu and Khamis Mushait, and Egypt is moving to help Saudi Arabia. Brent is down 1.8% to $107.86 and WTI 1.6% to $97.43 on Monday, and the drop comes from the Russia waiver rather than from anything in the Gulf. US diesel averaged $6.33 a gallon on Friday, up 73% from a year earlier.

- Trump signed an order late Friday waiving the Graham Act’s tariffs of up to 500% on Russian goods and 100% on the five largest buyers of Russian oil and gas, two days before they took effect, the second Russia sanctions waiver in two weeks. The tariffs would have hit China, India and Turkey. The waiver also covers restrictions on Russian sovereign debt and new investment, and lasts until the administration decides further action is appropriate. Trump has described a diesel deal under which Russia would supply 300,000 tonnes immediately, 500,000 in November and 1 million after that. Five Republicans joined Democrats in demanding the diesel licence be revoked, and Rep. Meeks introduced a bipartisan bill to block the deal. Zelenskyy called the waiver wrong and said he expects more. He also said US and Ukrainian teams talked Friday, that a trilateral leaders meeting is possible at the G20 on December 14-15, and that Starlink speed limits still hamper Ukraine’s defences. WSJ reported Putin is weighing a November summit with Trump and Xi on Ukraine’s fate. The waiver strips out the main secondary-sanctions risk on Russian crude flows at the point the IEA is trying to ease diesel.

- The US FY2026 budget deficit reached $1.99 trillion against $1.78 trillion a year earlier, about 12% larger, after a September deficit of $27.0bn against $30.0bn expected. August TIC data showed net foreign purchases of US assets at $199.8bn against $87.4bn in July, with net long-term flows of $279.2bn against an outflow of $27.9bn, all before October’s selloff. The Treasury curve steepened on Friday as haven demand met the supply backdrop, and the dollar had its first weekly loss in four weeks on bets that the Fed holds. Fed officials are in their blackout period before October 27-28, and Friday-morning futures put October hike odds near 15%, down from roughly even after CPI. Warsh named October and December as the decision points and gave no guidance. A $2 trillion deficit and heavy August foreign buying set the baseline for how far the refunding in early November can push yields.

- Euro-area final September HICP was confirmed at 3.8% against 3.2% in August, the highest since September 2023, with energy contributing 1.71 percentage points, core at 2.5% and services at 3.2%. The ECB has raised its deposit rate by 50bp this year to 2.50%, with the last 25bp on September 10, and the October 29 meeting is expected to hold. The Stoxx 600’s Friday gain came with banks leading as yields stayed down, and Goldman strategists expect 20% earnings growth from Stoxx 600 constituents in the second half. UK Chancellor Healey is reported to be raising taxes on banks in the October 28 Budget. German ZEW sentiment is due tomorrow and the first major vote on France’s revenue budget is also on Tuesday. The ECB faces a hotter headline than it forecast, and the market has already priced a path to 3.18% by late 2027.

- China’s third-quarter GDP grew 4.5% from a year earlier against 4.4% expected and 4.3% in the second quarter, and 1.2% on the quarter against 1.0% expected. September retail sales rose 1.1% against 0.5% expected, the fastest since March, industrial production rose 5.5% in line, and fixed-asset investment is down 7.2% year to date against down 7.3% expected. The statistics bureau said the Jan-Sept pace is consistent with the full-year target, while pointing to weak demand and a complex external environment. The PBOC fixed the yuan at 6.7208, the strongest since February 2023. MOFCOM said it will impose and adjust export controls on drone and dredger-related items, including shield tunnelling machines, from November 18. China is adding controls on construction machinery and drone components a month after EU leaders told the Commission to use trade defence tools against Chinese exports. DeepSeek also released a new V4.1-Flash model.

- Jakarta’s benchmark fell 4.9% at the open to 4,930.24, its lowest since October 2020, after Friday’s drop of about 11%, its steepest since 1998, when MSCI said Indonesia’s emerging-market status is no longer appropriate. MSCI will consult until April 2027 on a move to standalone status, and foreign investors had sold $4.7bn of Indonesian equities this year before the plunge. Elsewhere in Asia, Tokyo Electron lost 2.1% and the Nikkei opened more than 2% lower before trimming losses. Japan’s PM Takaichi said she has no preset view on an extra budget and plans to keep JGB issuance at an appropriate level, and BOJ Governor Ueda said underlying inflation is quite close to 2%. Hong Kong is closed for Chung Yeung Day, and the ASX 200 gained 0.4%.

- US earnings season has been strong while the tape has not: 46 S&P 500 companies reported in week one, 80% beat on EPS against 88% last quarter and a 69% average, with third-quarter EPS tracking up 27% on the year. Netflix and SpaceX report Tuesday, and Meta, Tesla, IBM, Texas Instruments, Lam Research and SAP report Wednesday after the close, days after the iShares semiconductor ETF lost 11.8% in a week. Intel reports October 29, Procter & Gamble Thursday, and flash PMIs for October are due Friday. Weekly jobless claims come Thursday and the Fed meets October 27-28. Lam Research and Texas Instruments report into the sharpest drop in chip equities since 2008.

- Cross-asset: Celanese raised liquid crystal polymer prices globally, effective immediately or as contracts allow, its eighth announced increase this year. Canada’s September CPI is due today, seen at 3.2% against 3.0%, and the Bank of Canada meets next week. Shanghai rose 0.2% near 3,722 after the GDP print. DAX gained 2.13% on the week to 25,622.61, the CAC 40 1.97% to 7,956.70 and the FTSE 100 3.13% to 10,881.90. Rheinmetall led the Euro Stoxx 50 on Friday with a 3.3% rise. Ahead: ZEW and the French budget vote on October 20, Meta and Tesla on October 21, the Fed on October 27-28, the UK Budget on October 28 and the ECB on October 29.

- Asia closed mixed with KOSPI outperforming +1.8%. EU indices -0.8% to -1.4%. US futures +0.1-1.0%. Gold +0.1%, DXY +0.1%; Commodity: Brent -1.4%, WTI -1.2%; Crypto: BTC +0.8%, ETH +0.4%.

Asia

- China Q3 GDP Q/Q: 1.2% v 1.0%e; Y/Y: 4.5% v 4.4%e.

- China Sept Retail Sales Y/Y: 1.1% v 0.5%e.

- China Sept Industrial Production Y/Y: 5.5% v 5.5%e.

- China Sept YTD Fixed Assets Ex Rural Y/Y: -7.2% v -7.3%e.

- China Sept Surveyed Jobless Rate: 5.2% v 5.3%e.

- China Sept YTD Property Investment Y/Y: -20.6% v -20.0%e.

- China Sept New Home Prices M/M: -0.14% v -0.17% prior.

- New Zealand Sept Performance Services Index: 50.9 v 51.0 prior.

- New Zealand Sept Trade Balance (NZD): No est v -1.3B prior; Exports: No est v 6.7B prior; Imports: No est v 8.0B prior.

- BoJ Gov Ueda spoke in Parliament and noted that underlying inflation was quite close to the 2% target and stressed that it was becoming more important to anchor underlying inflation around 2%.

- RBA Assist Gov Kent noted that there was reasonable evidence that neutral rates were rising here and abroad and hard to know where neutral was, too much uncertaint.

Global conflict/tensions

- Russia President Putin said to propose a three-way summit with President Trump and China President Xi in Nov on Ukraine.

- US President Trump signed an executive order waiving the imminent 500% tariff hikes on all Russian imports and tariffs of up to 100% on major buyers of Russian oil and gas, including China and India.

Europe

- UK Oct Rightmove House Prices M/M: 1.0% v 0.7% prior; Y/Y: -0.1%v -0.8% prior.

- Political uncertainty continued in France as protests across the country descended into violent clashes with police. Bond yields in France are expected to rise on Monday morning in response to the clashes, as economists fear the country increasingly appears ungovernable. Pres Trump formally endorsed Israel PM in the upcoming election.

Energy

- Oil prices remain supported due Middle East escalation risks, ongoing drone strikes on energy infrastructure.

- Iran Foreign Min Araghchi noted that Tehran's seven days proposal to re-open Strait of Hormuz was still on table. If US complied with Iran's conditions strait can be open within 6 days.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.94% at 10,779.91, DAX -1.13% at 25,333.36, CAC-40 -1.36% at 7,848.47, IBEX-35 -1.36% at 19,063.40, FTSE MIB -1.47% at 49,125.50, SMI -0.57% at 14,309.80, S&P 500 Futures +0.51%].

Market focal points/key themes: European equities opened the week under clear pressure, the Stoxx Europe 600 declining 0.33% as escalating political and social instability in France—marked by weekend riots over inflation, living costs and public-service erosion—elevated sovereign-risk premia across the eurozone’s second-largest economy and dragged the CAC 40 nearly 1% lower. The most striking individual moves were Steyr Motors’ 20% surge after Red Cat’s SMOT Acquisition launched a voluntary cash tender at €39 a share, ITM Power’s 7% advance on a 68% revenue jump and sharply narrowed EBITDA loss, Officina Stellare’s 6.5% and OHB’s 4.5% gains on continued European sovereign-space procurement, set against Kuros Biosciences’ 9% profit-taking decline after last week’s guidance raise, Eutelsat’s 6% reversal of its India/Starlink rally, and the 3–4.5% falls in Nokian Tyres, Stellantis and Brembo amid broad consumer-cyclical de-risking. Technology and selected semiconductor names offered selective resilience, with ASML, BE Semiconductor and ams-OSRAM advancing 1.5–2% on residual positive order-book read-throughs, while defence contractors Leonardo, Fincantieri and Indra surrendered 2.5–3% in profit-taking after Friday’s sharp rally. With a dense Q3 earnings calendar—EssilorLuxottica, Kering, SAP and BE Semiconductor this week, Meta’s AI-capex commentary on Wednesday—and only a modest cushion from the oil pull-back triggered by Trump’s waiver of certain Russian-energy sanctions, continental risk appetite remains subordinated to both French fiscal-political noise and the question of whether corporate margins can offset still-elevated global borrowing costs.

Equities

Consumer discretionary: Nokian Tyres [TYRES.FI] -4.5%, Stellantis [STLAM.IT] -3.5%, Brembo [BRE.IT] -3.0% (autos and suppliers weakened in broad consumer-cyclical de-risking as European benchmarks fell), LVMH [MC.FR] -1.5%, EssilorLuxottica [EL.FR] -1.0% (French consumer and luxury-linked shares fall after violent weekend protests, retail looting and renewed political and fiscal-risk concerns) HEALTHCARE: Kuros Biosciences [KURN.CH] -9.0% (profit-taking after last week's raised 2026 guidance and report of 40% nine-month sales growth; no new Monday company release identified).

Technology: ams-OSRAM [AMS.CH] +2.0%, ASML [ASML.NL] +1.5%, BE Semiconductor Industries [BESI.NL] +1.5% (continued positive semiconductor read-through from ASML's strong order outlook and customer demand visibility extending into 2029–30), SAP [SAP.DE] +0.5% (software outperforms in a selective technology rebound ahead of its quarterly results), Volex [VLX.UK] -1.5% (record H1 revenue and upper-end FY profit guidance were offset by expectations for broadly flat H2 revenue as data-centre growth annualises).

Telecom: Eutelsat [ETL.FR] -6.0% (reversed part of last week's India-authorization and Starlink-related rally, with no fresh company announcement Monday) ENERGY: ITM Power [ITM.UK] +7.0% (FY revenue rose 68% to £43.6m and the adjusted EBITDA loss narrowed 39% to £20.2m).

Consumer staples: Mowi [MOWI.NO] +4.0% (Q3 operational EBIT of €275m beat the €198.6m consensus, with harvest volume rising to 186,000 tonnes).

Industrials/defence: Steyr Motors [4X0.AT] +20.0% (Red Cat subsidiary SMOT Acquisition announced a voluntary cash tender offer at €39 a share), Officina Stellare [OS.IT] +6.5%, OHB [OHB.DE] +4.5% (European sovereign-space buying continued as policymakers push to reduce reliance on non-European satellite and launch providers), CSG [CSG.NL] -3.0%, Leonardo [LDO.IT] -3.0%, Fincantieri [FCT.IT] -3.0%, Indra [IDR.ES] -2.5%, Theon International [THEON.NL] -2.0% (profit-taking after Friday's sharp European defence-sector rally).

Speakers

- France President Macron said to refuse resignation of interior Minister.

- South Korea President Lee noted that the domestic stock market was undervalued but difficult for govt to intervene in equity markets.

- China Commerce Ministry (MOFCOM) to impose and adjust export controls on drone and dredger-related items such as shield tunneling machines, effective from Nov 18th.

- China PBOC to launch liquidity backstop tool for non-banks and unveil liquidity tool and wider SLF access. To facilitate yuan (CNY) trading by foreign finance firms.

Currencies

- Political unrest in France and questions around fiscal stability continue to weigh on the Euro during the session. Dealers saw concerns over the recent France's civil unrest coupled with the country’s debt load. The French situation was taking away the pressure for the ECB to deliver rate hikes. France's government was also struggling to pass budget proposals to lower the national deficit. Dealers noted that severe contagion in the region was less likely than 15 years ago during the Great Financial Crisis. Nonetheless French government-bond yields rose in opening trade with the spread against the german 10-year bond widening to over 140bps.

- USD/JPY at 158.00 area by mid-session. Dealers noted that the yen currency and bonds still showed caution over potential increases in government bond issuance. Continued fiscal concerns could weigh on demand at Japan's sale of 20-year government bonds Tuesday.

- The 10-year German Bund yield last at 3.42%, France 10-year Oat at 4.85% and 10-year Gilt yield at 5.37%; 10-year Treasury yield: 5.07%; 10-year JGB: 2.90%.

Economic data

- (CH) Swiss Weekly Total Sight Deposits (CHF): 457.0B v 456.4B prior; Domestic Sight Deposits: 435.4B v 432.6B prior.

Fixed income issuance

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.50% v 4.46% prior; Bid-to-cover: 4.59x prior.

- (SK) Slovakia Debt Agency (Ardal) sold total €530.4M in 2029, 2036, 2037 and 2051 Bonds.

Looking ahead

- (IT) Italy Debt Agency (Tesoro) to sell 5-year BTP Valore (retail) bonds.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €5.0B in 6-month and 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel Sept Unemployment Rate: No est v 2.8% prior; Broad Unemployment Rate: No est v 3.7% prior.

- 06:00 (IL) Israel to sell combined ILS2.85B in 2030, 2031, 2035, 2037. 2047 and 2056 bonds (7 tranches).

- 06:00 (RO) Romania to sell 2040 bonds.

- 07:00 (BR) Brazil Oct FGV Inflation IGP-10 M/M: 1.4%e v 1.5% prior; Y/Y: 4.7%e v 3.3% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CA) Canada Sept CPI M/M: 0.2%e v -0.1% prior; Y/Y: 3.2%e v 3.0% prior; CPI (ex-food/energy) Y/Y: 2.1%e v 2.1% prior; CPI Core- Median Y/Y%: 2.0%e v 2.0% prior; CPI Core- Trim Y/Y%: 1.9%e v 1.9% prior; Consumer Price Index: 170.2e v 169.8 prior.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €5.9-7.3B in 3-month, 6-month and 12-month bills.

- 10:00 (US) Oct NAHB Housing Market Index: 31e v 32 prior.

- 11:00 (CO) Colombia Aug Economic Activity Index (Monthly GDP) Y/Y: 1.5%e v 1.1% prior.

- 11:30 (CA) Canada Q3 BoC Overall Business Outlook Survey: No est v -0.4 prior; Business Outlook Future Sales: No est v 8.0 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 15:00 (AR) Argentina Sept Trade Balance: $2.0Be v $2.2B prior.

- 16:00 (US) Weekly Crop Progress Report.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 68.0 prior.

- 21:00 (CN) China Central Bank (PBOC) Monthly LPR Setting: Expected to leave 1-year and 5-year Loan Prime Rates (LPR) Rates unchanged at 3.00% and 3.50% respectively.

- 23:35 (JP) Japan to sell 20-year JGB Bonds.