Energy prices and yen top market agenda. Copper hits record.

Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hey everyone, it's Tuesday, September 2026, another very late start to the day. Sorry for that. We had a three-day holiday, of course, in the U.S., so there's not a lot to report at all from the U.S. session since there wasn't one, but we do have the futures at least in a slightly negative mood overnight. It's actually a Southern Aztec positive at one point this morning. I think this is clearly down to energy prices. We've been seeing onshore in the U.S. diesel prices pushing towards $6 per gallon at the retail level overnight. We've seen, or today actually I should say, we've seen Brent, November Brent trading at above $6 per gallon. We've seen Brent trading at above $6 per gallon. We've seen Brent trading at above $99 at times in that TTF gas contract, the one month, the one sort of major price benchmark for Europe. Had a new cycle high here, 75 plus euros. We were at 32 this time last year. I was looking at the supply situation. We're still a little bit below where we were heading into the winter of 21 and 22. At that time, it seems quite clear that Putin knew what he was about to do in 2022 as Gazprom was putting the, was creating artificial supply shortages and Europe was having a hard time building its supplies going into that winter. And prices were actually spiking close to where they are now. So we have a similar situation now. We're at slightly worse levels than back then. So this is clearly a supply pinch and it makes you wonder if Russia is again feeling that it can put or test European resolve in this Ukraine-Russia war. It's so hard in this information war that there is out there to understand what the realities are on the battlefield. Just want to put that in there as something that's really a geopolitical test for Europe. And speaking of geopolitics, I've got a couple of items I just thought I would throw out there. If you haven't seen these yourself, we're still wondering if this US-China summit is going to happen. I think it's scheduled for the 24th. There's been no confirmation from the Chinese side and especially in light of the US resolve or intention supposedly after Iran and some profoundly and some sort of anybody trading with Iran gets secondary sanctions and namely the chief, you know, the chief actor there would be China and its buying of Iran oil purchases, et cetera, over time. And there's been no sort of follow-up on that front except for China sending some warnings back when that summit or when that policy was announced. We have the UK announcing sanctions, not on Israel directly, but saying, you know, there's no trade. I don't know if they're going to select this, but ban on trade basically with any settlements on the West Bank. So UK Prime Minister Andy Burnham taking a position on that front will be interesting to see how both the US, well, especially how the US responds. That's the key relationship there. Obviously, Israel will be not in favor of that policy. Geopolitics, I should say, that's off the surface of the earth. When you see Donald Trump posting something about the moon is ours, I guess the US saying it can lay claim to the moon, that's going to be contentious if the US thinks it's going to get its way on that. I would suggest that that notion might be challenged. But just one of these things to put out there. We have Canada, the tariffs going into effect that threatened retaliatory tariffs against the US. It's on a small group of goods, but the key will be the US response. And as mentioned a little bit on the European resolve being tested and the high gas price, we have Moscow. Those envoys that the US tried to get something going. And again, you see sort of positive noises coming out of Washington. We never know what to think of these. But the day after these envoys left, what was it, Kushner and Witkoff, we see fresh bombings of Kyiv. So this is suggesting that this is going nowhere at the moment. And I really wonder, you have talked a lot about yields being a key variable here. But as we get into higher and higher energy prices, it's looking like a supply chain. It's looking like a supply chain. And it is a supply shock if they go higher still. And again, it is refined prices that are the key. There's some double of what the oil price is saying. And in some cases, like for diesel, the price per barrel, it becomes a limiting factor for the economy and a focus of risk sentiment. And that doesn't necessarily follow through to the yields. The idea being if energy goes to $300, it's not like central bank hiking is going to do anything about it. You're just going to have an absolute growth crisis, an economic crisis in growth terms. And some kind of ugly correction. So curious to see if we see signs of that interaction. We have seen higher yields today. They backed off a little bit from where they were at the highs early in the session today. I'm thinking of Europe here and a pretty solid advance in European yields yesterday with the US closed. We've seen the two-year trading above, two-year German, I should say, trading above the shats, above 3%. We saw Monday's close, actually the record high close, even if it didn't get to an intraday record high since, with the 2011 timeframe, 15-year high there. And then this interesting sort of divergence between what's going on in the likes of European yields yesterday and what we see in Japan recently. And the spread, let's just pick out the 10-year spread, for example. Actually, the longest end of the yield curve in Japan has been rallying the most, so 30 years, et cetera. A good sign and a good coincidence sign of what is driving Japanese yen strength, by the way, i.e. some trust going back into the bond market, maybe some flows, actually, maybe some GPIF flows, we don't know, but some strength there in the long end of the curve. Taking those yields lower, and you could say, well, from a carry trade perspective, this puts Japan at a disadvantage, but that's not how the dynamic has been of late. The dynamic has been one of Japan risks becoming an EM. In other words, their bond market's a sign that we need to be preferring these bonds over the bonds or this economy or this currency over another country. So we've seen the spread on the 10-year, so bund to JGB, 10-year JGB, going from the lows around 12 basis points. And back when Urien was trading on a 185-ish or so, what is this, around a month ago? No, early July it was when I did this. And then a week ago, it had risen to 35 basis points. Again, most of that was European yields coming up, a little bit Japanese yields coming down. And we've seen a further divergence there, 50 basis points now. So pretty sizable, pretty good signs of demand for longer end JGBs, especially in this backdrop of higher oil prices, higher yields elsewhere. And that has driven this follow-on move lower in the Yen crosses, strength in the Yen, in other words. And it's a broad move, and it is the move in the currency market right now. There are other things afoot a little bit, but it really is this Japanese Yen situation that is dominating focus. We saw a little bit of a drop in the JGB, but it's not the key 155 level in dollar Yen giveaway, supposedly opening up for a test of the lows of the year around 152.10. Now, it's been a pretty brutal move. It's in its fifth day. It's in time terms for something anywhere resembling this size. This is the most persistent move in ages. So it really does appear to be the real deal. I would want maybe 155 itself. It doesn't have to hold, but not terribly far above there. And certainly on a weekly close this week post of 155.10, it's going to be helpful if dollar Yen remains below 155 to encourage the idea that we're going to continue lower here. And what is the aim of Japanese officialdom here? It's not necessarily to engineer a massive resetting of the currency. I think, number one, they just want to stabilize things. I think if they could just stabilize the dollar Yen exchange rate at current levels, they'd be happy with that. But I think they know to get that stability, they probably need to, or would like to see it a bit lower still, 150. So maybe a new, you know, a new sort of stability and trading either side of 150 or so would be a desirable outcome. And it keeps you away from the whole speculating against the Japanese officialdom and the carry trade if we're at 160 plus. But it doesn't reset the Yen so aggressively that they have to worry about some negative impacts into their economy from a much stronger exchange rate. So can they get that soft landing? I don't know. I think we've seen a decent chunk of the move for now, certainly in maybe the bulk of it. But in price terms, it seems like it deserves a bigger reset. And I especially like to look at Yuri Yen as well. So what's the sort of equivalent? Well, you know, we've traded down below 179 at times here in Yuri Yen. And that is a new, the lows we've seen here are the lows for the year, unlike in dollar Yen. The next focus area, maybe 175. I put this, by the way, in my latest, the FX trader piece. I'll put a link to that in the podcast episode description. But the plus a little bit was the sort of the 2024 high, just when the carry trade was getting a, was in for a big body check, if you will, when the Bank of Japan surprised with that rate hike. And we saw a big move lower in Yuri Yen then. So 175, the next focus. 170, by the way, was the all-time high back in 2000, or before that. Not all-time, but all the way back to 2008. It feels to me like looking at what would be reasonable for European growth outcomes, relative exchange rate, et cetera, the 170 to 155 zone feels like a fair, and well back into that zone, is a fair price long-term for euro-yen. So a long ways off from that where we are now at 178. One of the keys for dollar-yen, by the way, and the direction for the dollar, we did not get any follow-on strength in the dollar from that quite positive U.S. jobs report. It was kind of a Goldilocks report. It wasn't anything that was massively positive, and certainly not positive enough to spike yields higher. And we're only just a bit above 50-50, by the way, for that FOMC rate hike next week. It is the CPI this Friday that will be critical, I think, for dollar direction, possibly for a read across broader markets if it sends treasuries into the dumpster and yields spiking to new highs. So that's the lay of the land in FX. A couple other bits and pieces. Aussie Kiwi going to a new 13-year high above 123. I think some of that is the residual momentum off that less hawkish than expected RBNZ meeting. There's an RBNZ speaker up super late today in Europe. In fact, it's just before midnight GMT. I think some of the Aussie enthusiasm is on metals prices, just in relative terms there, versus the Kiwi. And we've seen Eurostocky, so Euro versus the Swedish Krona, rising back towards 1115. So sort of neglecting that, or not neglecting that, but sort of neglecting that, or not neglecting that, but rejecting that attempt to engineer a reversal. And it does make sense, this move, if you think of the Swedish Krona as some kind of proxy for European growth outlook as well. Sweden maintaining that very low policy rate at 1.75%, and seen less in a hurry to hike than the ECB has been. So with this latest punch higher in energy prices, dimming the growth outlook, et cetera, not a huge surprise to see Eurostocky. And it's not just energy prices that are on the bid in commodity land. Precious metals a bit sidelined here. Gold's still kind of fumbling around this $4,400 area. It doesn't like the rising yields, probably doesn't like the oil price at highs. Might continue to be sidelined as long as we're marching higher in crude oil prices, unless there's some kind of policy move to indicate that yields will be suppressed or otherwise. But copper did hit a new record. Some of this on a tariff noise. It hit a new record, I should say, in London. We'll have Ole to talk on the podcast about that as soon as possible. But this is an interesting move worth following. There's a reminder somebody put out there on X that you need a lot of sulfuric acid in some parts of the whole processing chain to extract copper from the ore. Sulfuric acid is in shorter supply than it was due to the shutdown of Qatari LNG and all the sulfur that has accumulated as a side of the ore. So, it's an interesting move, and I think it's a good move, but it's also a good move to try to get copper out of the ore. So, it's a good move to try to get copper out of the ore. So, there are some knock-on effects outside of just oil there, and one of those is into copper. And if you didn't get to listen to yesterday's podcast, you can, of course, listen to it, but you can also just find the podcast episode description for yesterday. So, Monday, the 7th of September, there's a really interesting X post on the dire state of copper supplies. So, that's. what's impacting the copper market. Now, in terms of equity market performance, we had the release of this open AI model with markets kind of shut, at least in the U.S. We saw Korean memory names and the KOSPI in general overnight trying to get a boost out of this. That boost was pretty much erased entirely. So, it's shooting star formation in the likes of an SK Hynix on the daily. That was kind of interesting as well. The Nikkei down quite heavily on this very low level. So, it's kind of interesting as well. Yen strength, I think. So, rising energy prices, no big help there either. Today in Europe, we have Novartis massively down some 10%. It's starting to look pretty bad. This acquisition they made of, was it 12 billion euros or dollars for avidity and some drug that they have meant to address some kind of rare muscle wasting disease. There was some kind of setback or news that it didn't make enough difference in some kind of drug testing or trials. And you have a. Apparently, the third setback they've experienced in a week of this type of news. So, pretty ugly look there for Novartis. Other single stock news, we're all awaiting this huge anthropic IPO, highly anticipated. FT leading with a story about anthropic and open AI. Pushing for top tier credit ratings post IPO. Looks pretty dire if you look at what their revenue is versus what their costs are. But these are also companies that are going to be in the top tier. So, I think it's going to be a lot of fun to look at. And I think it's going to be a lot of fun to look at. But these are also companies that are growing like no other company that has IPO'd before at such a size. So, I wouldn't know how to assess the credit rating for these companies. But it will be important for their status and their ability to grow via debt issuance, not just via an IPO. We have Apple out tomorrow with a big event, which is meant to include a $2,000 plus foldable iPhone. I was blinking at the price but then I realized or some others mentioned that the latest Samsung phone models, the sort of new format foldables are around that price point already themselves. So, this is not a huge shocker in terms of price. What will the demand be? Will it move their overall business? That'll be the key question. Interesting to see how the stock receives that event. And then Thursday, as we've been mentioning all along, Adobe and Oracle, two very different companies reporting on the software as a whole. So, the first one is Apple. The second one is Google. The third one is Apple. The fourth one is Apple. The fifth one is Apple. I did see a headline. It wasn't really much of an article, but I think it's just a reminder worth repeating the headline on oilprice.com. Headline something along the lines of modern warfare is making, it's sort of essentially consuming or destroying rare earths because these are put in some of these advanced weapon systems that are then deployed. But if you deploy those and you explode some ordinance somewhere that contains trace amounts of germanium, there's no way to really economically or effectively retrieve that. So, some steady supply of some of these rare earth elements is going to be needed for this new era of high tech and this new awareness around the need to produce large amounts of these high tech based defense items. So, just a reminder there on the whole rare earths theme, which has been pretty quiet of late because we haven't had fresh sanctions threats that we've been talking about, at least in the from China, et cetera. And I wonder if there's some kind of window of risk around this summit, if it doesn't happen, for example, or if the U.S. postures too aggressively on Iran and China's involvement there, just to put it out there and associate it with that headline. I will put a link to the FX trader piece, as I mentioned. And as well, there's a wonderful, I know he's basically a democratic socialist, but he writes very well. And I think some of the specific things he writes on are spot on in terms of, you know, this is not what capitalism was meant to be. When we look at a company like Amazon, in this case, in his write-up, and their sort of use of what he calls payola, basically, you know, extracting profits from those that want to list their goods on the Amazon platform. They don't really have a choice to list anywhere else. They're absorbing a lot of the costs as well of the shipping, so that Amazon is even. making money, additional money, on its shipping because of those costs it is moving on to the seller. I think it's, you know, it will make people think twice, potentially, about their use of the Amazon service. He calls it nicely. He is the guy who came up with the neologism in shitification, and he calls something about, I can't remember the title of the article, something about the Enchitocene. Meaning the era of enchitification, when he's talking about Amazon's practices. As always, highly entertainingly written, and there's some deadly seriousness around his charges there. And Amazon is actually being assessed, or not assessed, but it's being accused of some malpractices around some of its auctioning process to those companies. Not only. This is not about the postage, but about those bidding for sort of top-tier listing, I guess, on certain searches. Terms, etc. A little bit like the Google search model. Something about they're not being charged the rate they should be charged. In other words, the second lower bidder's price plus a penny, they're being charged at the rates they said they were willing to pay. The top dollar, in other words. And that's not meant to be what's in the contract, or it's meant to be the practice. And then there's one, I haven't looked at this yet, but I've seen lots of noises. I think I passed along an article sometime back on this. A lot of noise about the private equity industry. I don't know if you've heard of it. And they're linking themselves to even acquiring, in some cases, life insurance companies to use those long-term dollars that are in life insurance policies to invest in their own private equity operations. What could be the risk if the private equity side of that goes belly up, especially in the coverage, the intensity of the coverage has been around a lot of the software investments that these companies have made, and that those software investments might need to be marked considerably lower because of the risk. And I think that's a really good point. I think that's a really good because of the risk of AI disruption. So I can't attest to the quality of this. month and a half old, maybe, this video, but it just looked like an interesting one on what the person calls an insurance time bomb, if you want to dig deeper into that story. All right, there's lots to look at. Going to be an interesting session ahead. Again, is there some sort of breaking point, straw that broke a camel's back point to these energy prices? Is that at $100 per barrel for Brent? We're almost there, basically. Or is it not until higher? Can we continue to ignore things like this and diesel effectively, for example, trading at $200 per barrel? It's looking a bit grim on the energy front, but let's see how sentiment shakes out and stay careful out there. We'll be back tomorrow with the next Saxo Market Call. This has been the Saxo Market Call podcast. Thanks for joining today's episode. We're always happy for your feedback and questions. To reach out, you can drop us an email at marketcall at saxobank.com. That's marketcall at saxobank.com. Saxo, serious trading worldwide. you