Friday evening, just before power hour, Trump's post landed in my news feed: a call with Putin, Russian diesel on its way. Minutes earlier the Treasury had signed the license that lets it into the US. In September, diesel at the pump hit an ATH, 6.53 dollars a gallon according to the EIA, against 3.81 before the Iran war. My thesis: three weeks before the midterms on 3 November, the White House is doing everything it can to give voters faith in the future, and it is meant to show when they fill up.

1The White House: four moves in one week

Monday: payment of the federal diesel tax is deferred for the rest of the year. Thursday: Trump promises not to attack Iran “before the midterms”. Friday: the license, and diesel prices are to fall “IN RECORD NUMBERS, AND FAST!”, Trump writes. Sunday: Trump declares an “ENERGY CEASEFIRE” that the Kremlin has not confirmed. Hours later a power plant in Kharkiv was hit, according to Zelensky.

2The counterpoint: Iran weighs more than diesel

The first 300,000 tons cover roughly 14 hours of US consumption, and the price was already falling before the license. “Everything” does not hold: the blockade of Iran's ports stays in place, the US sanctioned more ships in Iran's shadow fleet on the same day as the promise, and the promise only runs until the election.

Why fuel prices? According to Reuters/Ipsos, only 21% approve of Trump's handling of the cost of living, the issue most say decides their vote. Faith in the future is lagging: Michigan consumer sentiment fell in October, dragged down by independent voters.

3The Nasdaq handled the yield. AI is the question mark.

Last week's hypothesis, that stocks can handle the yield as long as the market expects at most one more hike this year, held. The Nasdaq 100 hit an ATH on Tuesday, and the 10-year yield closed the week lower, at 5.24%. According to the minutes of the September meeting, most Fed officials saw one more hike as likely, and the market puts it in December. The rates market has not struck out a second hike, only pushed it to early 2027.

Thursday's Nasdaq dip coincided with a Financial Times report: OpenAI's annualised revenue is close to 50 billion dollars, around 20 billion below the figure that had been circulating. If anything wobbled, it was the AI profits in the hypothesis, not the Fed.

Brent rose anyway

Brent rose 1.6% to 104.4 dollars on the week, while WTI, the US's own oil, stood still. I read that as the risk sitting in Hormuz and the Red Sea. On Saturday a missile hit Riyadh's airport: at least twelve dead, the deadliest attack on Saudi Arabia in more than a decade. Will the US join the Saudi strikes on the Houthis? “We may,” Trump replied. None of that was in Friday's prices.

The week ahead

• Tonight: oil opens, the first trading after Riyadh and the Houthis' unconfirmed claims of strikes on Aramco.
• Wednesday 14:30 CET: September CPI, expected to rise to around 3.6% from 3.4%. The last one before the election. Same day: the EIA's first fuel prices since the license.
• Thursday: the IEA board meets, and IEA head Fatih Birol wants member countries to consider releasing more diesel from emergency stocks. At 08:00 CET TSMC reports, a big AI test after the OpenAI report.
• Friday 05:30 CET: Fed Chair Kevin Warsh speaks, the day before the Fed goes quiet ahead of the 28 October rate decision, the only one before the election.

WTI is lower-hanging fruit than Brent

Now the focus shifts from the yield to oil. My hypothesis stands, slightly adjusted: the White House can get the price at the pump down a bit before 3 November, Brent is more uncertain, and as long as Brent rises, the likelihood grows that the market once again prices in two more hikes before year-end.

At 14:30 on Friday I was trading the Nasdaq live on TikTok when the US jobs report came out. I had a bull bias and expected a new ATH, the second in the same week. The report was “bad”: 29,000 new jobs when 90,000 were expected. The ATH came anyway. What changed was the expectations of the Fed. A week ago the market was pricing in two more hikes this year. After Friday, just one, and not even that one is certain. That was enough for an ATH.

1Why weak jobs became good news

It sounds backwards, but for the market the question is not how the economy feels but what the Fed does next. Fewer jobs mean less reason to hike, and every hike that gets priced out makes future profits worth more today. And the US does not need many new jobs to keep unemployment steady, because the workforce is barely growing any more. Weak, but not dangerous.

2The yield did not care

This is where it jars. The 10-year yield usually falls on weak jobs. It fell for an hour, then turned and closed at 5.3%, the highest since 2002. The people who lend money to the US government are looking at something other than jobs: inflation stuck above 3%, Brent crude above 100 dollars, and a government that borrows more every year. They want more pay. For anyone borrowing for a house, it feels like a hike, except nobody voted on it. The stock market celebrated the hike that was priced out. The yield did not care.

3Micron: great report, stock stood still

Micron, which makes the memory in AI servers, sold $54 billion in a single quarter, almost five times as much as the same quarter last year, and raised its forecast for the next. The stock barely moved. That is less strange than it sounds. After a rise of several hundred percent this year the report was already in the price, and what a report confirms does not move the stock. What moves it is the bar for the next quarter being raised, and that takes a few weeks. Nvidia is the clearest example: four reports in a row the stock has fallen on the day despite beating expectations every time, and yet it stands at an ATH today. The rise came between the reports, not on them.

Companies like that carry the Nasdaq. But on Friday more stocks in the S&P 500 fell than rose. A few giants lift, the rest feel the yield.

Oil fell during the week. Then there was fire near Riyadh.

Brent crude fell during the week, from 108 to just above 100 dollars, despite five tankers hit around Hormuz. The G7 is selling from its stocks and Saudi oil is getting out via the Red Sea. Then came Saturday: the Houthis say they hit Aramco's refinery south of Riyadh with missiles and drones, and smoke and fire rose over the facility. Saudi Arabia calls the claim misleading but has not explained the fire. Meanwhile Saudi Arabia is bombing the Houthis in Yemen and, according to Reuters, preparing a ground offensive within weeks to retake Bab el-Mandeb, the strait the Houthis seized in September. That war is about to grow, not fade. Pulling the other way is Trump, who says the war with Iran will soon be over and that oil prices will then come tumbling down. OPEC kept output unchanged today. None of this is priced. Oil opens tonight, and it is the first thing I will look at.

One more thing, which I think we will see more of: the FBI has found evidence that hackers took over the propulsion of a supertanker bound for Texas this summer. Oil has so far been about straits, pipelines and ports. Now it can be about code too.

The week ahead

• Tonight: oil opens. First trading after Riyadh.
• Monday 16:00 CET: ISM services. A hot number points to continued inflation pressure.
• Wednesday 20:00 CET: the Fed's minutes. Everyone voted for the hike, the question is how many want more.
• Wednesday 14 October: September CPI. Probably weighs heaviest for December.

The market got what it wanted. The yield did not care.

That can hold for a while, but not a whole autumn. My hypothesis: as long as the market counts on at most one more hike this year, stocks can handle this yield, because AI profits weigh more. If the market starts counting on two again, because Monday's ISM is hot or Wednesday's minutes show more Fed members wanting to hike, stocks have both the Fed and the lenders against them. And oil can take us there faster than the Fed: if Brent opens clearly higher tonight, inflation is back in the pricing before the minutes even arrive.

Last Sunday I wrote that the market counts votes. This week there were no votes to count: no Fed meeting, no Iran deal, no Micron report. Yet the Nasdaq set new records two days in a row, while the US 10-year yield rose to its highest level since 2007. My reading is that the market is pricing an economy running hot, not a central bank that got it wrong. Wednesday will tell.

1Nasdaq: new record, and the 10-year didn't bite

The records came on Monday and Tuesday, driven by AI chips after Meta launched an AI agent. Then came what should have stopped the rally: the US 10-year yield went from just under 5% to above 5.2%, and oil to 108. The Nasdaq gave back less than 1%.

That is not how it usually looks. The Nasdaq normally likes lower rates: tech companies are valued on profits years ahead, and the higher the rate, the less those profits are worth today. But it depends on why rates rise. If they rise because the economy is running hot and profits are growing, profits can grow faster than the rate eats them up. That seems to be the situation now: AI companies' profits are growing by tens of percent, and then a few tenths on the yield weigh little. In the autumn of 2023, 5% on the 10-year was enough to knock the Nasdaq down 10%. Today the yield is higher and the Nasdaq is at a record. The difference is the profits.

2Xi in Washington: friendly, but nothing solved

Trump and Xi agreed on a "stable relationship", a dialogue on AI and two pandas. Nothing on the dollar, as expected. Taiwan: Xi demanded that the US oppose independence, Trump replied that Xi "knows how I feel", and the arms package for Taiwan has been frozen since May. If it stays frozen, I read it as a bargaining chip ahead of the next meeting in Shenzhen. If it is released, expect Beijing to respond. Iran: China refuses to join the blockade but still buys only half as much Iranian oil as before the war.

3Two wars keep oil above 100

On Thursday the Houthis fired missiles at Saudi Arabia, among them at the port where Saudi has moved its exports, and Brent went to 108. The same day came news that the US and Iran are talking about reopening Hormuz step by step, with Qatar mediating, and oil fell back to 104. If there is a deal, Brent can probably fall towards 95. If the talks collapse, 108 is likely just a first step. The other war is less visible: Ukraine knocked out six Russian refineries in one week, among them Moscow's own. It is diesel and petrol that disappear, not crude, so the price at the pump will probably stay up even if Brent falls.

The dollar rises on rates, not on strength

The dollar index is at its highest level in two months. The dollar rose against the yen to just under 160, the level where Japan's finance minister says she is ready to step in together with the US, as this summer. If the dollar goes above it, the probability of a new intervention rises. The Riksbank, last week's test, was unanimous that hikes are coming, but the krona barely moved.

The week ahead

• Wednesday 14:30 Swedish time: PCE, the Fed's own inflation measure. Micron reports in the evening.
• Friday 14:30 Swedish time: the jobs report. Expected to show clearly fewer new jobs than in August.
• The Hormuz talks. Every headline moved oil several dollars this week.

New records or risk off?

The path to new records runs through Wednesday: PCE in line with expectations or lower, Micron delivering, and Hormuz talks that take oil towards 95. Then the 10-year probably falls back below 5%, and a jobs report cooler than August without collapsing does the rest. Risk off looks like this: PCE clearly above expectations, Micron missing after a rise of several hundred percent this year, or talks that collapse and Brent back at 108. Then the probability rises that the yield tests 5.5%, and a dollar above 160 against the yen would add fuel to that. My hypothesis: the records hold as long as yields rise because profits grow. If they rise because inflation bites with no growth behind it, the old rule applies again. Wednesday will show which.

Last Sunday I wrote that the dollar no longer reacted to hawkish news. This week it did. The dollar index rose 1.3 percent. But look at why, and you see something more important than the dollar itself. The market has stopped listening to what central banks say. It counts the votes.

1The Fed: the unity was the message

The hike to 4.00 percent was priced in at 90 percent, no story there. What hit was two things. The vote: 12 to 0. And the projection for 2027: 4.1 percent, up from 3.6 in June. So no cuts next year either. Warsh left his own dot in the dot plot blank, again, and said outright that he is not in the forward guidance business. Gold fell 100 dollars within half an hour.

But here is what few commented on: the 10-year yield, which had gone above 5 percent for the first time since 2007 in the days before the decision, fell back to 4.94 after it. The Fed said "higher for longer", and the long yield fell. That is not a contradiction. The bond market pays for credibility, not for low rates. Last week I wrote that the state buys and the market sells. The Treasury's 6 billion buyback didn't bite. Twelve unanimous votes did.

2Japan and England: the split was the message

The Bank of Japan hiked to 1.25 percent, the highest in 31 years. The yen still fell 1.2 percent. Not because the hike was wrong, but because two board members voted against, both appointed by Prime Minister Takaichi, and because Ueda refused to say anything about the pace ahead. The market read it as politics sitting at the table. The same day the Bank of England held at 3.75, but three of nine wanted to hike. The pound weakened.

Put it together. The dollar won the week not on its own strength but because the others looked weaker. One united central bank was rewarded, two divided ones were punished. It is the simplest explanation I can find for this week's currency moves, even though the dollar index is measured against precisely the yen and the pound, and Japan had more reasons to fall than the vote. It is a reading worth testing into the autumn, with the Riksbank as the first trial.

3The dollar as a weapon: the next act plays in Washington

BRICS signed off on its payment system last weekend. This week that front was quiet, but next week Xi Jinping visits the US. It is the first time since the sanctions threat against countries trading with Iran, and one week after China signed up for trade in local currencies. I don't expect headlines about the dollar, but it is in those meetings the pipes get laid.

Oil: the market found a way around

Brent peaked at 108 on Monday when Saudi Arabia's pipeline to the Red Sea was knocked out. Then the interesting part happened: the Saudis started shipping 2.8 million barrels a day through Hormuz, against 0.7 in August, and transferred cargo to tankers outside the strait. Brent closed the week at 103. Above 100 all week, but the market learned that supply finds a way. That is also why the long yield could fall on Friday.

The week ahead

• Thursday: the Riksbank. CPIF at 0.7 percent, the rate is expected to stay at 1.75. Sweden stands still while the world hikes, and the krona takes the hit.
• Friday 14:30 CET: PCE, the Fed's own inflation measure. The first print after the hike.
• Xi Jinping in the US. Watch what is not said about the dollar.
• More than ten Fed officials speak. After Warsh's silence, every word will be parsed.

Unity gets rewarded

Three central banks, three decisions, one single explanation for how the market reacted: the votes. The Fed was united and got both a stronger dollar and a lower long yield. Japan and England were divided and got weaker currencies despite hawkish policy. As long as oil stays above 100, every rate decision will be a credibility test rather than a rate decision. Next week it is the Riksbank's turn, and it cannot afford to look divided.

Last Sunday I wrote that a Fed hike was about to become the base case. After Friday's inflation print the market now prices roughly 90 percent for a hike on Wednesday. But the most important thing this past week was the dollar's reaction to that news. There wasn't one.

1Inflation: hot core, cold dollar

Friday's inflation came in at 3.4 percent, as expected. But core inflation, the one the Fed watches most, rose 0.3 percent in a month, more than expected. That should have lifted the dollar. Instead the dollar index closed the week unchanged at 99, and gold and silver even rose on Friday. A hawkish Fed used to give the dollar a lift. Now it isn't enough. That is the erosion I talked about, visible in real time.

2The national debt: the state buys, the market sells

The Treasury tripled its buybacks of long-dated bonds to 6 billion dollars on Wednesday. The 10-year yield still rose to 4.96 percent, one step from 5. At the same time the ECB hiked to 2.50 percent and Japan is expected to hike on Friday. The whole world is hiking while the US tries to push its own long-term rates down. It doesn't add up, and the market knows it.

3The dollar as a weapon: BRICS builds pipes, not a currency

This weekend eleven BRICS countries meet in New Delhi. India says no to a common currency and calls it "derisking, not de-dollarisation". But at the same time BRICS Pay is being launched, linking the payment systems of China, Russia, India and Brazil. Nobody is replacing the dollar. They are building around it. Exactly what China has done since 2012.

Oil drives everything

Brent peaked at 107 this week after the US sank eight Iranian tankers and Saudi production fell. Expensive oil keeps inflation up, which forces central banks to hike, which pressures bonds. All three points above are linked in that chain.

The week ahead

• Wednesday 14:30 CET: US retail sales.
• Wednesday 20:00 CET: the Fed decision. The hike is priced in; what moves the market is the projections and what Warsh says about October.
• Thursday: Bank of England. Friday: Bank of Japan, expected to hike.

What I'm watching this week

Wednesday's hike is priced in. What matters is two things: the projections, meaning whether the Fed sees more hikes ahead, and what Warsh says about October. A hike described as a one-off is received very differently from the start of a series. Add Japan on Friday, expected to hike for the first time in a long while, and you have a week in which the world's entire rate map is redrawn.

Last weekend I wrote that Fed chair Warsh could give the dollar a temporary lift by talking about inflation, and that this was where my thesis would be tested. The test came on Friday.

1The jobs report: the dollar won the first round

The US jobs report showed 162,000 new jobs, three times more than expected. A strong labour market means the Fed doesn't need to cut rates to help the economy. The market went from expecting a cut to now betting on a hike on 16 September. Higher rates make the dollar more attractive, so the dollar rose and gold and silver fell a little over one percent. Short term, exactly what I flagged happened.

2The national debt: two hands pulling in opposite directions

The US government is now buying back its own long-dated bonds at twice the previous scale, at least 4 billion dollars per round, with the first round this Thursday. Put simply: the state props up its own debt while the central bank talks about raising rates. That's why I'm not changing the long-term picture.

3The dollar as a weapon: China has spent fourteen years building around it

This is the point I think is most important to understand. I wrote that the more the US uses the dollar as a weapon, the more countries look for alternatives. The article below shows what that looks like in practice.

• In 2012 the US sanctioned a small Chinese bank for doing business with Iran.
• That same year China began building its own international payment system, CIPS. Today 210 banks are directly connected.
• China still needs the dollar; the big banks can't risk being shut out.
• So Iranian oil is bought through small refineries and small banks the US can't reach, paid in yuan outside the dollar system.

Bessent's threat last week therefore hits a system China has had fourteen years to build. That's why the rest of the world shrugged.

The week ahead

Monday is Labor Day in the US. The New York exchanges are closed, but index futures trade until 19:00 Swedish time, gold, silver and oil (WTI) until 20:30, then everything reopens at midnight. FX trades as usual. Expect thin volume and moves that don't say much; the real week starts on Tuesday. Check your broker's exact hours, they can differ by a quarter of an hour.

The Fed can't comment the week before a rate decision, so the numbers have to speak for themselves.

• Thursday: producer prices (PPI) and the state's first big bond buyback.
• Friday: inflation (CPI), the last reading before the Fed decides.

High inflation strengthens the dollar further and gold and silver could have a tough time short term. Calm inflation can turn the picture quickly.

Zoom out

Every sanction adds another piece to the system built to function without the dollar. You don't see it in this week's prices, you see it in the dollar's share of the world's currency reserves being the lowest in 25 years. Gold around 4,400 dollars and silver around 66 dollars are, to me, still a long-term case.

As you know, macroeconomics and geopolitics are a big interest of mine. After the summer break I'm getting more active and devouring information to judge what's clickbait and what's actually worth watching. I usually use the weekends to set my sights on the coming week. I'm going to start sharing more of my thinking.

Below is worth watching a little extra right now.

1. The US national debt has passed $40 trillion and the Treasury is now buying back its own bonds – the market reads it as more money printing, which would weaken the dollar. New Fed chair Warsh did, however, flag on Friday that inflation is still too high, which can give the dollar temporary support – that's where the thesis is tested.
2. The US is now threatening to shut countries that trade with Iran out of the dollar system – aimed mainly at China. Short term not much happens to the dollar; it's driven mostly by the Fed and rates. But long term this is big: the more the US uses the dollar as a weapon, the more countries look for alternatives – the dollar's share of the world's currency reserves is already the lowest in 25 years.

Slow erosion rather than collapse, but it strengthens the long-term case for gold & silver. See finance minister Bessent's statement here 👇