G7’s 100M barrels may already sit inside March’s 400M

EU mid-market update: G7’s 100M barrels may already sit inside March’s 400M; SpaceX puts $30B of IG debt behind Nvidia as Grok Bot opens to Claude; Micron’s Taiwan dispute moves from survey to a 99% strike mandate.

Notes/observations

- French Fin Min Lescure told the WSJ the government is prepared to use Article 49.3 to push through the €43B package if negotiations fail; on a finance bill that makes the operative vote the subsequent motion of no confidence rather than the budget itself. The draft only takes the deficit from 5.4% of GDP this year to 5.0% in 2027, while Le Pen's competing program now promises €140B of savings by 2032, and the OAT rally this week has already priced some probability that the political system produces more restraint than the sitting government's bill contains. Banque de France governor Moulin removed the other escape route this morning: France's situation is serious, but “there is no need to seek the solution in Frankfurt”, and the ECB does not need to intervene under current conditions. August's trade deficit narrowed to €6.1B from €6.6B, useful macro noise beside a fiscal argument measured in tens of billions. If 49.3 is used, the relevant OAT event becomes whether parties that disagree on nearly everything can agree on one thing long enough to censure Lecornu.

- G7’s 100M-barrel reserve release still does not identify 100M incremental barrels. The IEA governing board meets informally at 11:00 GMT today after EU representatives discussed the proposal this morning, but Reuters says the industry still cannot establish how much Europe and the US will actually put into the market; a separate report says some of the 100M may be volumes already designated under March’s record 400M-barrel IEA release but not yet delivered. The denominator is about one day of global oil demand at 102M bpd, against less than 6B barrels of commercial inventory that industry executives estimate is left globally, of which roughly 10% is readily accessible. Vitol says the Gulf has managed roughly 12M bpd of crude plus 2M bpd of products over the last 7–10 days, yet European diesel futures were still about $70/bbl over crude on Tuesday: crude flow has recovered faster than the product system the reserve release is supposed to repair.

- That is why Shell said its Q3 indicative refining margin jumped to a record $42/bbl from $24 in Q2, while LNG production slips to 7.2–7.6Mt and integrated-gas output at 740–780k boe/d remains well below the >900k boe/d run-rate before the regional disruption. Refinery utilisation is also being restrained by low Rhine water at Rheinland, so the margin is not being manufactured by running more barrels through the system. Brent is back near $101 after Gulf crude exports recovered sharply in September, but Europe's marginal product barrel is still clearing at a scarcity price. The IEA has pulled an informal discussion on the G7 reserve release forward to 13:00 Paris today; the political commitment is for as much as 100m barrels of crude and diesel, but there is still no public country allocation, crude/product split or tender schedule. A reserve release aimed at the $42 refining margin rather than the $101 crude barrel requires the right products in the right tanks, which is exactly the part of Friday's agreement that has not yet been specified.

- Micron’s Taiwan labor dispute has moved from strike preparation to authorization at the company’s largest manufacturing hub. 1,994 Taoyuan members, 99% of votes cast, authorized a strike, with timing still undecided after September mediation failed; Taoyuan and Taichung unions together represent more than 80% of Micron’s roughly 15,000 Taiwan employees, and Taichung negotiations continue separately. Micron’s FY26 Taiwan package already runs to 35–68 months of pay for eligible workers, including a NT$1M cash award, but the union is asking for a permanent pool equal to 15% of operating profit rather than another one-off. Six days ago Micron said long-term customer commitments had risen to $32B from $22B in June, mostly backed by cash deposits, remaining performance obligations had jumped to about $150B from $100B, and most 2027 HBM output was already contracted; the labor vote is landing against committed supply, not spare memory inventory.

- AMD's 2027 supply plan is already travelling beyond foundry capacity into memory, and Micron's Taiwan labour dispute has just put a human bottleneck beside the silicon one. Lisa Su says AMD will invest tens of billions of dollars across the supply chain, is planning capacity three to five years ahead and is discussing both memory and foundry cooperation with Samsung after talks with TSMC and Foxconn; she called memory essential to the whole computing system. Conventional DRAM contract prices are still expected to rise another 10–15% q/q after roughly 60% in Q2, even as Samsung's HBM share is forecast to rise from 20% to 34% this year. AMD is negotiating accelerator supply years in advance while one of the three global memory vendors now has a legal strike option at the manufacturing end of the contract.

- Elon Musk has gone from saying Grok would catch and then surpass the leading models to letting those models answer inside Grok Bot before Grok gets there. His latest instruction is explicit: route each task to whatever backend is most likely to win, including Claude Opus 5.5, MidJourney and Suno, after recent benchmarks continued to leave Grok behind the frontier on several reasoning, coding and agentic workloads. That lands awkwardly beside SpaceX's reported $40B Nvidia financing: Musk is preparing one of the largest proprietary-compute purchases ever while removing the requirement that his fastest-growing AI interface actually consume proprietary inference. He seem to have abandoned the captive-distribution assumption that made catching the frontier economically urgent; if Claude is better today, Anthropic gets the call while Grok keeps the user. The sequence is sharper than another benchmark loss: “we will catch them” has become “use them until we do.” The $40B therefore buys Grok another shot at model leadership, while the router makes sure SpaceX does not have to lose the application layer waiting for it—and leaves the uncomfortable possibility that the most valuable asset is becoming the system that chooses the model, not the model trained on the $40B of chips.

- Porsche's new 15% margin target is built around selling materially fewer cars than the company used to regard as normal. The CMD puts medium-term group sales at €41–45B, operating margin at 10–15% and automotive cash-flow margin at 9–12%, with long-run targets of 15% and 12%; the break-even volume falls below 200,000 vehicles, against 279,449 deliveries in 2025 and roughly 320,000 in 2023. Porsche wants 20% fewer model variants, around 30% more volume per remaining model, top-model average prices above €330,000 by 2030—about 20% higher—and roughly six times today's customization sales. Production personnel costs are targeted down as much as 30%, management positions 40%, while the balance sheet is supposed to retain net liquidity equal to 15–20% of automotive revenue and still distribute at least half of net income. Porsche made a 1.1% operating margin in 2025 and guides 5.5–7.5% for 2026, so the long-term target does not assume a return to the old China/EV volume machine; it assumes considerably more revenue per car, fewer cars required to cover fixed costs and a much smaller organization behind them. Porsche itself says reaching the top of the range requires either a better macro/regulatory environment or additional value measures.

- The BoE may reduce gilt-repo leverage by making part of it refinance every morning. Its proposed expansion of central clearing and minimum haircuts on uncleared repo is aimed at the 2020 dash-for-cash and 2022 LDI failure modes; AIMA says members could respond by replacing typical two-week repo with daily financing because of the economics of the new structure. Hedge funds account for about £85B of £200B of net borrowing in the gilt-repo market. The regulatory gain is lower bilateral counterparty exposure and more central netting; the cost can be a larger number of funding decisions during exactly the period in which dealers are pulling balance sheet. With 30-year gilt yields having traded at their highest since 1998 this month, converting fourteen-day funding risk into one-day funding risk would leave fewer days of committed financing between a yield shock and a forced balance-sheet decision. The BoE says implementation would take years and has not chosen a final design; AIMA wants it to watch next year's US Treasury clearing mandate first.

- Japan's wage and fiscal data are beginning to collide in the budget assumption itself. August labor cash earnings rose 3.8% y/y versus 3.7% expected, while the BOJ is considering formally acknowledging that underlying inflation has finally reached its 2% objective after lifting the policy rate to 1.25% in September. Takaichi told parliament overnight that government income and expenditure will be reviewed if interest rates move differently from assumptions; the finance ministry is already using a 3.8% debt-service assumption for FY2027, up from 3.0%, helping push requested debt-service spending to a record ¥36.64T inside a ¥143.1T budget request. The 30-year JGB reached 4.235% on Monday and Takaichi has promised to control issuance while simultaneously funding strategic investment and a two-year food-tax cut. The wage print gives the BOJ another domestic reason to keep normalizing at the same time the prime minister is explicitly admitting that the resulting yield path can rewrite the expenditure side of the budget.

- Cross-asset: crude and duration are rising together again while US equities remain at records. Brent is around $101.6, WTI $90.2 after renewed Houthi attacks and the Gulf storm threat; spot gold is near $4,137. DXY is around 102.07, EUR/USD near 1.12 and the yen back under pressure, while the US 10-year remains around the 5.3% area ahead of today's $39B auction. October Fed-hike pricing has collapsed to roughly 20% from about 50% a week ago while December still carries around an 85% chance, leaving the curve with much more long-end yield than the next-meeting probability alone would produce. The S&P 500 and Nasdaq closed Tuesday at records; Asia ex-Japan fell about 0.5% overnight. Oil is rebuilding the inflation tail, front-end Fed pricing is taking it out, and the long end has so far refused to choose between them.

- Asia closed lower with KOSPI underperforming -2.0%. EU indices -0.1% to -0.5%. US futures -0.2% to +0.1%. Gold -1.0%, DXY +0.4%; Commodity: Brent +0.6%, WTI +0.1%; Crypto: BTC -2.4%, ETH -3.9%

Asia

- China markets remained closed for Golden Week holiday.

- India Central Bank (RBI) raised repurchase Rate by 25bps to 5.50% (as expected) to move into tightening.

- Japan Aug Labor Cash Earnings Y/Y: 3.8% v 3.7%e; Real Cash Earnings Y/Y: 1.5% v 1.5%e.

- China Sept Foreign Reserves: $3.400T v $3.425Te; Gold Reserves 77.5M troy oz v 76.73M m/m [23rd straight month of resumed purchases].

- Japan PM Takaichi: Will consider reviewing policies, govt revenue and spending if interest rate shifts differ from expectations.

- BOJ's Sato agreed with the policy of adjusting rates in stages; Personal consumption momentum was not strong. Wanted to assess moves in consumption and income.

Global conflict/tensions

- VP Vance: Iran must cut nuclear enrichment capacity to end war; unclear how Tehran makes decisions.

- Houthis claimed to have attacked King Khalid international airport in Riyadh, Abha Airport, airbase at Khamis Mushait with drones/missiles.

Europe

- France Fin Min Lescure noted that the govt was prepared to use special constitutional powers to circumvent Parliament and push through billions in budget cuts if budget negotiations failed.

- UK Chancellor said to be planning major intervention to help poorer UK households with rising energy bills.

Americas

Trump: We have a very strong dollar; strong dollar gives you no inflation.

Energy

- Weekly API Crude Oil Inventories: -2.1M v +1.0M prior.

- Pres Trump reiterated that oil keeps flowing through Hormuz; biggest problem re Iran said nobody knows who was running the country.

- US Tsy Sec Bessent: Iran has not loaded a single barrel of crude onto a vessel since 25 Aug.

- NHC: Tropical Depression Nine becomes Tropical Storm Isaias; threatens Alabama area.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.05% at 10,535.97, DAX -0.46% at 25,331.72, CAC-40 -0.34% at 7,838.19, IBEX-35 -0.42% at 19,362.94, FTSE MIB -0.95% at 50,776.50, SMI +0.38% at 13,840.80, S&P 500 Futures +0.01%].

Market focal points/key themes: European equities traded mostly lower on Wednesday morning, with the FTSE MIB down 0.95%, the Euro Stoxx 50 off 0.63%, the DAX declining 0.46%, the CAC 40 slipping 0.34%, the IBEX 35 falling 0.42% and the FTSE 100 essentially flat at -0.05%, while the SMI managed a 0.38% gain. The cautious tone followed an overnight U.S. session in which the S&P 500 closed at a record 7,818.93, up 0.6% and above 7,800 for the first time, and the Nasdaq Composite rose 0.5% to extend its own record run on AI-related semiconductor strength, even as the 10-year Treasury yield climbed back to 5.31%. The most notable individual European movers were Avon Technologies, surging 11.5% after FY26 results showed revenue up about 12.5% and margins above prior guidance, and System1 Group, rising 7.5% on an improved Brave Bison takeover proposal, against Pennon Group’s 16.0% plunge on a heavily discounted £550 million rights issue and dividend cut, while European semiconductor names including Infineon and BE Semiconductor each fell around 3.5% on yield-driven technology de-risking. Investors awaited the Federal Reserve’s September meeting minutes for clues on the rate path—after hike odds for the October meeting had dropped sharply—and monitored oil prices firming above $101 a barrel after Houthi attacks in Saudi Arabia, alongside a report that SpaceX is seeking $40 billion to fund Nvidia chip purchases for its Colossus data centres.

Equities

Consumer discretionary: Forvia [FRVIA.FR] +4.5% (signed an India joint venture with Anand targeting 10% market share within five years, extending momentum from an upbeat Q3 trading read-through), IAG [IAG.UK] -2.0%, easyJet [EZJ.UK] -1.5%, Lufthansa [LHA.DE] -1.5% (airlines pressured by higher oil and renewed Middle East airspace and geopolitical risk).

Technology: System1 Group [SYS1.UK] +7.5% (Brave Bison raised its final takeover proposal to 180p cash plus 2.394 shares and a potential 20p contingent-value payment), Comet [COTN.CH] -4.0%, Infineon [IFX.DE] -3.5%, BE Semiconductor Industries [BESI.NL] -3.5%, SUSS MicroTec [SMHN.DE] -3.0%, Jenoptik [JEN.DE] -3.0%, ASM International [ASM.NL] -2.5% (European semiconductor names tracked overnight weakness in SK Hynix as rising bond yields prompted broader technology de-risking).

Energy: Maurel & Prom [MAU.FR] +2.0% (tracked higher crude prices as a US Gulf storm and renewed Saudi-Houthi attacks increased supply-risk concerns), SMA Solar [S92.DE] -3.0%, Alfen [ALFEN.NL] -2.0% (higher Bund and global bond yields pressured rate-sensitive property and capital-intensive clean-technology valuations).

Industrials / Defence: Avon Technologies [AVON.UK] +11.5% (FY26 results seen ahead of expectations, with revenue up about 12.5% and operating margin comfortably above the prior 14-16% guidance), Skanska [SKA-B.SE] +1.5% (SEB upgraded the construction group to Buy from Hold).

Financials: Bridgepoint [BPT.UK] +7.0% (raised FY26 performance-related earnings guidance to 37-39% of income from 20-25%, lifted medium-term guidance and introduced enhanced shareholder distributions), Swiss Re [SREN.CH] +1.0% (higher global bond yields supported reinvestment-income expectations for insurers).

Real Estate: Deutsche Wohnen [DWNI.DE] -3.0% (higher Bund and global bond yields pressured rate-sensitive property and capital-intensive clean-technology valuations).

Utilities: Pennon [PNN.UK] -16.0% (launched a £550 million seven-for-15 rights issue at 250p, a 35.5% discount to theoretical ex-rights value, and cut the dividend per share by about 30%).

Speakers

- Bank of France Gov Moulin noted that the situation on bond markets was complicated; France was not in economic crisis yet. Stressed that economic situation was serious but could act and was essential to reduce deficit and stabilize debt trajectory.

- Norway Govt draft 2027 budget raised its 2027 Mainland GDP growth forecast from 1.6% to 1.7%. Proposed NOK6.4B in tax breaks for 2027 budget.

- Turkey Central Bank (CBRT) Gov Karahan noted that all tools to be used for price stability.

- Iceland Central Bank Policy Statement noted that inflation was expected to fall quite rapidly in 2027 but uncertainty remained high. Stressed that inflation and expectations remained too high. Economic activity had clearly begun to slow.

- IMF Chief Georgieva stressed that advanced economies needed to take urgent action; US, Japan, France, Italy all in focus. govt need to act with no delay as budget deficits and debt were going up thanks to crisis.

- India Central Bank (RBI) Gov Malhotra post rate decision press conference noted that its focus remained on bringing headline inflation to 4.0%. Depth of tightening cyclew to depend on growth-inflation dynamics.

Currencies

- Higher oil prices and bond yields weighed upon risk sentiment and aided the USD.

- Dealers focused on the Fed Sept Minutes where it moved into tightening mode. For the upcoming Oct FOMC dealer currently pricing in less than a 25% chance of further hikes this month.

- EUR/USD dipped back below the 1.12 level in the session. French/German 10-year spread widened back towards the 140bps area. Bank of France Gov Moulin noted that ECB mandate was to combat inflation and it did not have a solution for France budget situation.

- USD/JPY continued to hover around the 158 area. BOJ's Sato did agree with the policy of adjusting rates in stages. Markets have downplayed more aggressive BOJ tightening scenarios in recent days.

- The 10-year German Bund yield last at 3.48%, France 10-year Oat at 4.83% and 10-year Gilt yield at 5.41%; 10-year Treasury yield: 5.30%; 10-year JGB: 3.09%.

Economic data

- (DE) Germany Aug Industrial Production M/M: 2.0% v 0.5%e; Y/Y: 2.3% v 0.7%e.

- (UK) Sept Lloyds House Price Index M/M: 0.0% v -0.2% prior; Y/Y: 0.0% v -0.4% prior.

- (SE) Sweden Sept Preliminary CPI M/M: 0.9% v 1.0%e; Y/Y: 1.2% v 1.2%e.

- (SE) Sweden Sept Preliminary CPIF M/M: 0.9% v 0.9%e; Y/Y: 1.5% v 1.5%e.

- (SE) Sweden Sept Preliminary CPIF (ex-energy) M/M: 0.1% v 0.3%e; Y/Y: 0.5% v 0.7%e.

- (SE) Sweden Sept Budget Balance (SEK): -23.0B v +61.9B prior.

- (NO) Norway Aug Industrial Production M/M: +1.0% v -7.1% prior; Y/Y: -0.6% v -1.8% prior.

- (NO) Norway Aug Manufacturing Production M/M: -0.4% v +0.7% prior; Y/Y: 0.4% v 1.5% prior.

- (ZA) South Africa Sept Net Reserves: $72.3B v $73.7B prior; Gross Reserves: $75.4B v $76.0B prior.

- (HU) Hungary Sept CPI M/M: 0.2% v 0.4%e; Y/Y: 1.6% v 1.8%e.

- (FR) France Aug; Trade Balance: -€6.1B v -€6.6B prior; Current Account Balance: -€1.5B v -€3.9B prior.

- (CH) Swiss Sept Foreign Currency Reserves (CHF): 770.5B v 770.1B prior.

- (CZ) Czech Aug Industrial Output Y/Y: 2.7% v 2.8%e; Construction Output Y/Y: -1.4% v +1.8% prior.

- (CZ) Czech Aug Trade Balance (CZK): -5.3B v -5.2Be.

- (MY) Malaysia Foreign Reserves end-Sept: $131.8B v $131.7B prior.

- (CZ) Czech Sept International Reserves: $180.1B v $184.6B prior.

- (TW) Taiwan Sept CPI Y/Y: 2.7% v 2.4%e; CPI Core Y/Y: 2.5% v 2.5%e; PPI Y/Y: 18.1% v 17.4% prior.

- (HK) Hong Kong Sept Foreign Reserves: $433.0B v $442.9B prior.

- (IS) Iceland Central Bank (Sedibanki) left 7-Day Term Deposit Rate unchanged at 8.00% (**Note: 1st pause in 4 decisions under the current tightening cycle).

- (IS) Iceland Sept Preliminary Trade Balance (ISK): -45.7B v -63.1B prior.

- (SG) Singapore Sept Foreign Reserves: $433.4B v $433.0B prior.

Fixed income issuance

- (DK) Denmark sold total DKK3.6 in 2028 and 2035 DGB bonds.

- (UK) DMO sold £1.0B in 0.25% July 2031 Gilts via tender; Avg Yield: 4.842% v 1.144% prior; bid-to-cover: 4.39x v 2.65x prior (**Note: The prior 0.125% Jan 2028 Gilt issuance was last held on Oct 20th 2021).

- (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2028 and 2046 bonds.

- (SE) Sweden sold total SEK4.6B vs. SEK5.0B indicated in 2037 and 2039 SGB bonds.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 3.75%.

- (IL) Israel Sept Foreign Currency Balance: No est v $241.6B prior.

- (PH) Philippines Sept Foreign Reserves: No est v $104.8B prior.

- (UR) Ukraine Sept Official Reserve Assets: No est v $48.7B prior.

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

- 05:30(DE) Germany to sell €4.0B in new Nov 2033 green Bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (EU) European Union to sell combined €6.0B combined in 3-month, 6-month and 12-month bills.

- 06:00 (CZ) Czech Republic to sell combined CZK7.0B in 2035, 2037 and 2038 bonds.

- 07:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Oct 2nd: No est v -6.0% prior.

- 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 1.5%e v 0.1% prior; Y/Y: 3.8%e v 2.6% prior.

- 07:30 (CL) Chile Sept Trade Balance: $2.6Be v $1.7B prior; Exports: No est v $9.5B prior; Imports: No est v $7.8B prior; Copper Exports: No est v $4.6B prior.

- 07:30 (CL) Chile Sept International Reserves: No est v $53.5B prior.

- 07:30 (UK) DMO to sell £1.50B in 0.125% Jan 2028 Gilts via tender.

- 08:00 (PL) Poland Sept Official Reserves: No est v $305.0B prior.

- 08:00 (HU) Hungary Central Bank (MNB) Sept Minutes.

- 08:00 (CL) Chile Aug Nominal Wage Y/Y: No est v 7.8% prior.

- 08:00 (MX) Mexico Sept Vehicle Production: No est v 344.9K prior; Vehicle Exports: No est v 300.5K prior.

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

- 09:00 (RU) Russia Sept Official Reserve Assets: No est v $769.0B prior.

- 10:30 (US) DOE Weekly Crude Oil Inventories.

- 10:30 (TR) Turkey Sept Cash Budget Balance (TRY): No est v 49.8B prior.

- 11:00 (US) Sept NY Fed 1-Year Inflation Expectations: 3.6%e v 3.6% prior.

- 11:00 (US) Treasury liquidity buyback target.

- 11:30 (US) Treasury sells 17-week bills.

- 12:00 (CA) Canada sells 2-year bonds.

- 13:00 (US) Treasury sells 10-year notes (reopening).

- 14:00 (US) FOMC Sept Minutes.

- 14:00 (BR) Brazil Sept Vehicle Production: No est v 271.2K prior; Vehicle Sales: No est v 275.1K prior Vehicle Exports: No est v 39.8K prior.

- 15:00 (US) Aug Consumer Credit: $15.0Be v $18.1B prior.

- 15:00 (AR) Argentina Aug Industrial Production Y/Y: No est v -4.9% prior; Construction Activity Y/Y: No est v -4.5% prior.

- 19:00 (KR) South Korea Aug Current Account Balance: No est v $42.1B prior; Balance of Goods (BOP): No est v $40.4B prior.

- 19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to raise Reference Rate by 25bps to 4.50%.

- 19:00 (CO) Colombia Sept CPI M/M: 0.4%e v 0.4% prior; Y/Y: 6.3%e v 6.2% prior.

- 19:00 (CO) Colombia Sept CPI Core M/M: 0.3%e v 0.3% prior; Y/Y: 6.3%e v 6.3% prior.

- 19:01 (UK) Sept RICS House Price Balance: -30%e v -28% prior.

- 19:50 (JP) Japan Aug Current Account Balance: ¥3.173Te v ¥2.989T prior; Trade Balance: -¥715.2B v -¥399.9B prior; Adjusted Current Account Balance: ¥2.158Te v ¥2.523T prior.

- 20:00 (AU) Australia Oct Consumer Inflation Expectation: No est v 4.9% prior.

- 22:00 (JP) Japan Sept Tokyo Avg Office Vacancies: No est v 1.9% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$450M indicated in 2029 and 2036 bonds.

- 23:00 (ID) Indonesia Sept Consumer Confidence: No est v 118.5 prior.

- 23:30 (JP) Japan sells 6-month bills.

- 23:35 (JP) Japan sells 30-year bonds.

- 23:45 (TH) Thailand Sept Consumer Confidence: No est v 53.2 prior; Economic Confidence: No est v 46.6 prior.