Trump desperation grows ahead of midterms. US yields pop ahead of CPI.

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 everybody, it's Thursday, 10th of September, 2026, and markets on the defensive here. We're getting some kind of capitulation-like moves in Europe at least. Yesterday was a pretty ugly session, down 1.6% almost for the stocks, 50. Broader stocks, 600 down, minus 1.4%. You know, it looks kind of ugly on the charts, and then you look at the overall drawdown. I think it was for the stock 600 I did this. Yeah, it was minus 3.7% total drawdown, not even halfway to an official correction territory. So still modest. But clearly, this latest spike higher in yields is spooking the market to a degree, as are rising energy prices. November Brent traded as high as almost $102 per barrel. WTI, the U.S. key grade, was topping out just below $98 a barrel before these crude prices dropped back a little bit. The focus was yesterday, and I neglected to mention it, the Treasury buyback announcement was set, of course, for yesterday. And we were anticipating it quite a bit after the Treasury went to the, you know, made the fuss over raising its buyback amounts, saying they would be greater, at least double. So people thought, okay, maybe they'll go over the $4 billion that would be double. And the $6 billion was announced, with that dropping back to $4 billion for subsequent months. The market was underwhelmed, and Treasury yields shot higher. And interestingly, the U.S. dollar didn't really do anything, nor did the Japanese yen. So I think the key was obviously the Treasury market for the future. But I mean, you know, yes, we saw a new high for the cycle. And importantly, for the U.S. 10-year, that was the high since that episode in late 2023, where it topped out, I think it was a top out actually above 5% nominal. I'm forgetting if it just fell short of just above that level intraday on a couple of days. But, you know, we're still talking about three or four basis points, maybe five basis points yesterday in terms of that overall move. So, you know, it's still, you know, I think we would need to be blasting about 5% for this to be a properly, you know, a move that's destabilizing for this outlook for sentiment. The 30-year is still actually, you know, retained by the prior high there, so not quite yet breaking out. So we have to give it time. Let's see. Clearly some positive correlation as well with crude oil prices. There's lots of news on the geopolitical front in terms of announcements, not really in terms of new sort of fresh hostilities. Trump is trying to, do damage control by saying, look, this is about the political cycle. And basically, they'll end immediately after the election is his wording. Meanwhile, there's a lot of wording from top advisors that the risk could be that Iran persists basically through to the 2029 election. So this is, you know, it feels like Iran is strapped in to resist at all costs to whatever degree it can, but how long can they do so? It will be really critical here. You're also seeing some saber rattling in this new Middle East alliance. I'm forgetting the name of it. Pakistan, Saudi, and others that have signed on to linked to activities of the Houthis and the Houthis are threatening the Bab al-Mandeb Strait, which is the outlet for seaborne cargoes that need to get out of the Red Sea. Clearly those Suez Max type tankers don't have to go through there and could go up through the Suez Canal, but that's a limited number of tankers relative to the larger ones that are the, you know, the big VLCCs or whatever they're called. So we have this whole geopolitical situation, shortly put, you know, causing ongoing consternation. And where's the end of it? I don't know. It does feel like though, there's not this magic announcement that Trump can make as he could in the past, which said, oh, there's negotiations ongoing. Oh, there's agreement framework. But of course, there is that random risk out there that things could suddenly move in either direction, I suppose. Nonetheless, if- If Iran feels like it can buy some time somehow, maybe they'll do that. It just feels like with the maximum pressure tactic from the U.S. that would require that the U.S. does its own climb down first, something it doesn't appear that Trump, the Trump administration is ready to do. Let's park that. I get sick of talking about it. I get sick of hearing myself talk about it. But the bad vibes are pretty evident in the U.S. yesterday as well with this odd twist that we're still seeing some positive action and some key sort of AI type, you know, adjacent stocks and tech, as you said, are happening. And I think that's a good thing. I think that's a good thing. Adjacent stocks, the Philadelphia Sox semiconductor index up 0.4% on the day. The NASDAQ only down minus 0.3 on a day when the S&P was down half a percent and the median stock was down about a percent. If you look at the S&P 500 equal weight, Russell 2000 down minus 1.3, feeling the pressure from yields and crude oil prices there. So not a good day. And yeah, it does feel like- As long as these- It feels like we need to see a thaw in both the Treasury market upside yield action and in the energy action to maybe see a meaningful clearing and rebound in risk sentiment. Either that or maybe some breakthrough thing that can drive sentiment back to the positive side. Don't know if we'll get it from today's Oracle and or Adobe. I doubt if Adobe is broad enough to inspire the broader market. Oracle, it could potentially be as a hyperscaler, most sort of aggressive one in terms of leveraging its balance sheet into CapEx, into this whole hyperscaling effort. It's trading around its 200-day moving average and some crazy volatility readings going into tonight's earnings report after the U.S. close. I was looking at the options market here and I don't have a lot to compare on. Apparently, it's not even the highest so-called implied volatility ranking that options have had for Oracle, but it just seems so nosebleed high. That's incredible. 166% implied volatility. That's an annualized measure going into, I should say, for Friday expiry options. So basically, you have tomorrow's session if you put on a trade today before that expires. Then for the September 18th, so that's basically next week, the monthly expiries, those are at 100%. And for October options, that drops down to 65%. By comparison to Adobe, it's still at a respectable 115% for the Friday expiries, 70% for the September 18th expiries, and dropping down to 60% for October. So there's, you know, in other words, it's implying some pretty chunky moves. Could it inspire risk sentiment either way, or does it just inspire some kind of pop and then the so-called vol crush as the weight of these options, you know, this bidding up of options of either stripe, seeing people taking profits on whatever the move does materialize? We shall see. I did note yesterday, I didn't link it to a specific story, but Google actually dropping solidly below its 200-day moving average, a key development there. On the flip side, Meta, an enthusiastic response to that Muse AI agent, it was trading around its 200-day moving average, and it popped well above with a 6.5% advance on the day on this news item. It does seem, if there is engagement, if there is an interest in using this agent, especially people subscribing to it, of course, it does see a more of their WhatsApp business for sure. It's a lot of WhatsApp, you know, activity takes place sort of just peer-to-peer out there. And if people are sort of plugging into this AI agent to, you know, observe and use agentic AI across all of their Meta apps, there is an ecosystem there that is quite unique because of users' engagement with that Meta ecosystem, Instagram, et cetera, otherwise as well. Yeah, let's see, what else do we have? I should have started off the top with the headlines that everyone else is screaming about, and that is Trump. It's just, it's so non-serious, but Trump promising a $5,000 or floating idea of $5,000 STEMI checks basically to every American if the GOP wins the midterms. It's non-serious in terms of the actual, anything resembling that size of a STEMI check, blowing, you know, fresh holes of incredible magnitude in the deficit and the national debt, destabilizing the treasury market. The Congress, have to pass this. And I don't think anybody in their right mind would do so, knowing what the consequences could be. But whatever. We just have to deal with processing these crazy announcements, which are both delusional and smack of a bit of desperation. There's that one. And then there's the another. Also, we're switching over to the geopolitical front again. I neglected to mention this one. Germany is mobilizing and moving its, stationing its, whatever number it was, armed brigade in Lithuania. The first time you're seeing a German unit stationed outside the German borders within Europe since World War II. So this is a significant signaling, I would say, obviously to Russia and perhaps on NATO as well. And then the other big news item was Apple's big event yesterday announcing that folder. I had a look at it. My impression is not going to be any more interesting than anybody else's impression. But my impression would be that this looks like a device that is not for a serious adult, or I should say businessman type. But looking at myself, the rounded corners, first of all, I'm not an Apple fan person. I'm not in the Apple universe. But just that rounded, whatever you call it, bezel or siding, especially when you open it up, I think it looks like it's something that is appealing to Gen Z and Gen Alpha people, younger people. Maybe that's a great marketing ploy. I'm sure there's a tad of money that has gone into researching different designs and what would be the most appealing. But I'm curious to see how that plays out. Apparently, and this is probably just with the maximum storage options, but the price point could go up to $3,200 for this device. I'm really curious to see how this impacts Samsung's business. They have been the leaders in the foldable market, at least for devices that have large sales outside of China. China has its own very high-quality devices, obviously. But if this impacts the pricing and Samsung can drop its pricing a bit. Whereas Apple insists on maintaining those margins, maybe more so than Samsung does. And as well, I saw some headline. I don't have the data in front of me or anything. But some of the switches that are going on from Apple into Samsung have been due to the availability of these foldable devices. So this is a rearguard action, of course, against that. But is this specific foldable device the one that is going to boost sales? Don't know. But Apple also somewhat dangerously, perhaps, raising those prices. Across the board because of the higher costs of components, especially storage memory. So, yeah, let's see. I'm curious if that big boost that was there for the iPhone 17 upgrade cycle will be difficult for Apple to repeat. In terms of the aftermarket reaction, by the way, to this, almost non-existent. I can't even remember if it was up or down half a percent. Up half a percent, it looks like I noted here in my notes. So not a – people are a bit – scratching their head maybe, maybe not on this announcement. Over to macro and FX again. So, yes, the key focus is the U.S. Treasury market, is really the global bond market. We looked at Europe yesterday as well. A significant advance to new highs for the cycle in European yields. Heading into today's ECB, and as I discussed yesterday, this 25 basis point hike that is coming today, fully priced in. Many of you or most of you even will be listening to this podcast after the fact. Yeah, I'm struggling to come up with the surprise scenario from the ECB. Maybe the surprise scenario, if there is one, is them a little bit more sitting on their hands-ish because it is a supply shock rather than an inflation shock that ECB policy tightening is going to ever do much about. Those factors that are driving inflationary forces in Europe, that is. So on the hawker side, I struggle a little bit relative to what is already priced in, which is effectively those three rate hikes over the coming – Yeah. What should we call it? Now I'm forgetting the timing of them. But certainly most of a second hike is priced into December, and then the third one priced in, I think it was in the April-June timeframe of next year. And then the really critical one here, mostly because I don't think the market is looking for information value in it. The market is looking to potentially trade. I think we're at high energy levels across assets, whether it's oil, whether it's a risk sentiment broadly, and especially in treasuries. People want to take a position. People want to get involved. But they like to get these important data points out of the way before doing so. And I'm convinced of that often that it's not about the data itself. It's just getting that event risk out of the way. And then liquidity is there for the market to express whatever view it's been building towards. Still, of course, the information value of the US CPI data point, and that's what I am referring to, the one released on Friday, could be interesting, could inspire the market to adjust. to whatever the FOMC next week is going to bring. But the really fascinating bit will be the types of reactions like it's fully in line with expectations, and we'll talk about those expectations or just look at the expectations on whatever news article. It's fully in line with expectations, and the market moves massively in either direction regardless. That gives you a much stronger signal than almost anything else. Maybe only the more extreme action would be if it comes in. And under expectations, and the market sells off anyway. In other words, US Treasuries sell off anyway despite a softer inflation print. Also, information value in the market's reaction to the opposite direction of what you would expect from reading the data. So that's the kind of flavor I'm looking for from this figure rather than A, trying to predict it, or B, trying to predict market reaction functions. Let's just see what the quality of the data is and how the market reacts to it. Of course, hotter than CPI. Hotter than CPI than expected, I think, is the most sort of straightforward scenario. And if there's pent-up pressure to sell anyway and that is released, that's sort of just a, yes, this is what we expected type of scenario on a hot inflation print. And now it's pretty much drawing to a close what I had to say for today. I do have a couple of links of note that you can find in the podcast episode description. I want to preface this with saying I know sometimes I weigh in a rather political-sounding fashion on this. On this podcast, I really like to stay out of it, the whole political angle, but sometimes I find different viewpoints from any side very interesting to consider. The Trump administration, for example, there is a deep, I think, strategy within the Trump administration, not always driven by Trump himself, that I take very seriously and I think is a very serious strategy. And that is the whole sort of Michael Every expressed framework around grand macro strategy, the U.S. reasserting its control over supply chains, entertaining the different angles on why the Iran war was started as a sort of counterpoint against China and especially taking out a key power within the Russia-China-Iran axis, if you want to call it that. So I don't sign on fully to any specific view. I do think it's important to look at criticism from both sides of nearly everything. So just want to preface that. So I'm going to preface that with a couple of the links today. And one of those is to Matt Stoller, who can look very much just like a progressive Democrat. I would say he's mostly an anti-monopolist, anti-crony capitalism. And I fully respect his criticisms on that front, on what some of these big companies are doing to the U.S. economy and how they are able to abuse their power, which I think is this level of abuse of monopolies that is at the greatest levels essentially since the trust busting back around. Around the turn of the 19th to the 20th centuries. But in any case, this is an interesting specific one also because of the political angle of what's going on. In an article he calls, Bottom line here is that Trump is trying to lower prices on beef ahead of the election. So he's willing to import enormous loads of frozen beef from Brazil and Argentina, where some of this may be rather dodgy quality because of various, I guess, antibiotics or hormones. Even China is saying it will not import, I think it's Brazilian beef. And basically this, for good reason, has American ranchers up in arms because their costs have gone sky high. They can't get the prices or sell prices, anything resembling what this imported dodgy meat can be sold at. So this is a, it's not in number terms a key part of the Trump base, but it's certainly a group of people, that is cattle ranchers, that are out in rural communities. Which are traditionally very pro-Trump, and they're very, very directly negatively impacted by this. So there's the story itself, it's kind of gross, what's happening. And then there's the political angle as well. Then there's a pro-publica piece. And again, that's totally a, yes, it's a totally a progressive leaning democratic type of organization, which naturally anything is that's pro, you know, not disrupting U.S. government basically in U.S. sort of the standards of behavior of the, that came before this era of populism. But they put out a piece, which I think is just worth considering how things could play out. If, and likely when, given Trump's history, he decides that he wants to challenge specifically or comprehensively some of the midterm results. It's called "Inside Trump's Effort to Take Over," quote unquote, "Take Over the Midterm Elections." So a Bruegel piece, this was FT Alphaville on what's driving global, the global rise in long-term interest rates. Their conclusion is it's just massive investments, clearly some of that in the whole data center build-out, which has created a big supply of, you know, longer-term debt, duration, that is. And then I'm not sure what this means, but there's less absorption of a yield insensitive investors. I guess that just means the, the sort of passive allocation, I'm not sure. There's less absorption of a yield insensitive investors, and then there's less absorption of a yield insensitive investors. But it's more of a comprehensive piece if you want to get into the weeds on the rise in interest rates and what those drivers are. Then Michael Avery passed along, I'll just put in a little link to it, this news that Deutsche Bank will be the official clearer of Renminbi or Chinese UN transactions in Europe. Interesting look there when you have this, you know, back and forth on to what degree Europe needs to launch or mobilize its own efforts to sort of push back against China's massive, for example, export, some would say dumping, of certain products that are out-competing European industry and could be undermining European industry going down the road. So interesting one there. And there's this very heavily covered, but I'll put in a link to an FT article, this anthropic, I guess he's an engineer, a programmer, somebody the last name Coxon, who has resigned because he sees sort of the lack of safety guardrails as, you know, threatening, essentially threatening mankind before the decade is out. I don't know if it means the 2020s, because that's pretty darn soon, or if it means a decade from now. But yeah, we've seen this line of argument from some key AI researchers, slightly concerning reading, but worth consideration too. Yeah, and that takes me to the end of the podcast for today. Super interesting to see how the session develops these days, but really into the end of the week is really critical over that CPI data point. Whether that sort of reinvigorates this negative momentum, reinvigorates volatility across markets, or not. Or the opposite, that we see a few rays of light because CPI is benign, yields retreat, maybe the energy price retreats a little bit on the lack of fresh news. Who knows? That would be the positive scenario if we're capable of ginning up one here in the near term. And then the sort of mini themes of the Oracle and Adobe reports after the close. All right, that's it for today. Stay careful out there, and I'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 of all kinds. To reach out, you can drop us an email at marketcallatsaxobank.com. That's marketcallatsaxobank.com. Saxo, serious trading worldwide.