General Market News

Britain's Serious Fraud Office, Kazakh miner ENRC, and law firm Dechert have settled a lawsuit ending a 10-year legal saga stemming from a bribery probe. ENRC had accused the SFO and Dechert of improperly causing damages during an investigation into alleged bribery in the Democratic Republic of Congo. The SFO closed its investigation in 2023 without filing criminal charges.

• ENRC sought approximately $76 million in unnecessary investigation costs and $90 million in increased borrowing costs, plus interest
• A court previously ruled the SFO would not have opened the investigation had it not induced ENRC's former Dechert lawyer to act against the miner's interests
• The settlement terms remain confidential, announced just before the High Court was set to deliver its damages ruling

The bond market is experiencing a sell-off as the 10-year Treasury yield hit its highest level since 2023, driven by concerns over record government debt, deficits, and persistent inflation. Financial advisors are urging fixed-income investors to avoid panic selling and instead diversify their bond holdings rather than flee to cash. Various strategies are being recommended to navigate the volatility while maintaining income generation for long-term financial security.

• Advisors recommend diversifying fixed-income portfolios with shorter-duration bonds (3-7 years), high-quality corporate debt yielding 5%+, and avoiding concentration in long-term Treasuries given fiscal uncertainty
• Alternative income strategies include Treasury Inflation-Protected Securities (TIPS) with real returns around 2.4%, short-term bond ETFs that saw $12.8 billion in July inflows, and floating-rate debt that resets with rising rates
• Experts warn against moving entirely to cash since it doesn't beat inflation, and note that higher current yields actually improve future return potential for buy-and-hold bond investors

September is historically the worst month for stocks, with the S&P 500 averaging a 0.8% decline since 1950. However, analysis shows that when the S&P 500 is up 10% or more year-to-date through August, September typically delivers positive returns of 0.93% on average. With the index up over 13% this year through August, historical patterns suggest this September could break from its traditionally poor performance.

• Since 1990, the S&P 500 has gained an average of 0.93% in September when up 10%+ year-to-date through August 31, with positive returns two-thirds of the time
• Only three of twelve S&P 500 sectors fell in September during years when they were up year-to-date as of August 31, despite three sectors (communication services, healthcare, energy) typically declining in the month
• Top September performers include industrials and materials stocks, with Quanta Services averaging 6.2% gains and Caterpillar up 6.1% historically during the month

US stock futures fell sharply Wednesday morning, with Nasdaq futures down 200 points (0.65%), as investors faced pressure from rising oil prices above $95 per barrel, 10-year Treasury yields approaching 4.8%, and uncertainty around AI sector earnings. The market awaits Broadcom's fiscal third-quarter results as a critical test of continued AI spending momentum amid concerns about whether massive AI investments will generate sufficient returns.

• Brent crude climbed above $95 and the 10-year Treasury yield neared 4.8%, creating inflation concerns and pressuring growth stock valuations through higher borrowing costs
• Broadcom's earnings report after Wednesday's close is viewed as a key 'AI reality check,' with Wall Street expecting roughly $29 billion in quarterly revenue and options pricing a 7% swing in the stock
• Dell shares surged on strong AI infrastructure demand results, offering evidence that physical AI infrastructure spending remains robust despite investor questions about return on AI investments

South African pharmaceutical company Aspen Pharmacare reported a 22% increase in normalised earnings on Wednesday. The growth was driven primarily by strong performance in its commercial pharmaceuticals unit during the reporting period.

• Normalised headline earnings per share rose 22% compared to the previous period
• The commercial pharmaceuticals unit was identified as the main driver of growth
• Aspen is South Africa's largest drugmaker and the earnings growth reflects strong business momentum

Mortgage rates climbed to their highest level in four weeks, reaching 6.79% for 30-year fixed-rate loans, driven by inflation concerns and deficit worries pushing yields higher globally. Total mortgage applications rose only 0.8% as borrowers increasingly turn to adjustable-rate mortgages (ARMs) offering lower initial rates of 5.94%, though these loans carry greater future risk.

• The ARM share of applications increased as borrowers seek lower initial rates (5.94%) versus fixed rates (6.79%), despite the risk of future rate adjustments
• Purchase applications rose 2% week-over-week but remained 0.2% below year-ago levels, while refinance applications fell 1% and were down 19% year-over-year
• Ample housing inventory in local markets is supporting transaction volume despite elevated rates, providing buyers with more choices

Global bond markets are selling off as energy prices surge due to Iran conflict escalation, with U.S. 10-year Treasury yields hitting 4.8% and approaching the critical 5% threshold. Multiple central banks including the Federal Reserve, ECB, and Bank of Japan are expected to raise interest rates in September, adding pressure to both bond and equity markets as winter approaches.

• U.S. 10-year Treasury yields reached 4.8%, nearing the 5% level that poses significant challenges for equity valuations in mixed asset portfolios
• New Zealand's Reserve Bank delivered its second consecutive rate hike, becoming the first major central bank to act this month, with Fed officials including Michael Barr signaling September rate increases may be necessary
• Rising oil and natural gas prices (European gas at highest since 2023) are intensifying fiscal pressures for governments facing budget deadlines and elections, including Germany's state elections and U.S. midterms in two months

China's Sinopec is aggressively buying Russian oil through October 2026 to capitalize on improved refining margins and offset reduced Middle Eastern supply, leaving smaller independent 'teapot' refiners struggling to secure crude. The buying spree has driven up prices and accelerated trading timelines, while Iranian oil supplies have dwindled due to a U.S. naval blockade resumed in mid-July. Teapots now face sharply higher costs for alternative crude sources, potentially forcing refinery run cuts.

• Sinopec purchased 10-15 ESPO shipments for October (235,000-353,000 bpd), with total Russian oil imports in August estimated at over 400,000 bpd, representing 9% of its refinery throughput
• October ESPO trading closed by mid-August, nearly a month early, with November premiums surging to $10 per barrel as Sinopec's demand squeezed available supply
• Independent refiners face Iranian oil premiums at $6 over Brent (versus typical discounts) and Iraqi Basrah Medium near $8 above Brent, prices at which most teapots would lose money and may cut runs by late September

The Bank of Canada faces a challenging interest rate decision on Wednesday as Trump's 50% tariffs on Canadian goods and Canada's retaliatory measures create conflicting pressures of weaker growth and higher inflation. While Canadian GDP grew 0.8% in Q2 and inflation rose to 3% in July, the escalating trade war complicates the central bank's monetary policy outlook.

• Canada announced retaliatory tariffs on over $20 billion in U.S. goods, effective September 8, in response to Trump's 50% tariffs on Canadian exports
• Goldman Sachs forecasts the tariffs will reduce Canadian GDP growth by 0.3 percentage points while boosting inflation by 0.3 percentage points
• The BoC has held its benchmark rate at 2.25% for six consecutive decisions, down from a 5% peak, with most analysts expecting rates to remain on hold despite traders pricing in three hikes over the next 12 months

U.S. Treasury yields rose on Wednesday as part of a global bond sell-off driven by inflation concerns and expectations of central bank rate hikes. The 10-year Treasury yield reached 4.81%, its highest level since January 2025, while the 30-year yield climbed to 5.286%. Investors are demanding higher premiums on medium- and long-term government debt amid fears of entrenched inflation.

• The 10-year Treasury yield increased 1 basis point to 4.81% (highest since Jan 2025), while the 30-year yield rose 2 basis points to 5.286%
• Market expectations are shifting toward interest rate hikes this month in the U.S. and other countries as central banks prepare to combat persistent inflation
• Some bond investors are holding back from locking in current high yields, anticipating yields could rise even higher if central banks implement aggressive rate increases

Iraq increased oil exports to over 2 million barrels per day in August, recovering from severe disruptions caused by the near-closure of the Strait of Hormuz since February due to the Iran war. Deep discounts of $25-$30 per barrel and Iranian approval for tankers to transit the strait have attracted Chinese and Indian buyers, with September imports expected to rise further.

• August exports reached 2.17 million bpd, up from 1.32 million bpd in July but still below February's 3.36 million bpd before the Strait of Hormuz crisis began
• Iraq offered steep discounts of $25-$30 per barrel FOB, enabling traders to earn profits of about $10 per barrel after shipping and insurance costs of around $17 per barrel
• Chinese refiners purchased at least 16 million barrels for September delivery, with major buyers including PetroChina, Rongsheng Petrochemical, and trading firms Vitol, Trafigura, and Mercuria

Shein shares fell more than 5% on their second day of Hong Kong trading, closing at HK$46 after a lackluster debut that saw the stock initially tumble 10%. The fast-fashion retailer raised $1.7 billion in its IPO at a $26.5 billion valuation, roughly a quarter of its 2022 peak of nearly $100 billion.

• The stock closed at HK$46 on Wednesday, down from its HK$48.56 IPO price, following Tuesday's volatile debut session
• Shein's valuation of $26.5 billion represents a dramatic 73% decline from its $100 billion peak valuation in 2022
• Higher tariffs in the U.S. and EU, slowing revenue growth, margin pressure, and intensified competition are undermining investor confidence in Shein's low-cost cross-border business model

Global government bond yields surged to multi-decade highs on Wednesday as inflation fears and concerns over high debt levels intensified. Major central banks including the Federal Reserve, Bank of Japan, and European Central Bank are expected to raise interest rates this month, putting additional pressure on bonds. The selloff has also triggered risk-off sentiment in equity markets.

• The German 10-year Bund yield reached 3.375%, its highest level since 2011, while Japan's 10-year yield stood at 3.016% and U.S. Treasury yields remained above 4.8%
• Rising commodity prices driven by tariffs have reignited inflationary pressures, compounding concerns about fiscal positions and debt loads in major economies from the U.S. to Japan and Germany
• Principal Asset Management's CIO warned that stratospheric global debt levels during a period of healthy economic growth create a 'more precarious place' if economic disturbances occur, with no apparent political will to address the issue

Meta CEO Mark Zuckerberg and Tesla CEO Elon Musk addressed the G20 summit advocating for expanded AI data center infrastructure. Their appeals highlight the tech industry's push for government support in building the massive computing infrastructure required for advancing artificial intelligence development. The intervention signals growing pressure on policymakers to facilitate AI infrastructure expansion.

• Two of tech's most prominent figures directly lobbied global leaders at the G20 for support in expanding AI data center capacity
• The plea underscores the critical infrastructure needs for AI development as companies race to scale computing power
• Government cooperation is increasingly seen as essential for meeting the energy and physical infrastructure demands of AI expansion

China is maintaining steady refined fuel exports at around 4 million metric tons in September, continuing its relaxed export controls implemented after easing restrictions in March. The move allows Chinese refiners to capitalize on tight global fuel markets and high overseas margins, with diesel profits estimated at over $200 per ton. State-owned refiners PetroChina and Sinopec received over 60% of export allowances.

• September exports of approximately 4 million tons represent a 33% increase from 2023's monthly average of 3 million tons, with diesel and jet fuel comprising the bulk of shipments
• Chinese diesel export margins are estimated at more than 1,500 yuan ($223) per ton, while Asia's diesel refining margins have tripled to around $70 per barrel since February
• Increased Chinese exports are expected to boost Asian fuel supplies and help cap regional price gains amid tight global markets following Russian refinery disruptions and reduced Middle Eastern exports

Three liquefied natural gas cargoes from Qatar and the UAE were transferred via unusual ship-to-ship operations outside the Strait of Hormuz in August for delivery to India and Japan. The transfers occurred amid heightened tensions following a U.S.-Israeli war with Iran that began February 28, which has largely shut the strait and disrupted regional energy supplies. Asian spot LNG prices have more than doubled to $23.20 per mmBtu as a result.

• Iran has largely shut the Strait of Hormuz during the six-month conflict, causing several commercial vessels to face attacks and forcing LNG carriers to use unconventional ship-to-ship transfers
• Asian spot LNG prices reached a five-month high of $23.20 per million British thermal units, more than double pre-conflict levels, due to reduced regional LNG exports
• Three tankers completed STS transfers off Oman and UAE coasts: GasLog Shanghai to GasLog Savannah, Al Rekayyat to Tembek (delivered to India), and Mraweh to LNG Enugu (en route to Japan)

Renewed military conflict between the U.S. and Iran on September 2, 2026, has disrupted shipping through the Strait of Hormuz, a critical chokepoint handling 20% of global crude oil trade. The escalation sent WTI crude surging 4.82% and Brent up 5.07%, while vessel traffic through Hormuz dropped sharply from a 10-day average of 13 ships to just four. U.S. crude inventories also fell by 2.6 million barrels, further tightening oil market fundamentals.

• Iranian forces launched missiles and drones at U.S. positions in Jordan, Iraq, and Bahrain, prompting U.S. strikes on Iranian air defense and maritime infrastructure, with Iran's Revolutionary Guard signaling further trade disruptions.
• Only four vessels crossed the Strait of Hormuz on Tuesday versus the 10-day average of 13, while two Saudi supertankers were hit by projectiles, highlighting immediate supply risks.
• Natural gas markets remained less constrained despite geopolitical tensions, with U.S. LNG exports averaging 17.4 Bcf/d in H1 2026, up 23% year-over-year, though Qatari supply disruptions tightened global LNG availability.

With U.S. national debt surpassing $40 trillion and long-dated Treasury yields at their highest since 2007, concerns over America's fiscal outlook are intensifying. Treasury Secretary Scott Bessent believes the U.S. can grow out of the debt, but historical precedent shows Washington has repeatedly innovated financing methods during crises. The article examines six episodes where unconventional strategies were deployed to address funding challenges.

• During the Civil War, federal debt rose from $65 million (1860) to $2.7 billion (1865), roughly doubling annually—far exceeding the 6.6% annual compound rate seen since 1946—prompting creation of new buyer classes through National Banking Acts and mass retail bond campaigns.
• World War II financing relied on war bonds (funding roughly half of wartime debt) and Fed yield pegging that capped Treasury bill rates at 0.375% and long-term yields at 2.5%, a system that collapsed in 1951 due to postwar inflation.
• The 1978 dollar crisis prompted 'Carter bonds' denominated in Deutsche marks and Swiss francs, part of a $30 billion coordinated support program with Germany, Japan, and Switzerland to defend the currency through foreign-currency borrowing and intervention.

Shipping traffic through the Strait of Hormuz dropped sharply to just 4 vessels on Tuesday, well below the 10-day average of 13, following U.S. air strikes against Iran and Iranian retaliation. The strait is a critical chokepoint that normally carries about one-fifth of global oil consumption, and Iran has threatened to 'tighten the lock' on the waterway amid escalating U.S.-Iran conflict.

• Only 4 commodity vessels transited the Strait of Hormuz on Tuesday (1 entering, 3 leaving), down from 10 the previous day and significantly below the 10-day average of 13 ships
• Iran's Revolutionary Guard Corps warned U.S. attacks would 'tighten the lock' on the strait, which carried approximately 20% of global oil consumption before the conflict
• Traffic through Bab el-Mandeb, another Middle East chokepoint, also declined to 18 vessels versus a 10-day average of 24, indicating broader regional maritime disruption

Japanese beverage maker Ito En surged 8% on Wednesday after reporting strong fiscal first-quarter results that beat analyst expectations, with operating profit jumping 22% year-over-year to 10.2 billion yen. The company defied a broader market sell-off thanks to improved profitability in its core tea business and a turnaround in its vending machine operations.

• Operating profit of 10.2 billion yen ($63.7 million) significantly exceeded Citi's forecast of 7.7 billion yen, with revenue rising 3.3% to 135.18 billion yen
• The vending machine business posted a 4% operating profit margin after integrating related operations in May, contributing over half of the 2.5 billion yen profit beat versus expectations for a loss
• Ito En plans to expand its overseas business to more than 60 countries by fiscal 2029 from 52 currently, with its Oi Ocha brand marketed globally by baseball star Shohei Ohtani