Morning Wrap (07.10.2026)

Oil prices are rebounding again amid renewed tensions between Saudi Arabia and the Houthis. Houthi forces reported attacks on Riyadh Airport, Abha Airport, and a Saudi air base, although the strike on Riyadh has not been confirmed.

Brent crude remains near $100 per barrel, while WTI has risen above $90 per barrel.

A developing storm in the Gulf of Mexico is expected to strengthen into the first hurricane of the 2026 Atlantic season. Offshore areas along its projected path account for around 15% of U.S. oil production, while several refineries could also be at risk. Refinery outages could have an even greater impact than lower crude production, given the already tight conditions in the diesel market.

According to reports, shipping companies are paying tanker captains around $100,000 per month, along with substantial bonuses, to transit the Strait of Hormuz. Crews still have the right to refuse voyages into war zones, making personnel availability another constraint on Persian Gulf exports.

U.S. API data showed a decline in crude oil inventories of around 2.1 million barrels, while the market had expected an increase. Gasoline inventories also declined, while distillate stocks rose slightly.

The yield on the 10-year U.S. Treasury remains around 5.3% following a prolonged sell-off in the bond market. Goldman Sachs believes the move may have gone too far, pointing to oil prices, strong U.S. economic data, weak Treasury auctions, AI-related corporate debt issuance, and technical selling as the main drivers.

The U.S. dollar strengthened broadly (USDIDX +0.25%) during the Asian session, tracking rising U.S. Treasury yields. USDJPY approached 158.4000, while EURUSD fell below 1.1220.

Real wages in Japan increased for an eighth consecutive month, while base wages continue to grow at a pace close to 4%. The data strengthen the BOJ's case for further rate hikes following September's move to 1.25%. High oil prices remain the main threat to household purchasing power and the sustainability of real wage growth.

Internal RBA models suggest that a sustained 20% decline in AI-related stocks could weigh on Australian consumption, particularly if the sell-off spreads to the broader equity market. Combined with falling property prices, this would represent a significant risk to household spending.

According to reports, SpaceX is seeking to raise $40 billion in financing, including around $30 billion of investment-grade debt, to purchase AI chips from Nvidia.

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