Market News

The circular financing debate cuts to a question investors have been circling for months (many, many months): how much of the current AI infrastructure buildout reflects genuine end-user demand versus vendor financing chasing its own tail. Nvidia's customer concentration disclosure, with three direct customers accounting for 16%, 15% and 13% of first-half fiscal 2027 revenue, gives the concern some statistical weight regardless of how the investment structuring is characterised. Regulatory commentary from the IMF and BIS on AI financing risk more broadly adds a macro dimension, since both flagged growing use of debt and private credit across the AI value chain rather than singling out any one company. For now, the debate looks more…

USD/JPY: 154.00 US$2.86bn 153.00 US$2.74bn 152.00 US$1.66bn

EUR/USD: 1.1575 EUR1.44bn 1.1600 EUR996.2mn 1.1500 EUR947mn

AUD/USD: 0.7150 AUD657.4mn 0.7250 AUD622.1mn 0.7110 AUD543.5mn

USD/CAD: 1.3900 US$693.8mn 1.3800 US$535mn 1.3950 US$319.7mn

GBP/USD: 1.3630 GBP565.4mn 1.3500 GBP540mn

Q&A: FX option expiries

What exactly is an FX option expiry? An FX option gives its holder the right, though not the requirement, to buy or sell one currency for another at an agreed rate, called the strike, on or before a set date. That date is the expiry.

Why can a large expiry influence the spot market? It largely comes down to hedging. Banks and dealers who have written these options typically hedge their exposure by trading the underlying currency pair. As…

Thursday's confirmed attack on two vessels near Oman's Khasab, at the mouth of the Strait of Hormuz, adds a fresh, verified data point to the run of shipping incidents that have punctuated the Iran war since earlier this year, and this kind of event tends to move oil risk premia even before vessel identities or damage extent are known. That sits alongside, but is separate from, the still-unconfirmed claim that Saudi Arabia's East-West pipeline has suffered a fresh rupture, a claim now supported by a second round of satellite imagery rather than by any official corroboration.

A confirmed shipping attack landing on the same day raises the odds that traders start pricing in a broader pattern of extended  infrastructure risk rather than…

Thursday's confirmed attack on two vessels near Oman's Khasab, at the mouth of the Strait of Hormuz, adds a fresh, verified data point to the run of shipping incidents that have punctuated the Iran war since earlier this year, and this kind of event tends to move oil risk premia even before vessel identities or damage extent are known. That sits alongside, but is separate from, the still-unconfirmed claim that Saudi Arabia's East-West pipeline has suffered a fresh rupture, a claim now supported by a second round of satellite imagery rather than by any official corroboration.

A confirmed shipping attack landing on the same day raises the odds that traders start pricing in a broader pattern of extended  infrastructure risk rather than…

I'll get more up on this soon, but this is moving oil:

• Unverified satellite data fuels talk of fresh hit on Saudi Arabia's East-West pipeline

Also, Iran has struck 2 vessels with 4 missiles in the US-backed southern Omani corridor of the Strait of Hormuz. the vessels were transiting under US escort.

Unconfirmed claims of fresh damage to Saudi Arabia's East-West pipeline, a key Red Sea export route that bypasses the Strait of Hormuz, are the kind of headline oil markets have grown sensitive to since Houthi attacks on the kingdom escalated again this month. Even unverified, the mere suggestion of another strike on Petroline tends to draw a knee-jerk bid in crude given the route's role as a workaround while Hormuz-linked disruptions persist. Absent confirmation from Aramco, the Saudi energy ministry or a wire service, any price reaction attributable specifically to this claim should be treated as rumour-driven positioning rather than a repricing of fundamentals. The bigger, already-confirmed backdrop, last week's wave of Houthi strikes…

Adobe's fiscal third-quarter results cleared both revenue and earnings estimates, reinforcing the view that its push into AI-powered creative and marketing tools is translating into steady top-line growth. The market's attention, however, is likely to centre on the fourth-quarter guidance, where the revenue range brackets but falls short at its midpoint of the roughly $6.85 billion analysts had pencilled in. That gap, even a modest one, can be enough to unsettle a stock trading on elevated software multiples, where investors tend to reward acceleration and punish deceleration regardless of the size of the beat just delivered. The adjusted earnings guidance, by contrast, sits comfortably above consensus, suggesting margin discipline…

US stocks finished lower across the board, pressured by another sharp rise in Treasury yields. The 10-year yield increased 11.8 basis points to 4.9545%, its highest level since October 2023. The rise in borrowing costs weighed particularly heavily on small-cap and technology stocks.

Oil added another inflation concern after moving above $100 per barrel for the first time since mid-May. Higher oil prices can lift headline inflation, squeeze corporate margins and make it more difficult for the Federal Reserve to lower interest rates.

The final numbers are showing:

• Dow industrial average fell 317.03 points, or 0.61%, to 52,069.22
• S&P index fell 44.59 points, or 0.58%, to 7,591.78
• Nasdaq Composite fell 171.62 points, or 0.65%, to…

• The US Treasury bought $5.187 billion in 10-20 year notes
• US treasury sells $22 billion of 30 year bonds at a high yield of 5.308%
• EIA weekly US crude oil inventories -391K vs -1554K expected
• US wholesale inventories +1.3% in line with expectations
• US August existing home sales 3.98m vs 3.98m expected
• ECB's Lagarde: The economy is proving resilient
• US August PPI 5.4% vs 5.3% expected
• Jobless claims show steady US employment picture. Initial claims 206K vs 205k estimate
• ECB hikes by 25 basis points, as expected

Markets:

• WTI crude oil up $6.67 to $102.72
• Gold down $78 to $4322
• US 10-year yields up 12 bps to 4.95%
• USD leads, AUD lags
• S&P 500 down 0.5%

This is one of those days where the hairline fractures in the market split open. Eyes were on PPI today…

Australia is a major exporter of hard commodities, including gold and copper. When those commodity prices fall, the value of Australia’s exports can decline, reducing the flow of foreign money into the Australian economy. That can weigh on the Australian dollar and push the AUDUSD lower.

Copper also tends to act as a barometer for global growth, particularly demand from China—Australia’s largest trading partner. If copper is tumbling, traders may see it as a warning that global and Chinese demand is weakening. That normally works against the growth-sensitive Australian dollar.

Gold is a little more complicated because it can fall when the US dollar and US yields rise. A stronger US dollar can pressure gold and copper while simultaneously…

The next Treasury buyback is Sept 24.

I wouldn't read too much into this result because it's the first one in the series so the market might be feeling it out. That said, the market was disappointed this week at only $6 billion and $5.187 billion is even lower than that. US 10-year yields hit the highs of the day afterwards and the highs since 2023.

Not coincidentally, the Nasdaq is at the lows of the day, down 1.0%.

The good news for Trump is that if he doesn't want the Federal Reserve to hike rates twice before year end, he has the tools to stop it.

That's not the use of legal threats and other intimidation but ending the war in Iran. The resilience of oil market to lost supplies has been remarkable so far this year, defying analysts for months but the laws of supply and demand remain unbroken. The combination of the release of strategic reserves and (in particular) supressed Chinese demand kept a lid on oil but it appears that's ending. China has returned to the market and there isn't enough oil to go around.

Today, we're seeing signs of a scramble to secure supplies with brent and WTI both up 6% in the ninth consecutive day of gains. Brent is at the…