Iran's retaliation for the tanker strikes crosses into Jordan, crude back at July highs

EU mid-market update: Iran's retaliation for the tanker strikes crosses into Jordan, crude back at July highs; Apple to unveil iPhone Duo; First-of-its-kind Republican Midterm Convention opens.

Notes/observations

- Iran has answered the tanker strikes by firing on a third country, and crude supply risk now has a node outside the Gulf. CENTCOM confirmed five Iranian crude carriers destroyed on 8th Sept, after IRGC targeted a US warship with ballistic missiles twice in two days; Tehran replied with 20 ballistic missiles at Al-Azraq air base in Jordan, 18 intercepted, no casualties. Exchange had been confined to Iranian and US assets, so what is new is that it has landed on a state not party to it, and one that hosts US forces. Strait tightened in step: transits fell to six commodity vessels against a ten-day average of twelve, UKMTO logged another interaction with a merchant vessel, and a fire aboard a vessel at Qatar's Al Wakra port was contained. Second node opened overnight, drones hitting CPC terminal on the Black Sea, main export route for Kazakh crude, so Mediterranean availability is now exposed alongside the Gulf. Brent retested $100 for the first time since 24th July; oil and gas and utilities led the European open while retail and travel and leisure were sold. Iraq is pressing for a larger OPEC+ baseline in the capacity audit, but that feeds 2027 quotas, not this quarter's barrels. Pass-through is in the prints already, Norway's August PPI including oil accelerating sharply again on the year and China's August PPI running above forecast while headline CPI met.

- Today’s calendar carries three overlapping catalysts that together reset the near-term risk map. The Treasury’s enlarged long-duration liquidity-support buybacks officially begin, lifting the maximum operation size for 10–30-year nominals from $2B to at least $4B through the November 4 refunding; the first real test of whether the bigger window can clear the persistent dealer backlog arrives immediately. Parallel to that, the Supreme Court deadline for responses to the administration’s emergency application seeking tighter USPS mail-ballot rules lands, with any eventual ruling carrying direct implications for election mechanics across multiple states ahead of November. And in Dallas the first-of-its-kind Republican Midterm Convention opens, with Trump scheduled to speak both nights and JD Vance appearing on the 10th, as the party attempts to re-anchor the campaign narrative around inflation, the Iran conflict, trade, immigration and cost-of-living pressure—terrain that could produce fresh tariff, tax, healthcare or fiscal-policy commitments before the weekend is out.

- Analysts expect Apple today to unveil the iPhone 18 Pro and Pro Max at only about $100 more than their predecessors, deliberately absorbing much of the memory-cost inflation, while also launching a foldable iPhone Duo starting at $2,000 (the lower end of the $2,000–2,500 analyst range) that will reach 2 TB storage for roughly $3,000, ship in October, support the Apple Pencil and arrive in dark blue and white finishes. The same high-stakes Cupertino event, scheduled for 13:00ET, will also introduce the Apple Watch Series 12 and Ultra 4, which gain a privacy-focused AI feature that analyses the wearer’s day and summarises conversations without recording, storing or displaying any audio transcript, plus improved battery life on the Ultra 4. Alongside the new iPhones and Watches, Apple will refresh its AirPods line-up, underscoring the company’s willingness to protect margins and demand by eating elevated component costs across its flagship portfolio.

- OpenAI’s claim that 10 000 agents resolved a long-open Navier–Stokes finite-time singularity in 88 hours and formalised the argument in Lean in 17 more is less a speed record than a change in the unit of mathematical labour: what once required decades of scarce human insight can now be searched, refined and certified on demand. The lasting significance for AI progress is that a verified proof becomes permanent infrastructure rather than a one-off flash of brilliance; subsequent systems and researchers inherit the intermediate lemmas without having to rediscover them, turning mathematics into a compounding asset. Once that loop works, every domain that shares formal or semi-formal structure—algorithm design, physical modelling, genomic interpretation—gains the same possibility of scheduled, parallel discovery instead of waiting for the next rare human insight.

- Inditex missed on margin, not on demand. H1 revenue came in marginally ahead while operating profit and net income both fell short, and the shares were marked sharply lower pre-open despite strong early autumn trading; European retail was the weakest sector at the open, and the shortfall points at costs rather than the consumer. Apple is the other read: pricing its foldable at the low end of estimates implies it is absorbing the memory cost increase itself (event at 10:00 local in California), which supports the memory cycle European semiconductor equipment names traded on overnight.

- Ahead: ECB and US PPI on 10th Sept, alongside Masu's remarks and a PBOC, CSRC and bank regulator briefing; US CPI on 11th Sept; FOMC on 15th-16th Sept; BoE, BOJ and Japan's cabinet reshuffle on 17th-18th Sept; Berlin and Mecklenburg-Vorpommern state elections on 20th Sept; Xi in Washington on 24th Sept; US import bans on Canada effective 29th Sept; OPEC+ on 4th Oct.

- Tails: Strike on Jordan invites a wider coalition response and is the largest upside risk to crude, unpriced; against it, Iran and Oman are still expected to sign corridor maps within days, which would restore some transit and pull premium out. Also live: Trump publicly praised AfD's Saxony-Anhalt win overnight while Merz called the party a destructive force whose migration policy amounts to ethnic cleansing, giving a German political problem an external sponsor ahead of 20th Sept; and OpenAI warning it may pause new Pro subscriptions on Astra demand is a further power-demand signal for European utilities and grid names.

- Today’s TTN investor conf schedule: The day’s highest-signal sessions open with Western Digital at 08:50 ET (HDD exabytes, nearline pricing and capacity ramps) alongside Astera Labs, followed by Marvell at 11:30 ET. Core afternoon focus is Microsoft’s Amy Hood at 12:30 ET (Azure capacity and FY27 margins), ServiceNow’s dual CFO/CEO slots at 13:15/13:50 ET (paid AI monetization), and Dell’s Michael Dell at 15:25 ET ($95 bn AI backlog plus memory constraints). Supporting updates come from Sandisk at 14:30 ET and Lumentum at 14:35 ET, with Applied Materials CEO at 17:25 ET and Salesforce at 18:05 ET closing the day.

- Asia closed mixed with KOSPI outperforming +1.4%. EU indices -0.8% to -1.5%. US futures -0.1% to +0.1%, Gold +1.0%, DXY -0.1%; Commodity: Brent +2.5%, WTI +2.1%; Crypto: BTC +1.1%, ETH +1.0%.

Asia

- South Korea Aug Unemployment Rate: 2.7% v 2.8%e.

- China Aug CPI Y/Y: 0.8% v 0.8%e; CPI Core Y/Y: 1.0% v 0.9%e.

- US Tsy Sec Bessent reiterated view that had 'information' on the Japanese Yen; When we intervene on the Yen, "I have good insight" on what the BOJ and policymakers would do.

- Korea Exchange said to launch stock after-market trading on Mon, Sept 14th.

Global conflict/tensions

- Continued escalating tensions across the Middle East as Oil prices edged toward $100 per barrel. US and Iran entering a more direct phase of confrontation.

- IRGC said it launched heavy ballistic missile strikes against Jordan’s al-Azraq Air Base; warned tanker crews near Kuwait and Bahrain to evacuate their vessels immediately.

- U.S. Central Command, five Iranian crude tankers were destroyed in retaliation for recent Iranian missile attacks on a U.S. warship.

Americas

- (US) July Consumer Credit: $18.1B v $11.3Be.

- Treasury Sec Bessent stated that was trying to slow things down in the bond market; Markets were not sufficient; They're run by humans and they make mistakes. Dismissed recent Treasury market alarm as overdone, saying investors are not genuinely worried about US creditworthiness.

- Chile Central Bank (BCCh) left the Overnight Rate Target unchanged at 4.50% (as expected); Decision to keep policy steady was unanimous.

Trade

- US announced new restrictions on selected Canadian imports and to impose 50% levies on products including all-terrain vehicles, boats and cheeses.

Energy

- Iraq said to seek significant output quota increase during OPEC+ audit.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.37% at 10,771.72, DAX -0.77% at 25,793.25, CAC-40 -1.00% at 8,235.03, IBEX-35 -1.41% at 19,715.49, FTSE MIB -0.51% at 51,909.50, SMI -0.88% at 13,934.30, S&P 500 Futures +0.01%].

Market focal points/key themes: European stocks slipped Wednesday as the STOXX 600 fell 0.4%, the DAX 0.4%, CAC 40 0.6% and FTSE 100 0.2%, with broad pressure on industrials, consumer discretionary and rate-sensitive names outweighing gains in energy after Brent crude surged 1.6% to $99.49 on Houthi strikes against Saudi cities, U.S. attacks on Iranian oil tankers and an Iranian missile hit on a U.S. base in Jordan that pushed supply-disruption fears closer to the $100 psychological barrier. Energy majors captured the direct oil read-through, with Eni rising 1.5% and Shell, BP and TotalEnergies each adding 0.5%, while Vallourec climbed 1.5% after sealing a new OCTG supply agreement that deepens its long-term commercial and technology ties with Saudi Aramco. The same oil-driven inflation scare left money markets fully pricing a 25 bp ECB deposit-rate hike to 2.50% on Thursday, keeping sovereign yields near multi-year highs and compressing equity risk premia, which hit AUTO1 Group hardest (–4.5%) after its CFO stepped down, Inditex (–3.5%) on a slight H1 gross-margin miss despite solid recent sales, Burberry (–3%) on an HSBC Hold initiation, and Coloplast (–2.5%) following a JPMorgan Underweight cut. Defence names reversed Tuesday’s rebound (Rheinmetall –2.5%, Thales –2%, BAE Systems –1.5%) under the risk-off and lingering Morgan Stanley de-rating, while Ørsted dropped 1.5% on Andel’s discounted stake sale, Airbus fell 1.5% after cutting its 20-year China narrowbody forecast by roughly 500 aircraft, and LVMH declined 1.5% as HSBC’s downgrade to Hold outweighed a same-day Santander upgrade amid fragile luxury sentiment.

Equities

- Consumer discretionary: Inditex [ITX.ES] –3.5% (H1 gross margin of 58.7% slightly missed expectations despite resilient +9% Aug. 1–Sep. 7 constant-currency sales, disappointing after the stock’s recent record high), Burberry [BRBY.UK] –3.0% (HSBC initiated at Hold as renewed oil-driven inflation concerns compound already-fragile luxury/discretionary sentiment), LVMH [MC.FR] –1.5% (HSBC downgraded to Hold from Buy with €490 target, outweighing Santander’s same-day upgrade to Outperform as luxury sentiment remains fragile).

- Consumer staples:

- Energy: Eni [ENI.IT] +1.5%, Shell [SHEL.UK] +0.5%, BP [BP.UK] +0.5%, TotalEnergies [TTE.FR] +0.5% (direct oil read-through as Brent breaks $100 on renewed Houthi attacks on Saudi energy infrastructure and deepening Middle-East supply-disruption risk).

- Industrials: Rheinmetall [RHM.DE] –2.5%, Thales [HO.FR] –2.0%, BAE Systems [BA.UK] –1.5% (European defence reversal as the oil-driven inflation/risk-off move hits the sector after Tuesday’s rebound, with the recent Morgan Stanley sector de-rating still weighing on positioning), Airbus [AIR.FR] –1.5% (lowered its 20-year China narrowbody delivery-demand forecast by roughly 500 aircraft).

- Technology: AUTO1 Group [AG1.DE] –4.5% (CFO Christian Wallentin stepped down; CEO Christian Bertermann assumes finance responsibilities while the board searches for a successor).

Speakers

- Ukraine Pres Zelenskyy sttated that Ukraine hit Novorossiysk naval base and oil terminal.

- Japan said may convene extraordinary diet session on Monday, Oct 5th.

Currencies

- Focus remained on the Mid-East tensions. US destroyed five Iranian oil tankers on Tuesday in response to fresh attempts by Tehran to strike US warships in the Middle East in recent days. Higher oil prices continued to push up global bond yields. Brent retested the $100/barrel market during the session (highest since late July).

- USD/JPY pair remained in focus after 4% rise in the yen currency in the past week. Pair tested below 153 in early EU trade before consolidating. Comments again from US Tsy Sec Bessent on intervention helped the yen muster strength.

- EUR/USD at 1.1640 ahead of Thurs ECB decision where they were expected to hike its key rates by 25bps. Bund yields edged higher as market participants added to ECB rate-hike bets next year as oil and gas prices jump after the US attacks Iranian tankers.

- China PBOC sets the yuan mid-point at 6.7769 v 6.7804 prior (strongest level since February 8th, 2023).

- The 10-year German Bund yield last at 3.38%, France 10-year Oat at 4.26% and 10-year Gilt yield at 5.19%; 10-year Treasury yield: 4.80%; 10-year JGB: 2.87%.

Economic data

- (NL) Netherlands July Consumer Spending Y/Y: 1.2% v 1.7% prior.

- (FI) Finland July Preliminary Trade Balance: -€0.7B v +€1.9B prior.

- (NO) Norway Aug PPI (including Oil) M/M: 4.7% v 8.9% prior; Y/Y: 30.1% v 23.4% prior.

- (JP) Japan Aug Preliminary Machine Tool Orders Y/Y: 64.7 v 50.4% prior.

- (FR) France July Industrial Production M/M: -0.4% v +0.2%e; Y/Y:-0.5% v +0.4%e.

- (FR) France July Manufacturing Production M/M: -0.8% v +0.4%e; Y/Y: -2.0% v -1.5% prior.

- (TW) Taiwan Aug Trade Balance: $22.3B v $19. 9Be; Exports Y/Y: 41.0% v 34.7%e; Imports Y/Y: 44.3% v 40.1%e.

-(GR) Greece Aug CPI Y/Y: 3.8% v 3.4% prior; CPI EU Harmonized Y/Y: 3.7% v 2.7% prior.

-(IS) Iceland Aug International Reserves (ISK): 949B v 959B prior.

Fixed income issuance

- (IN) India sold total INR240B vs. INR240B indicated in 3-month, 6-month and 12-month.

- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 2.75% Feb 2037 SGB bonds.

- (IT) Italy Debt Agency (Tesoro) sold total €9.0B vs. €9.0B indicated in 12-month Bills (2 tranches).

Looking ahead

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

- (UR) Ukraine Q2 Final GDP Y/Y: No est v 0.6% prelim.

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

- 05:30 (DE) Germany to sell €5.5B in 3.0% Aug 2036 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.5-1.75B in 2030, 2034 and 2035 OT bonds.

- 05:30 (PL) Poland to sell Bonds.

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

- 06:00 (IL) Israel Aug Consumer Confidence: No est v 64.0 prior.

- 06:00 (PT) Portugal July Trade Balance: No est v -€3.6B prior.

- 06:00 (CZ) Czech Republic to sell combined CZK8.0B in 2034 and 2037 Bonds.

- 06:00 (CZ) Czech Republic to sell €0.5-0.75B in 6-month bills.

- 07:00 (US) MBA Mortgage Applications w/e Sept 4th: No est v 0.8% prior.

- 07:00 (UR) Ukraine Aug CPI M/M: No est v 0.3% prior; Y/Y: 8.1%e v 7.7% prior.

- 07:00 (UK) Weekly PM Question time in House.

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

- 08:00 (MX) Mexico Aug CPI M/M: 0.3%e v 0.0% prior; Y/Y: 3.3%e v 3.1% prior.

- 08:00 (MX) Mexico Aug CPI Core M/M: 0.2%e v 0.2% prior; Y/Y: 3.9%e v 4.0% prior.

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

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending August 22nd: No est v +11.8K prior (**Note: released 2 weeks ago).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 5 Year Bonds.

- 12:00 (SE) Riksbank's Seim Speaks in Stockholm.

- 13:00 (DE) ECB’s Nagel (Germany).

- 13:00 (US) Treasury to sell 10-Year Notes Reopening.

- 16:30 (US) Weekly API Crude Oil Inventories.

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

- 21:00 (AU) Australia Sept Consumer Inflation Expectation: No est v 4.9% prior.

- 22:00 (JP) Aug Tokyo Avg Office Vacancies: No est v 2.0% prior.

- (JP) BOJ Board Member Masu.