Macro

• The week ahead features a fair dollop of labour market data releases in the all-important US economy, topped off by September’s employment report (Fri).
• On Tuesday, the latest US JOLTS report will update labour demand and could influence expectations about how far the Fed will need to go in its renewed tightening cycle.
• On Wednesday, the latest US PCE inflation figures will be released alongside personal income and spending data, ADP employment numbers and the final estimate of second-quarter GDP. 

• Asia’s spare capacity is filling gaps left by tighter US, European and Middle East supply, but recovering demand and fourth-quarter maintenance will test its limits.

• Traditional suppliers are losing export availability, giving Asian producers more room to meet requirements in the US, Europe and other overseas markets.

• The response spans the region, with South Korea, Taiwan, India, Singapore and China all sending cargoes beyond Asia.

• The world economy no longer enjoys the benefits of low inflation. US equity investors are embracing the eventual return of low inflation due to the rollout of artificial intelligence.
• Geopolitics has contributed to a pivot away from globalisation with inflationary implications via supply chain recalibration. Deteriorating fiscal positions, partly due to higher defence commitments, are also producing inflationary pressures. 
• The media has concentrated on the Fed’s role in contributing to higher US interest rates, but the strong economy has also played a role due to rising corporate credit demand.

• Kuwait passed legislation for sukuk borrowing and a new mortgage law.                 
• Bahrain’s GDP fell in Q1 by 3.8 %. FX reserves at their lowest.
• Oman, the only GCC country to benefit from Trump’s war.

• After the initial surge in oil prices yesterday reflecting President Trump’s “rejection” of Tehran’s “proposal” of essentially a seven-day MOU, prices retraced substantially.  
• The pullback appeared to reflect word that Iran Foreign Minister Abbas Araghchi met with mediators in New York after stating that Iran is open to “real diplomacy.”                                         
• At this juncture, however, we are retaining our scenario discussed in recent reports, i.e. that there is a relatively high probability of a return to military conflict.          

• Crude oil futures were sliding lower on Friday following reports that US and Iranian officials were continuing talks on a deal to reopen the Strait of Hormuz, leaving Brent little changed on the week.
• Nov26 ICE  Brent futures were 1.9% lower at  $104.62/b (2045 BST), while Nov26 NYMEX WTI was at  $92.62/b , down 2.1% versus Thursday’s settle.
• According to Reuters, US and Iranian negotiators in New York are discussing a phased path to end the near seven-month conflict that would see Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran.

Highlights

• Malaysia sees over 90% probability of very strong El Niño by October–December

• Vietnam sees 98% probability of very strong El Niño during October–December

• China’s rubber regions show sharply contrasting drought and rainfall risks

• DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers.  Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.
• DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.
• Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers’ ability to meet their contracted offtake agreements.

• In a world of surging interest rates, highly leveraged markets, sectors and stocks are more vulnerable than unleveraged ones. The former set will have skyrocketing capital costs dampening their profitability.
• China (86% net debt-equity in 2025), Thailand (105%) and Philippines (118%) are the most leveraged Asian markets. The least leveraged are Taiwan (54%), India (65%), Indonesia (66%) and Korea (68%).
• Thai telecom, Philippines transportation, Philippines energy, Korean distribution services, Philippines telecom, Indonesian transportation are the most-leveraged market-sectors. Singapore health technology, Indonesian commercial services, Taiwan energy, Indonesian industrials are the least-leveraged.

• It would appear that our scenario in terms of a U.S.-Iran deal remains intact, i.e. “we will believe it when we see it.”    
• President Trump has apparently rejected Iran’s “seven day” timeline for what essentially appears to be an effective reiteration of the original MOU, strongly supported  by the IRGC.              
• President Trump also suggested, as anticipated, that a “re-escalation” of military strikes is possible, but his timeline, at least at this point, is after the midterms, but we shall see.             

• A review of recent events/data impacting our investment themes and outlook
• Global Bond Yields and the Dollar continue their move higher
• Nasdaq prints new highs while weakness lurks beneath the surface

• Hopeful easing of energy price pressures didn’t disrupt the rising trend in interest rates, aided by PMI data showing sustained resilience and the ongoing fiscal profligacy.
• The Norges Bank delivered a hike, despite dovish hopes to stop it, while the Riksbank signalled it will start hiking before year-end, and even the SNB opened a hawkish door.
• Next week is the RBA’s turn to be hawkish to avoid unwelcome FX pressures. US payrolls and higher EA inflation are the week’s highlights in the macro data.

• Where is the market most crowded — and where could the consensus be most vulnerable? This note uses our cross-asset sentiment rankings to find out.
• Technology, Industrial Metals and Energy remain among the strongest consensus longs, with bullish sentiment elevated enough to raise the hurdle for further positive surprises.
• Health Care and High Yield sit near the bearish end of the ranking, but Health Care offers the cleaner contrarian setup given broader and more extreme pessimism.

• There were interest rate rises in both the United States and Japan, neither of which did anything whatsoever to stop the rise in long bond yields, which continues relentlessly upwards.

• The equity markets are failing to read the room, particularly with the Iran war, which is ongoing and disruptive for oil and oil product flows. These problems take time to emerge and they will start to do so over the coming months. When they are realised, equity markets are going to take fright in the same way as bond markets now.

• If governments wish to curtail activity in the bond markets, they’ve really got to take decisive action against inflation, which they haven’t done so far.

• The healthcare sector continues to outperform in September, remaining in the leading quadrant for strength and momentum.  Analysts project a 35% one-year return for the sector.
• Outflows to Hong Kong ETFs since the start of the Iran War have reversed and remained neutral this month.  Southbound net flows are flat after turning negative in 1Q26.
• Chaozhou Three-Circle (6951 HK) has been in the news following its 1H26 earnings report. The company’s H shares have gained 30% since their July listing.

• In Depth: China’s Blood Supply Runs on a Knife Edge. When Li Ke saw the toilet bowl filled with blood, she knew her father might not make it.
• She was caring for him during his hospital treatment for lymphoma.
• His platelet count remained dangerously low, and he needed transfusions two or three times a week.

• The SNB held its policy rate at 0%, as unanimously forecast, judging that higher headline inflation does not yet warrant tightening.
• A weaker franc and elevated energy costs have lifted the inflation path, but forecasts of 0.8% in 2027 and 2028 still support a prolonged hold.
• Rate rises require broader, persistent inflation; renewed franc strength or weaker global demand would instead reinforce the 0% floor.

• The Riksbank held at 1.75%, as unanimously expected, but its higher rate path confirms a 2026 increase in the base case, with more in 2027.
• Stronger demand, a weaker krona and higher energy costs raise second-round inflation risks, despite underlying inflation remaining near 2%.
• Future hikes hinge on adjusted inflation, demand and labour-market resilience, the krona, energy prices and fiscal policy.

• The Norges Bank hiked by 25bp to 4.50% in a hawkish move relative to a dovishly split consensus that had leaned towards a hold after soft summer inflation. 
• Policymakers looked through a CPI-ATE undershoot, citing sticky business costs, energy prices and global tightening; the rate path is to stay higher for longer.
• Risks are two-sided: further hikes if inflation persists, but a faster turn to cut if disinflation resumes; Norway is likely near its cycle peak.

• The Hong Kong market continues to drift sideways this month, trading above its long-term support levels but unable to rally past strong resistance at 27100.
• The healthcare and materials sectors have been the only positive performers since August.  Large-cap and value factors have consistently outperformed YTD.
• JOINN Laboratories (6127 HK) had an engulfing breakout earlier in the month. The H1 2026 backlog surged 61% to CNY 3.7bn, with newly signed orders nearly doubling.  

• Malaysia’s king granted imprisoned ex-prime minister Najib Razak a conditional pardon reducing his sentence to house arrest, triggering  a long-simmering flashpoint in the political scene. 
• UMNO notches a symbolic win in securing its former leader’s release, but this risks reviving public memory of the corruption scandals that cost it in previous elections. 
• Anwar’s coalition is on the back foot: the prime minister has to balance between his angry reform-leaning base and the coalition partners, adding strain heading into the 2028 election window.

• Our view of the U.S.-Iran conflict remains that in terms of a “deal,” we will believe it when we see it in tandem with the possibility of renewed military strikes.                  
• In this context, we believed that once October NYMEX CL expired, we suggested support for the November contract at roughly $90.00-$92.00 per barrel.                                         
• Thus far we have been effectively on the mark, but we fully concede there remains much uncertainty in either direction between now and the end of the year.          

• Crude oil futures continued to pull away from weekly lows on Thursday as initial optimism around renewed talks between the US and Iran receded, with little progress made.
• Nov26 ICE Brent futures were 4.4% higher at  $107.56/b (2030 BST), having peaked at $106.50/b, while Nov26 NYMEX  WTI was at $95.47/b , up 3.6% versus Wednesday’s settle.
• Diplomatic hopes and improving supplies had been pressuring oil prices in the first half of the week, analysts said, with initial signs of progress in US-Iran negotiations and the partial restart of Saudi Arabia’s East-West pipeline helping ease concerns over balances.

• The dollar reacted to one macro factor all year, with a sensitivity statistically indistinguishable across five regimes; what changed was which driver moved the factor and whether others followed it.
• Gold led before the Iran war, VIX during it and again in the fiscal-dominance weeks; since Jackson Hole the dollar has traded the factor itself, led by the front end.
• A dollar factor and the same macro drivers explain 72%-85% of every G10 currency except the yen; beyond the dollar, NOK traded oil, CAD the BoC, NZD the RBNZ.

• In Depth: How Paying for Likes Is Becoming a Crime in China
• China’s courts are grappling with how to punish the growing business of artificially inflating views, likes, comments and other engagement to make merchants and products appear more popular than they are.
• Chinese Fugitives Allegedly Faked Jewish Ancestry to Gain German Citizenship

• Bank Indonesia held its policy rate at 5.75%, as expected, prioritising rupiah stability while macroprudential and fiscal measures support growth.
• Near-Term cuts are unlikely as Fed tightening, a strong dollar, weak portfolio inflows and higher oil prices constrain BI’s policy flexibility.
• A prolonged hold is most likely; renewed rupiah or inflation pressure could trigger a hike, while cuts require sustained external stability.

Highlights

• El Niño expected to strengthen, with nearly 100% persistence probability through February 2027

• Indonesia wildfire emissions reached 19.7 million metric tons CO2 in early September

• August 2026 was the hottest August globally, intensifying rubber supply concerns

• AI’s Next Battle Is Not Models — It Is the US$4tn+ Fee Pools Around Them, From Financial Services to Advertising and Information
• Silicon Valley Has the Scale and Cost Advantage; Wall Street Has the Licences, Balance Sheets and Relationships to Defend the Fortress
• Our Outcome: A Bifurcated Oligopoly — AI Captures Unlicensed Thinking, While Regulated Incumbents Defend Clients but Surrender Pricing Power

• The standard Central Bank response to higher inflation is to raise interest rates, but the impact on an economy will depend on a) what is causing the inflation and b) the nature of the balance sheets involved.

• Simply following the Fed risks bad outcomes for Europe and the rest of the Anglo Saxon Markets.

• Inflation at the moment is largely cost push, not demand pull, certainly not outside of the US.

• Crude oil futures rebounded strongly on Wednesday to halt the week-long losing streak, with investors unconvinced that the US and Iran are nearing a deal to end the war.
• Nov26 ICE Brent futures were 4.5% higher at  $103.69/b (2038 BST), halting a run of five straight losses, while Nov26 NYMEX WTI was at $92.73/b , up 2.4% versus Tuesday’s settle.
• The higher prices came after Tuesday’s high-level talks led by White House Middle East envoys Steve Witkoff and Jared Kushner, while Foreign Minister Abbas Araghchi headed the Iranian delegation.

• Flash PMI balances broadly increased in September, despite the intensifying energy supply shock. It has so far been shrugged off, just like the tariffs last year.
• Services balances had fallen in Q1 before the conflict began but have broadly recovered all the lost ground even without the conflict ending.
• National services balances are broadly above their medians of the past year and decade, so demand is not depressed and can’t offset excess inflation in policy trade-offs.

• As we anticipated, Iran President Masoud Pezeshkian’s speech before the U.N. General Assembly was not “benevolent” by any stretch of the imagination. Oil prices rebounded in response.                 
• The earlier oil price weakness appeared to reflect optimism regarding the “sideline” meetings between Iranian delegates and Jared Kushner and Steve Witkoff.                                       
• With respect, however, Iran has previously indicated they would not negotiate seriously with the two who Tehran characterizes as “mere real estate developers.”          

• In Depth: Why Geely’s Founder Broke With Chinese Business Tradition for His Succession When Li Shufu stepped down as chairman and executive director of Geely Automobile Holdings Ltd.
• in August, it signaled far more than a routine leadership change at one of China’s largest private carmakers.
• FINANCE & ECONOMY Hong Kong Moves to Ease Listing Rules on Major Deals, Spin-Offs 

• Remittances keep rising! Urban CPI a touch lower, core inflation higher!                           
• MPC meeting on Thursday! NBE to acquire Banque Misr’s UAE branches.
• The start of divestments finally?

• The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.
• Healthcare is the only sector in positive territory in September.  The materials sector benefited from gains in the gold sector.
• ZTE (763 HK) is maintained a BUY at CMB International with a +48% 12-month upside target price.  The company is transitioning to international and AI sectors for growth.

• Elevated portside inventories and a fresh WoW increase suggest Golden Week restocking has yet to translate into meaningful inventory drawdowns.
• Options positioning is turning increasingly constructive, with call OI building at strikes 105 and 110. OI PCR of 0.61 reinforces the bullish bias.
• Managed money extended its bearish positioning for a 12th straight week, trimming long exposure by ~4% while increasing short positions by ~3%. 

• The Fed has embarked on a rate hike cycle and one more hike in December seems baked in. Treasury yields hovering at higher than 5% seem to portend more hikes.
• Asian yields started rising and PE peaked a year ago. Foreign flows, also impacted by US yields, dropped massively in 2025-26. Valuations and flows are anticipating the bad news already.
• Banks, insurance and basic materials should do well in an inflationary and tighter monetary environment. These sectors are also cheap in relation to their future earnings growth and ROE.

• In his speech to the U.N. General Assembly, President Trump stated that a “deal” with Iran could be made after the U.S. midterm elections.                  
• This suggests to us that there remains the possibility of the U.S. launching a major strike, perhaps on Pickaxe Mountain, before the midterms, as we previously discussed.                                       
• Such an attack might satisfy the domestic base and yet allow President Trump to offer some form of “carrot” to Iran after the midterms to achieve his “off ramp.”          

• Crude oil futures dropped for a fourth straight session on Monday, as expectations that Saudi Arabia could soon restore some flows through its damaged East-West Pipeline eased concerns over supply disruptions.
• Nov26 ICE Brent futures were 3.6% lower at  $100.11/b (2119 BST), while Nov26 NYMEX  WTI was at $92.04/b , down 4.2% versus Friday’s settle.
• Brent earlier traded at an intraday low of $98.98/b, dropping below $100/b for the first time in two weeks.

• Crude oil futures remained volatile on Tuesday as talks around this week’s UN gathering got underway, including backchannel diplomacy between the US and Iran, while Saudi Arabia is preparing to restart exports from the Red Sea.
• Nov26 ICE Brent futures were 1.9% lower at $98.40/b (2124 BST), while Nov26 NYMEX  WTI was at $89.73/b , down 2.6% versus Monday’s settle, leaving both benchmarks retreating for a fifth session.
• Brent traded down to a two-week low of  $97.43/b after Japan’s Kyodo agency reported that a senior Iranian official told the US that Iran would reopen the blocked Strait of Hormuz “within seven days” if Washington accepts Iran’s demands, including lifting a military blockade of Iranian ports.

• One word: bombast. Of 14 testable claims in Trump’s UN speech, two hold up. The structure is the one he used on North Korea in 2017. 
• The structure (annihilation threat, self-praise, a deal that is always close) is identical at the same podium in 2017. He will not change, because markets keep rewarding the pattern.
• His Iran stance now changes daily and the deal is dated to the election. Expect a Hormuz headline before 3 November, and more volatility after. 

• Global air freight rates edged up again last week according to the latest data from TAC Index, calculating agent for the Baltic Air Freight indices and leading price reporting agency for air freight markets.
• The global Baltic Air Freight Index (BAI00) gained +0.9% over seven days to September 21 – leaving the index now at +20.9% versus where it was a year ago, with rates remaining strong in the runup to the traditional peak season.
• With jet fuel rates now up more than double at +116.5% year-on-year to September 18, according to the IATA Jet Fuel Price Monitor, pressure for rates to rise further would seem to be increasing.

• Cover Story: Jeju Missing Persons Scandal Tests Seoul’s Criminal Justice Overhaul Along South Korea’s Jeju Island, the Jeju Olle Trail passes through villages, farmland and coastal roads.
• In Suwon-ri, a community of about 500 households in the northwestern township of Hallim-eup, a narrow palm grove sits beside a road, about 200 meters from the village office and 400 meters from a house.
• BlackRock China Unit Wins QDII License for Overseas Investment BlackRock Fund Management Co.

• WTI gained 0.25% for the week but reversed sharply from its midweek highs as Saudi Arabia restored alternative export flows and fears of a prolonged supply loss eased.
• Options volatility and skew fell after the initial supply shock, while managed money cut net longs, pointing to more cautious positioning as WTI slipped below USD 100.
• Energy ETFs lagged crude despite selective AUM support, while Halliburton enters Q3 with North American pricing, Middle East activity and Venezuela as key catalysts.

• India reversed its entire relative gain against EM. The near 50% relative drawdown is the deepest and longest since 2012, so we’re positioning for improvement.
• Bottom-Decile losses in India have historically preceded strong rebounds. Although relative washouts offer no comparable evidence. We can scale up on an absoute basis.
• Opportunity in the middle of the index. We built a tiered watch list from the middle cohort, scaling toward equal weight as confirmation arrives.

• In its recent Investment Strategy Insights publication, UBS makes the case for expanding commodity exposure beyond traditional safe-haven assets such as gold and the more familiar energy and industrial metals segments.
• The underlying argument is that commodities can provide additional sources of return, portfolio diversification, and protection against inflation, geopolitical disruptions, and structural supply constraints – something we argue for a couple of years now
• UBS identifies several structural trends supporting commodity markets. 

• BoJ’s rate hike failed to lift the yen, as cautious guidance kept markets unconvinced that a faster tightening cycle was coming.
• Record FX intervention has bought the yen some breathing room, but narrowing the yield gap will require a sustained hawkish BoJ stance.
• Options still flag downside risk, yet institutions are building bullish exposure, creating a notable divergence in yen positioning worth watching closely.

• This week’s macro calendar is fairly light after last week’s blockbuster US interest rate move.
• The standout release stateside is Wednesday’s S&P Global flash manufacturing and services PMIs for September, which will give investors a good understanding of how growth is holding up post-hike.
• Thursday brings weekly jobless claims and new home sales, but the bigger story that day is the scheduled Trump-Xi summit in Washington.

• The Fed raised its policy rate expected. Chairman Warsh is seeking to speed up inflation’s decline towards 2%. Interest rate futures are discounting more hawkish policy compared to FOMC members.
• The Fed’s policy rate will remain higher for longer. Higher productivity growth from artificial intelligence raises the neutral policy rate due to high prospective returns on future capital spending outlays.
• Concerns about US equities have risen due to higher Treasury yields after many years of suppression by the Fed but a repeat of the 2022 equity market correction is unlikely.  

Highlights

• Natural rubber exports rose 10.7% MoM to above 110,000 tons in June

• Export earnings jumped 17% as higher prices offset lower shipments

• China shipments surged 36.4%, the strongest growth among major destinations

• Weather and geopolitical risk are compounding across agricultural origins this edition, from West Africa to the Black Sea.
• Treefera’s own stress readings show West Africa’s current cocoa crop in much better shape than feared even as a firming El Nino clouds the 2026/27 outlook, while Black Sea strikes choke wheat exports and positioning and import-driven swings add further volatility in corn and sugar.
• Ghana’s cocoa drought stress has fallen 87% year on year, even as the 2026/27 main crop remains a Watch under a firming El Nino, per Treefera Market Intelligence’s current stress read.

• Saudi’ GDP contracted by 4.7 % y/y in Q2 2026. CPI stable.

• Qatar’s fiscal deficit the largest in ten years.

• Kuwait, Cabinet allows the Future Generations Fund to be tapped. None of these headlines impact markets.

• Yesterday’s selloff was apparently catalyzed by a combination of optimism regarding the restart of the East-West Pipeline and a possible U.S.-Iran “deal.”                 
• In terms of any U.S.-Iran “deal” that has any degree of substance, as we have said several times, we will believe it when we see it.
• In this context, whenever funds felt a “deal” was in the offing, it presented an attractive buying opportunity.           

• Crude oil futures were slightly softer late Friday after paring most of the early losses on Friday, amid reports that major disruptions on Saudi oil supplies were set to continue through October.
• Nov26 ICE Brent futures were 1.1% lower at  $103.66/b (1830 BST), versus an intraday low of $101.92/b, while Oct26 NYMEX  WTI was at $100.88/b , down 1% versus Thursday’s settle.
• It left Brent slightly lower on the week after crude pulled back when Saudi Arabia indicated it could restore about half the capacity of its East-West pipeline within days by bypassing a damaged section, with full flows potentially returning by the end of October.

• There appears to be no letup in the Houthis-Saudi conflict, although as we anticipated, Pakistan and Türkiye are offering “assistance” to Saudi Arabia under the Mecca Joint Defense Agreement.   
• At the same time, there are “rumblings” about a renewed U.S. military campaign against Iran, including a possible strike against Pickaxe Mountain.             
• Nonetheless, at this juncture we would retain our previously delineated trading range for the prompt NMEX crude oil contract of $95.00-$110.00 per barrel.          

• Foreigners sold a record ₩148trn of Korean equities in 1H26, with Samsung and SK hynix accounting for ~87% of the exit.
• Retail absorbed the selling at the top, but September turnover has halved and leveraged demand is now fading as the buyback became an exit door.
• Position for the structural bid: favour value-up banks and holdcos, be selective on Samsung/SK hynix, and avoid leveraged AI and IPO exposure.

• Corporate Japan absorbs ¥20trn of equity in 2026 against ¥10trn the market must clear; on a share-count basis about 2% of market capitalisation is being retired.
• Seventeen IPOs raised ¥144bn in 1H26 against ¥16.2trn of buybacks and 128 delistings; insurers’ zero-holding targets run to FY2029–30, but disposal pace is slowing.
• Post-BoJ hike: overweight cash-funded buyback names and take-private candidates; underweight Growth market, JGB duration and yen cash; neutral yen, hold Japan equities unhedged.

• A review of recent events/data impacting our investment themes and outlook
• The Boj, the Fed, and the ECB all tightened rates this week – with different outcomes
• Tightening liquidity globally, but still no signs of a major top