Daily Briefing | October 2, 2026: High Bond Market Pressure and Tightening Global Fuel Supply

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Today's main theme

Over the past 24 hours, the common theme in global markets has shifted from "whether central banks will raise interest rates next" to "whether energy shortages and long-term financing costs can be alleviated simultaneously." The yield on the 10-year U.S. Treasury note rose to 5.34% intraday, the highest since 2002, before falling as Federal Reserve officials hinted at a possible pause in October. However, Chinese refineries suspended exports of refined oil products to regions outside Hong Kong and Macau, and Russia extended its ban on diesel exports, pushing Brent crude oil back above $100 per barrel. AI capital expenditures have also entered a more complex financing phase: Broadcom plans to provide Anthropic with a loan of up to $42 billion, while also serving as its chip design and computing equipment supplier, with industry orders, credit risks, and conflicts of interest intertwined. Geopolitically, the United States has expanded sanctions against Iran's railway and automotive industries, while Russia has warned the West against escalating the Kaliningrad dispute through nuclear deterrence. The start of the fourth quarter indicates that even with a brief pause in policy interest rates, energy, geopolitics, and AI investments are likely to maintain high market discount rates.

Five key news items

1. The 10-year US Treasury yield hit 5.34%, and Federal Reserve officials lowered expectations for an October rate hike.

The yield on the 10-year U.S. Treasury note rose to 5.34% on Thursday, the highest since 2002, before falling back to about 5.237%. Previously, US Treasury bonds experienced one of their worst quarters since 1994, and global long-term financing costs rose accordingly. New York Federal Reserve President Williams and Federal Reserve Vice Chairman Jefferson said that the next step can wait for more data, and the market has therefore shifted its expectations from an October rate hike to a more likely one in December. Minneapolis Fed President Kashkari still expects further tightening before 2027, but is unsure whether action will be taken this month. Stagnant manufacturing activity, rising input prices, and a drop in initial jobless claims to 197,000 continued to diverge inflation and growth signals. The stock market barely closed higher after yields fell, with the S&P 500 rising 0.20%. The key issues going forward are non-farm payrolls, energy prices, and long-term bond buying: even if the probability of short-term interest rate hikes decreases, housing, corporate credit, and technology valuations will still be under pressure if term premiums and fiscal supply continue to push up long-term yields. The market also needs to determine whether overseas buyers view the current yield as a value range or demand higher risk compensation. This choice will affect dollar liquidity and global asset repricing.Source: Reuters；Market Data

2. Chinese refineries suspend most refined oil exports, causing Brent crude to return to $102.

Four sources familiar with the matter said that Chinese refineries have suspended exports of refined oil products to regions outside of Hong Kong and Macau, awaiting further notification from Beijing, with the core objective of prioritizing domestic supply. China's main exports include diesel, aviation kerosene, and gasoline; Domestic commercial gasoline inventories had previously fallen to their lowest level since 2011, diesel inventories to their lowest level since 2015, and refinery processing volume fell by about 7% this year. The news, coupled with troop surges in the Middle East and Russian diesel restrictions, pushed Brent crude oil settlement prices up 4.37% to $102.31 per barrel in December, and WTI crude oil up 2.71% to $92.87. China is not the world's largest exporter of refined oil products, but it is an important marginal supplier in Asia. Exiting would increase diesel cracking price spreads and regional refining profits, and exacerbate transportation, agriculture, and aviation costs. The duration of the policy depends on the speed of inventory recovery and refinery operations after the National Day holiday. It remains to be seen whether Beijing will issue new export quotas, state-owned refineries will cancel the scale of ship cargo, and whether Europe's release of diesel reserves can offset the supply gap in Asia. If restrictions continue into winter, Asian airlines and logistics companies may be forced to lock in fuel costs in advance, and terminal fares and freight rates will also face a new round of adjustments.Source: Reuters；Oil price impact

3. Broadcom plans to provide Anthropic with up to $42 billion in chip financing.

Anthropic’s IPO filings disclosed that Broadcom has agreed to provide up to $42 billion in financing to support its AI infrastructure spending; The relevant convertible debt could cover approximately one-third of Anthropic’s five-year, $125.2 billion TPU computing power lease commitment. Broadcom is also involved in Google's TPU design, equipment leasing, and financing, and expects Anthropic to become its largest computing customer by 2027. Anthropic will have access to several gigawatts of next-generation TPU computing power starting in 2027, while Broadcom expects AI semiconductor revenue to reach approximately $115 billion in fiscal year 2027 and $230 billion in fiscal year 2028. This cycle of "suppliers providing financing and customers repurchasing chips" can accelerate data center construction, but it also closely links the balance sheets and demand forecasts of both parties. Anthropic warned that payment or performance defaults could cause large lease obligations to expire immediately, while restricting the use of the $42 billion credit line; Broadcom's pricing and hardware decisions may also affect its computing power acquisition. Going forward, we should observe the IPO terms, conversion price, computing power utilization, and regulatory agencies' scrutiny of conflicts of interest and concentration. If the model's revenue growth rate cannot cover long-term lease payments, the debt swap will dilute equity; If demand materializes, Broadcom can simultaneously earn revenue from chips, leasing, and financing.Source: Reuters

4. The United States extends sanctions to Iran's railway and automotive industries, extending the blockade pressure from sea to land.

The U.S. Treasury Department announced sanctions against Iran's railway and automotive industries and their overseas suppliers, expanding the "economic exile operation" launched in August. The list includes Iran's Khodro and Sepa, which together account for more than 90% of Iran's domestic automobile market; The state-owned Islamic Republic of Iran Railway Company, Raja Passenger Transport Company, and major private freight companies were also included. The U.S. port blockade has restricted Iran's oil exports through the Strait of Hormuz and forced it to rely more on road and rail transport for petroleum products, fertilizers, and chemicals. The new sanctions are intended to cut off these alternative routes. Some suppliers in Indonesia, the UAE, and Türkiye were also affected. The measures may further reduce Iran's war financing and industrial logistics, but they will also increase the costs of transportation, employment, and living for ordinary residents, and weaken the political space for the seven-day confidence-building plan. Going forward, attention should be paid to whether third-country companies will stop supplying goods, how Iran will circumvent settlement and parts restrictions, and whether sanctions and Qatari mediation can be included in the same negotiation order. Automobiles and railways are highly linked to domestic employment, and the new restrictions may also force Iran to prioritize civilian supplies and increase the cost of government subsidies and exchange rate stabilization.Source: Reuters

5. Putin warns the West against escalating the Kaliningrad dispute; Russia extends diesel export ban.

Russian President Vladimir Putin stated at the Valdai Forum that the world is in a dangerous moment, and if NATO attempts to isolate Kaliningrad, located between Poland and Lithuania, Russia will respond with all means, including nuclear weapons. He also denied any intention of attacking NATO and said he was willing to talk to the leaders of the United States and China. Russia had previously sent a diplomatic note to NATO hinting at nuclear retaliation against the blockade of Kaliningrad, while NATO emphasized its defensive nature and refused to accept nuclear blackmail. Putin also acknowledged that Ukraine's attacks on Russian refineries cost Russia about 1% of its GDP and stated that diesel would not be supplied to the global market until sanctions were lifted. Russia has extended its ban on diesel exports to producers until the end of October, while U.S. diesel prices have risen above $6.50 per gallon. Military warnings and energy restrictions reinforce each other, directly transmitting European security risks to inflation. Next, we need to observe NATO's military deployment in the Baltic Sea, the attack and defense of Ukrainian and Russian refineries, and whether Russia is using diesel supply as a bargaining chip in sanctions negotiations.Nuclear deterrent source: Reuters；Diesel Policy Sources

Market Correlation and Today's Observation

The core of today's pricing is that "policy suspension does not equate to an easing of financial conditions." Federal Reserve officials lowered expectations for an October rate hike, which may weaken short-term yields and the upward momentum of the dollar; However, the 10-year US Treasury yield once touched 5.34%, indicating that energy shocks, fiscal supply, and AI capital expenditures are still driving up actual financing costs. If non-farm payrolls are strong and oil prices remain above $100, long-term yields may continue to fluctuate at high levels, with overvalued technology stocks, real estate, and highly leveraged corporate bonds being the first to come under pressure. The Broadcom-Anthropic financing arrangement can support chip orders, but it has also made the market focus more on revolving financing, customer concentration, and computing power utilization, rather than valuing the technology sector solely based on revenue growth.

In terms of commodities and exchange rates, China's suspension of refined oil exports, Russia's restrictions on diesel supply, and Iranian shipping disruptions have all pushed up the risk premium for refined products. Strong oil prices typically support the US dollar and depress the currencies of energy-importing countries, which is particularly detrimental to the euro, Japanese yen, and Indian rupee. Gold, on the other hand, was simultaneously pulled by safe-haven buying and high real interest rates. China's policy of prioritizing domestic inventory can reduce domestic energy shortages, but it may increase imported inflation and limit the room for global central banks to cut interest rates. Today, the focus should be on whether Brent can hold above $100, the diesel cracking spread, the divergence between the long and short ends of US Treasury bonds, the reactions of Asian currencies, and whether a new implementation order emerges between the escalation of US-Iran sanctions and Qatar's mediation. If oil prices continue to rise while the Federal Reserve remains on hold, the yield curve may steepen further; If fuel supply is released or negotiations achieve a breakthrough, long-term bonds and cyclical stocks will be the first to receive a buffer. China also needs to observe refinery startups, inventories, and export quotas after the holidays, as this will determine whether the restrictions are short-term inventory management or longer-term energy security policies.

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Cover image:Alpha Perspective / Unsplash