Diplomacy ends, a third carrier sails, and the bond market prices a longer war

Rubio expels Iran's delegation, and a third US carrier heads for the Gulf

Secretary of State Marco Rubio told the US mission to the UN to inform Iranian foreign minister Abbas Araghchi and his team to leave New York immediately on Monday evening, after seven months of war and weeks of Qatari-mediated indirect talks produced nothing; the delegation flew to Doha early Tuesday. Tehran disputes the account, saying the departure had been scheduled with the State Department since 17 September. The USS Theodore Roosevelt strike group and the USS Makin Island amphibious group are now sailing with more than 7,000 sailors and 2,000 Marines aboard, which could put three American carriers in the region by late October, and Trump said renewed strikes were “possible” after the 3 November vote: “We have a lot of weapons.”

Why it matters: The diplomatic track that markets had been pricing since August is now closed, and the administration has effectively scheduled the next phase of the war for after the midterms — which means roughly a fifth of the world's seaborne oil stays bottled up behind Hormuz for at least another month.

Sources: Axios · The Japan Times · The Washington Times

US borrowing costs reach 24-year highs as energy inflation hardens

The 10-year Treasury yield touched 5.33% on Thursday, its highest since April 2002, and the 30-year reached 5.67%, the highest since July 2002; two-year yields rose to about 4.92%. Traders are pricing persistent, energy-driven inflation from the Hormuz closure plus heavy federal issuance, and they are doing so even after a softer core PCE reading cut the odds of an October Fed rate rise to roughly 39%.

Why it matters: The long end is rising faster than the short end, which is the bond market saying this is not a monetary-policy problem the Fed can solve by waiting — it is a view that oil-fed inflation and US debt issuance are both structural. Every mortgage, corporate refinancing and government interest bill in the country is priced off that curve.

Sources: FXStreet · Invezz · The Hill

Micron's revenue nearly quadrupled, and it guided higher again

Micron reported fiscal fourth-quarter revenue of $54.23bn, against $11.32bn a year earlier and $51.07bn expected, with adjusted earnings of $33.42 a share and an operating margin of 82.3%. DRAM revenue rose 343% to $39.8bn, three-quarters of the total, and data-centre revenue was up elevenfold. Guidance for the current quarter is about $61.5bn. Full-year revenue was $133.2bn, up 256%. The stock is up around 270% this year and dragged the rest of the chip sector higher on Thursday.

Why it matters: Memory is the part of the AI supply chain that cannot be faked with announcements — chips have to be made, bought and installed. An 82% operating margin on quadrupled revenue says the spending commitments the AI labs have been disclosing are already turning into orders, which is the strongest counter yet to the bubble case.

Sources: CNBC · Quiver Quantitative · Earnings call transcript

Serbia's election campaign turns violent, and the watchdogs are counting

The election monitor CRTA has warned of a series of serious incidents in the campaign for the 25 October parliamentary vote, saying participants must refrain from violence and that authorities have to respond to perpetrators without discrimination. More than 35 attacks on journalists have been recorded, alongside assaults on citizens and opposition activists: the journalists' association NUNS condemned a physical attack on Aleksandar Blanuša, editor of the Volim Zrenjanin portal, and an Anti-Corruption Agency monitor was beaten about the head and body after photographing a stand run by the governing SNS. An opposition councillor has accused Belgrade's mayor of assaulting her. Vuçić has told supporters not to respond in kind. The student list, running for the first time, opened its campaign in Novi Sad with a rally announced 24 hours in advance that drew about 6,000 people.

Why it matters: Serbia's opposition is contesting an election whose terms are set by an acting president from the ruling party; if the campaign's main feature becomes physical intimidation rather than programmes, the result will be contested whatever the count says.

Sources: N1 · BBC via 021 · N1 live blog

Bosnia votes on Sunday, with the Croat seat the one genuinely open race

Bosnia and Herzegovina holds its tenth post-war general election on 4 October, choosing the three-member state presidency, the 42-seat state House of Representatives, both entity parliaments and the Federation's cantonal assemblies. The Bosniak seat is a rematch between the SDA's Bakir Izetbegović and the incumbent Denis Bećirović of the Social Democrats. For the Serb seat, the governing SNSD is running Željka Cvijanović against the united opposition's Marinko Božović, with Savo Minić and Branko Blanuša contesting the Republika Srpska presidency. Željko Komšić is barred from a third consecutive term as the Croat member and has endorsed the independent Slaven Kovaçević against HDZ's candidate. The campaign has been coloured throughout by the wartime past — it opened under the nationalist glorification of Ratko Mladić at his funeral, and Biljana Plavšić, the Republika Srpska wartime vice-president who pleaded guilty at The Hague to persecution as a crime against humanity, died in Belgrade on Thursday aged 96.

Why it matters: Komšić's term limit removes the one presidency member elected by non-Croat votes, so Sunday decides whether Bosnia's Croat seat returns to ethnonationalist control — the question that has driven every constitutional fight in the country for fifteen years.

Sources: European Western Balkans · Washington Post · Sarajevo Times

The last US troops leave Iraq, 12 years after the mission against Islamic State began

The Pentagon said the withdrawal of American and coalition forces and equipment from Erbil Air Base is complete, ending Operation Inherent Resolve's presence in Iraq; Erbil had hosted about 1,500 US and allied troops. The multinational task force against Islamic State will be headquartered in Jordan, and counter-IS work in Iraq now passes to Iraqi forces supported by a conventional bilateral security relationship. Iran and its allied militias in Iraq treated the departure as a victory.

Why it matters: The US has removed its ground presence from Iraq in the same fortnight it is massing naval and air power against Iran next door — which both shrinks the target set available to Iranian-aligned militias and removes Washington's main physical leverage inside the country.

Sources: PBS NewsHour · NPR · Fox News

Britain says there are “strong indications” Iran was behind the RAF Fairford scare

Prime Minister Andy Burnham said on Wednesday there were “strong indications” of Iranian involvement in suspicious activity early on Sunday near RAF Fairford, the Gloucestershire base used by American bombers in the war against Iran, where three vans were seen approaching. It was the first official British attribution. Police found no explosives; five British men arrested on Sunday on suspicion of terrorism and explosives offences were released, and a UK-Iranian national has since been arrested. Iran's London embassy “categorically rejects and strongly condemns” the claim, and Araghchi said Burnham was “barking up the wrong tree”.

Why it matters: An attributed plot on British soil would pull the UK from logistical support into being a party attacked at home, and it lands precisely as Washington abandons negotiation — raising the question of whether European governments are prepared for the next phase to reach their own territory.

Sources: NBC News · Al Jazeera · Al Jazeera analysis

Thursday's session: chips carried the market while the bond market went the other way

Wall Street dipped early as yields spiked, then recovered to close marginally higher on the first trading day of the quarter: the S&P 500 rose 0.19% to 7,666.45, the Nasdaq Composite 0.04% to 26,871.60 and the Dow 20.51 points, or 0.04%, to 50,926.56. The split was clean — semiconductors rallied on Micron's results while the 10-year yield pushed to 5.33% and the 30-year to 5.67%, both multi-decade highs, before easing back into the close. Europe was weaker, the STOXX 600 down 1.3% at 626.65 and the Euro Stoxx 50 off 1.38%, squeezed by the same global yields and expensive crude. WTI settled 2.7% higher at about $92.87 a barrel as traders read the collapse of the Iran talks as a longer closure of Hormuz; a Reuters poll now puts analysts' average 2026 Brent forecast at $89.05, up from $85.08 a month ago. Gold rose about 0.6% to roughly $4,212 an ounce and bitcoin gained 1.3% to near $84,700.

Why it matters: Equity investors are buying the one part of the economy with visible demand while the bond market reprices the cost of everything else. That gap has held for weeks; this morning's jobs report is the first number that can close it in either direction.

Sources: CNBC · Invezz · Trading Economics · OilPrice · Fortune

OpenAI says people linked to China's Moonshot AI ran a campaign to steal its models' reasoning

OpenAI published an account of what it calls an adversarial distillation campaign: coordinated attempts to make its models reproduce their own protected reasoning traces in a form the requester could read, including copying encrypted reasoning out of one conversation and asking a separate session to decrypt and transcribe it. Activity began on 1 July 2026, spiked to 16,000 attempted requests from more than 4,000 accounts on 24–25 July, and was shut down on 28 July; related prompt patterns were found across more than 15,000 users. OpenAI attributes the core cluster to individuals associated with Moonshot AI, the Beijing company behind the Kimi models.

Why it matters: Hidden reasoning traces are the main thing separating a frontier model from a cheap imitation of one, and this is the first detailed public case of a named lab's reasoning being targeted at industrial scale — which turns model weights into an export-control and espionage question rather than a terms-of-service one.

Sources: CNBC · The Hacker News · BankInfoSecurity

A superfluid helium qubit is proposed that could cut quantum error rates a hundredfold

A University of Surrey team published the first reported design for a qubit built from superfluid helium-3, a frictionless liquid that is electrically neutral and therefore largely indifferent to the stray charges and electromagnetic noise that scramble conventional superconducting qubits. Their calculations for the device, which they call a superfluid helium oscillator qubit, predict error rates roughly 100 times lower. The work appeared in npj Quantum Information; this is theory and modelling, and no such qubit has been built, but the authors suggest it could eventually work alongside superconducting hardware or serve as quantum memory.

Why it matters: Error rates, not qubit counts, are what keep useful quantum computers out of reach, and almost all the industry's money is on superconducting circuits. A credible path to a hundredfold improvement on a different physical substrate is the kind of result that changes which bets look sensible.

Sources: Phys.org · ScienceDaily · Nanowerk

Stellantis jumps 7.6% off a record low, rescued by American pickup trucks

Stellantis shares rose 7.57% on Thursday from an all-time low after third-quarter US sales came in roughly flat overall but pickup sales rose 34%, with the Ram 1500 up 73% year on year. Chief executive Antonio Filosa reaffirmed guidance for mid-single-digit net revenue growth this year and said the group expects to be cash-flow positive next year. The contrast with Europe is sharp: the company is pausing production at Sochaux, Rennes and Mulhouse for stretches of mid-to-late October because its battery joint venture ACC cannot supply enough cells for long-range electric models.

Why it matters: The same company is being bailed out by large petrol trucks in the US while losing European output to a battery shortage — a precise illustration of why global carmakers' capital is drifting back towards combustion engines even as Europe's EV demand outruns its cell capacity.

Sources: Yahoo Finance · Euronews · Automotive News Europe

Three sweeps and one decider: the MLB wild-card round is done

The Yankees eliminated the Red Sox with a second straight blowout, the Padres swept the Cubs, and the White Sox swept the Astros to become the first wild-card team into a division series. Only the National League's Atlanta–Philadelphia series went the distance, and the Braves ended it on Thursday night at Truist Park, 6–2, on home runs from Michael Harris II, Matt Olson and Ozzie Albies. Atlanta now travels to face the Dodgers. The division series open on Saturday with four Game 1s, including the White Sox at Cleveland and the Yankees at Tampa Bay.

Sources: ESPN · CBS Sports · ESPN schedule

US September payrolls, 8:30am Eastern

Consensus is for about 90,000 jobs after 162,000 in August, with unemployment holding at 4.1% and average hourly earnings up 0.3% on the month; forecasts range from Barclays' 50,000 upwards. With the 30-year yield at a 2002 high and October rate-rise odds near 39%, this is the number that decides whether the bond market's inflation story or the equity market's growth story gets the next few weeks.

Sources: Newsquawk · Bloomberg

Euro-area flash inflation for September

Eurostat publishes its flash estimate this morning, with consensus at 3.2% headline and 2.7% core. Euro-area inflation has climbed from 2.8% in June to 3.2% in August on the same imported energy costs now driving US yields, and a third consecutive rise would make the ECB's current pause considerably harder to justify.

Sources: Trading Economics · Eurostat

Bosnia's last day of open campaigning, and the last day for polls

Publication of opinion polls is banned from 7am today, and the full election silence begins at 7am tomorrow and runs until polls close on Sunday. Today is therefore the final day on which Bosnia's parties can move voters or the public can see a measured estimate of the three presidency races.

Source: Sarajevo Times

Whether Washington answers Iran at all

Tehran left New York expecting a formal American response to the Qatari-brokered proposals on Hormuz. Rubio's expulsion order is the answer so far, and the Pentagon is weighing options for a third carrier and up to 10,000 more troops. Any statement today on either the talks or the deployment sets the direction of oil, and therefore of the inflation reading in every market above.

Source: The Japan Times