US Market Open: Iran's delegation reportedly has no plans for talks with the US; crude benchmarks gain, lifting yields

US President Trump said he rejected a deal from Iran to open the Strait of Hormuz, while he stated Iran wants to make a deal in which they open the strait immediately. He expects talks with Iran to resume this week even though he rejected Iran’s latest proposal.
Iran's delegation in New York has no plans for talks with the US, according to a source close to the delegation cited by IRNA; Brent +3.3%.
European bourses were initially firmer but now off best levels; NQ -1% lags on elevated yields and tech underperformance.
DXY is steady; JPY strengthens on further jawboning from officials.
Yields reside at multi-decade highs as energy benchmarks continue to rise; US 10yr holds at 5.23%.
Looking ahead, highlights include speeches from ECB’s Lagarde, BoE’s Ramsden, Fed’s Barkin, Bowman, Cook and UK Chancellor Healey

SNAPSHOT

As of 10:45BST / 05:45 EDT

LOOKING AHEAD

Looking ahead, highlights include speeches from ECB’s Lagarde, BoE’s Ramsden, Fed’s Barkin, Bowman, Cook and UK Chancellor Healey
Click here for the Week Ahead preview

IRAN CONFLICT

US President Trump said he rejected a deal from Iran to open the Strait of Hormuz, while he stated Iran wants to make a deal in which they open the strait immediately because it is losing so badly.
US President Trump said he expects talks with Iran to resume this week even though he rejected Iran’s latest proposal, while he stated the conditions Iran wants are something the US may have agreed to around a year ago and that Tehran overplayed its hand, according to Axios.
US President Trump said that as soon as the Iran war is over, which is soon, oil will drop, while he stated that they took out a record oil amount from Hormuz on Saturday night. Trump also stated that they will win against Iran in military and economic warfare, while he didn't want to say regarding striking Iran before the Midterms and noted that Iran inflation was at 318%.
US President Trump told Chinese President Xi during the summit to stop supporting Iran, according to Axios on Friday, citing US Ambassador to Beijing Perdue.
Iran's delegation in New York has no plans for talks with the US, according to a source close to the delegation cited by IRNA.
Iranian Foreign Minister Araghchi said they have seen the initial response from US President Trump to the 7-day ceasefire proposal, but are waiting to receive the official response via mediators, while he added that only a negotiated solution can get them out of this deadlock. Araghchi also stated that Iran's conditions are clear and that any move towards reopening the Strait of Hormuz is contingent on these conditions being met.
Iranian Foreign Minister Araghchi said he and Iranian President Pezeshkian did not come to New York to sell a war and that they came to forge peace, while he added that Iran remains steadfast in the face of any aggression even if it comes to an apocalyptic war, but is at the same time, ready for real diplomacy.

Please see the geopolitics section below for more details

EUROPEAN TRADE

EQUITIES

European bourses (STOXX 600 +0.1%) were broadly firmer this morning, but have come off best levels as energy benchmarks continue to rise and as yields remain elevated.
European sectors hold a positive bias. Optimised Personal Care tops the pile, joined closely by Retail and Consumer Products. The downside resides Basic Resources, with the sector dented by continued pressure in the metals space amidst elevated yields and geopolitical uncertainty. Also towards the bottom is Tech, following the negative bias set out by SK Hynix (-5%) and Samsung (-5.4%) overnight. For the former, it was recently confirmed that SK Hynix’s unit Solidigm is aiming for a US IPO, which would see SK Hynix essentially sharing Solidigm's future earnings.
Key Movers: Barrat Redrow (+13%) / Persimmon (+14%) gain after UK PM Burnham announces a new help-to-buy scheme to get first-time buyers on the housing ladder, named "Your First Home".
US equity futures are lower across the board, with underperformance in the tech-heavy NQ (-1%) vs the ES (-0.5%). This action comes amidst elevated yields and higher energy prices, and with Tech also pressured by the aforementioned SK Hynix report.

FX

DXY is little changed overall, with the Buck caught between higher oil prices, yields and Fed tightening bets on one side, and notable JPY strength on the other (see below for more details). Friday’s hawkish Fed rhetoric remains on traders' minds, with Hammack saying policy needs to be restrictive to bring inflation lower and that she does not currently see policy as restraining the economy. DXY trades around the 101 mark in a current 100.98-101.20 range (vs 100.87-101.31 range on Friday). Note, month- and quarter-end flows are also coming into traders' views, with rebalancing likely to become more influential as month-end approaches.
EUR/USD is modestly softer with little in the way of fresh bloc-specific drivers, leaving the pair largely at the whim of broader USD action but perhaps with some more influence from the GBP today. EUR/USD trades within a 1.1371-1.1391 range, with ECB's Lagarde due for a text release at 15:00 BST.
GBP is modestly firmer against the USD despite some caution around the UK fiscal outlook. PM Burnham hinted at new taxes to fund social care reform and acknowledged challenging circumstances heading into the Budget, while also announcing a new help-to-buy scheme. The spending narrative is being treated cautiously, although the potential growth impulse is being taken at face value for now, with Chancellor Healey still to come at 12:00BST, speaking at the Labour conference. As such, the stable open for Gilts seemingly provided traders with some relief for now. Before that, on the BoE front, Ramsden is due for a text release on QT at 11:00BST. GBP/USD trades towards the top of a 1.3218-1.3273 range.
JPY is the clear G10 outperformer, extending gains after Japan’s top FX official Mimura said authorities are not satisfied or reassured by recent Yen price action and are watching whether markets take their “clear message” at face value. Mimura also mentioned the BoJ’s shift towards rate hikes and the subsequent result of the narrowing of the US-Japan yield gap. USD/JPY fell from around 157.55 to 157.25 on the remarks, and continued to fall to a trough of 156.50.
Japanese FX Official Mimura said they are closely watching to see if markets take the clear message they are giving at face value. Not satisfied with or reassured by recent JPY action. BoJ's clear shift onto a rate-hiking path is gradually narrowing the Japan-US yield gap. A clear message was sent to the US on rates.

FIXED INCOME

A bearish start to the day, though only modestly so despite energy upside of in excess of USD 2.00/bbl. USTs hit a 104-15+ low in the European morning.
The main updates being the US President rejecting the Iranian proposal, but despite that he expects talks with Iran to recommence this week. From Iran, the delegation in the US reportedly has no plans to speak with the US on such matters, though Iranian President Pezeshkian has said they remain ready for dialogue.
The action has lifted yields across the globe and the curve, with the US curve modestly flatter given the near-term implications for energy, inflation and by extension the Fed from the lack of concrete progress on Hormuz. The US 10yr yield remains at a c. 5.23% recent peak, with both the short- and long-end of the curve also at/near multi-year highs.
Gilts opened with modest pressure given the above, though the UK focus point has been the weekend’s briefings from UK PM Burnham and, to a lesser extent, Chancellor Healey. The Chancellor added little, but we await more detail from his 12:00BST speech today. From Burnham, he outlined reform to the housing market, hinted at a tax increase to fund his social care ambitions and seemingly didn’t rule out an early election; though, on the latter, the inference is more from the tone of the Kuenssberg interview than anything he explicitly said.
Net, the above has been taken in relative stride by the market, with the pressure seen in fitting with EGBs and no further bearish impulse coming from the PM’s comments.
Bunds in-fitting, at a 119.22 low with downside of 10 ticks at most. Reacting to the upside seen in global energy benchmarks and further gains for TTF on the Middle East uncertainty. Action that continues to keep the ECB’s October meeting live, and increases the odds of a back-to-back hike after September’s move.
Japan Finance Ministry proposes the cut to mid-term JGB liquidity auctions, given improved JGB market functions; proposes reducing 5-11 year liquidity enhancement bond supply.
Australia sold AUD 800mln 3.75% April 2037 bonds b/c 4.88, avg. yield 5.429%.

COMMODITIES

WTI Nov and Brent Dec futures are firmer after gapping higher at the open as US-Iran tensions somewhat picked up over the weekend (see below for details), with no notable de-escalation progress to report thus far following the UNGA. WTI Nov trades within a USD 92.68-95.75/bbl range, while Brent Dec trades within a USD 97.62-100.94/bbl range. Dutch TTF is firmer as renewed Middle East tensions add to European supply concerns, with the EU warning member states of a potential energy price crisis and urging them to continue filling storage while considering measures to curb demand. TTF trades towards the top end of a EUR 72.30-74.33/MWh range.
Precious metals are sharply lower this morning as the renewed rise in oil prices adds to inflation concerns, pushing yields higher and reinforcing expectations for further Fed tightening. Spot gold has fallen through USD 4,200/oz and trades near the bottom of a USD 4,140-4,286/oz range. Spot silver underperforms to a greater extent, falling almost 5% at the time of writing to around USD 61.00/oz within a USD 60.95-64.26/oz range.
Base metals are also softer amid the higher yield environment and broader selling across metals, while weaker Chinese data adds another headwind ahead of a holiday-shortened weekend for China.. Chinese Industrial Profits growth slowed to 4.2% Y/Y in August from 11.2%, with YTD growth easing to 15.7% from 17.6%. 3M LME copper resides at the bottom of a 14,376.58-14,612.00/t range.
Over the weekend, Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, while Iran said any reopening remains contingent on its conditions being met and its UN delegation reportedly has no plans for talks with the US. Trump nonetheless expects negotiations to resume this week, with the Iranian President this morning also supporting talks. Further, there was renewed Houthi activity against Saudi Arabia, with explosions reported in Riyadh and disruption at King Khalid International Airport. Traders are also mindful on US diesel policy after Trump said he is “thinking very seriously” about an export ban, despite earlier White House assurances that one would not be implemented.
Qatar has reportedly extended its force majeure on LNG shipments to Asia and Europe by another month, Bloomberg reported.
India Trade Minister Goyal said India is working with the UAE to expand strategic petroleum reserves.
Libya’s NOC Chairman said the Sharara oil field is producing more than 300k BPD.
Qatar to extend force majeure on LNG deliveries to Pakistan through November.

TRADE/TARIFFS

China Commerce Ministry said we look forward to expanding China-US collaboration in the coal sector and that the sides agreed to form an agricultural working group, have also agreed to set up communication channel for AI incidents. China will review and approve applications from financial service institutions worldwide, including those with US capital, to operate and open branches. China expects US to offer fair, transparent, and stable policy environment for Chinese financial institutions. Both sides agree to keep talks on boosting China-US flights and related issues. Trade truce with US will remain in place through January 2027.
White House said US and China confirmed agreement regarding a USD 30bln vs USD 30bln reciprocal tariff cut. said:. Will consider certain US products for import into China and China is to import US coal in 2027-2028. China and US launch AI dialogue under the trade mechanism.
US trade sources tell FBN there will be historic purchases announced in agreement with China. Both sides will also exempt more agriculture products, medical supplies, and lo-tech electronics from additional tariffs.

NOTABLE EUROPEAN HEADLINES

UK PM Burnham hinted regarding new taxes to pay for social care reform and confirmed he wants care for the elderly and infirm to operate on NHS principles, while he didn’t deny that this would be paid for with tax increases.
UK PM Burnham insisted he can deliver a real change for people in the country despite the nation facing severe economic headwinds, while he acknowledged they are facing a challenging set of circumstances at the budget. It was also reported that Burnham announced a new help-to-buy scheme to get first-time buyers on the housing ladder.
UK PM Burnham suggested he could block plans for a third runway at Heathrow Airport.
British police arrested several suspects over a ‘major incident’ near an airbase used by the US, while US President Trump said the men arrested at the UK airbase were looking to do ‘big damage’.
France is mulling a change to the way payroll tax deductions are calculated in its 2027 budget bill, which would effectively be a payroll tax increase for firms and could bring in an additional EUR 3bln-3.5bln.
Germany’s North Rhine-Westphalia premier Wuest, who is a key figure in Chancellor Merz’s CDU, criticised the government regarding the pace of economic reforms and said delays in enacting legislation contributed to the party’s disastrous performance in regional elections this month.
ECB’s Sleijpen said the Netherlands needs to keep government spending in check and that state debt will increase if they do nothing, while he warned it would be highly irresponsible to borrow more, which is also not good for inflation.
Swedish Social Democrat leader Andersson said she will tell the parliament speaker she cannot form a government under the current circumstances.
EU leaders are deadlocked over the next long term budget, Politico reported citing a German diplomatic cable; ahead of an October 15th meeting, a development that raises the prospect of there being no-deal by end-2026.

CENTRAL BANKS

BoJ Minutes from July meeting stated members agreed financial conditions are accommodative and many members noted firms are steadily passing on rising raw material costs, keeping inflation elevated.
BoE's Dhingra said that she is worried that high rates would hit investment and lower supply.
PBoC to inject CNY 661bln via overnight reverse repos.
PBoC injected CNY 139bln via 7-day reverse repos with the rate at 1.40% and CNY 300bln via 14-day reverse repos with rate at 1.25%.
PBoC set USD/CNY mid-point at 6.7399 vs Exp. 6.7085 (prev. 6.7489).
BoK said to closely monitor financial and forex markets.

NOTABLE US HEADLINES

US President Trump said had an incredible meeting with Chinese President Xi, also noted that he's having dinner tonight with Anthropic's head at 10pm and will be meeting with Anthropic on Tuesday, adds Anthropic's Dario is very highly respected.
US President Trump announced that he approved new fuel economy standards that terminate former President Biden's EV mandate, while he said the new standards will take the waste out of building cars in the US, which means lower prices, and noted that more than USD 100bln is being invested in American autos under his administration.
US President Trump said he will talk about AI with Anthropic's CEO Amodei, who was having dinner at the White House on Sunday, while Trump said he would tell Amodei, "let's go, let's win."
US Treasury Secretary Bessent urged Fed policymakers to keep an open mind regarding interest rates, while he argued that AI-driven productivity gains and deregulation would help curb US inflation. Furthermore, he said that core inflation has been very stable and fell in recent months.

GEOPOLITICS

RUSSIA-UKRAINE

EU's Foreign Policy Chief Kallas said that intelligence reported indicate that Russia is planning further sabotage; called for focus on addressing gaps in Europe's defence capabilities. EU’s Naval Aspides Mission requires more naval assets to be operational, adding that the need is bigger than it has ever been.
EU countries consider NATO-style joint responses to Russian hybrid attacks which have included drone attacks, bombs and arson, according to FT.
US President Trump said he told Ukrainian President Zelensky to take it easy on refineries.
Ukrainian President Zelensky said on Sunday morning that Russian strikes overnight killed four in Ukraine and damaged a data centre in Kyiv.
EU countries consider NATO-style joint responses to Russian hybrid attacks which have included drone attacks, bombs and arson, according to FT.

MIDDLE EAST

Iran:

Iranian President Pezeshkian said regional states can safeguard their own security, and he denied Iran's direct involvement in Yemen, describing the situation as unrelated to Iran, but stated that Iran is ready to help resolve the conflict and urged Houthis and Saudi Arabia to enter talks instead of escalating.
IRGC spokesman said not only is the Strait of Hormuz not open, but it is a hunting ground for the IRGC Navy against US submersibles.
Iran army spokesman said Iran’s armed forces are prepared for any renewed US attacks after US President Trump said he rejected a deal from Iran.
Local sources reported that a sea cruiser fired at a violating vessel in an unauthorised route of the Strait of Hormuz, according to Fars News.
Saudi authorities suspended in-person classes in Riyadh for a week on Sunday, following reports the day before that Saudi air defences said they intercepted Houthi drones headed toward the capital and ballistic missiles targeting Khamis Mushait.
Iranian President Pezeshkian said Iran remains ready for dialogue despite being attacked during previous talks, but pressure and attacks will not force Iran to surrender.
Source said Iran is prepared to compromise on its nuclear programme but wants guarantees Israel will not attack again after a US deal, N12 reported.
What Western media outlets are promoting regarding the negotiations is false news, reported Al Mayadeen citing high-ranking Iranian security source. The reason for the continued closure of the Strait of Hormuz is the Americans' failure to fulfill their commitments. Iran has informed the American side of its seven conditions, and the ball is now in the American court. The Strait of Hormuz will not be opened through tweets or misleading news published by media outlets close to the White House.
Iran Foreign Minister said we have not closed the door to diplomacy despite American violations; choice now rests with US. If the conditions are met, the Strait of Hormuz and maritime traffic can be reopened within 7 days. We will open the Strait of Hormuz on the sixth day of implementing the plan. We will return to negotiations with America on the seventh day of implementing the plan. The 7-day deadline begins as soon as the United States accepts the plan we proposed. Tehran will not yield to pressure or relinquish its sovereign rights. Plan's requirements are similar to those in the MoU with the US.
Iran Foreign Minister said we are committed to protecting freedom of navigation in the Strait of Hormuz, and its security cannot be restored through military blockade and escalation. We conveyed a message to America via Qatar, consisting of a 7-day plan. Our position is clear regarding the ongoing developments, particularly in and around the Strait of Hormuz.
IRGC Spokesperson said we will not stop punishing the US until Iran's seven conditions are met; our missiles are capable of destroying America's multi-layered defenses, Fars reported.
Iranian Real Admiral Siyari said they are fully in control of the Strait of Hormuz, Defa reported; "we act assertively in the north of the Sea of Oman and east of the Strait of Hormuz and will not allow anyone to attempt passage".
Eight US Marines were injured two weeks ago when an Iranian cruise missile attacked the ship they were operating on in the Strait of Hormuz, according to US officials cited by NBC News.

Other:

Yemeni sources say Armed Forces aircraft carried out several airstrikes on Houthi positions in Al-Rabeei, west of Taiz, Al Arabiya reported.
Saudi artillery and missile attacks on the border county of Saada in Yemen, according to SNN.
Saudi's Foreign Minister arrives in Washington to meet with US Secretary of State Rubio.
Iraqi sources report suspension of flights at Erbil Airport in Iraq following reported of attack on separatist party headquarters, according to SNN.
US President Trump administration officials said US has no plans to sell weapons to China after US ambassador to Beijing, Perdue, told an interviewer that President Trump at one point offered to sell US arms to Chinese President Xi, according to WSJ.
Explosions reportedly heard in Erbil, northern Iraq, according to SNN.
Several commercial aircraft were not being allowed to land at King Khalid International Airport in Saudi Arabia, following reported of explosions heard in Saudi Arabia.
Israeli PM Netanyahu visited Abu Dhabi on Sunday and met with UAE's President, according to Axios.

CRYPTO

Bitcoin (-2%) is lower this morning and trades just shy of the USD 83k mark, whilst Ethereum holds around USD 2.6k.

APAC TRADE

APAC stocks began the week mixed as higher oil prices spurred hawkish rate bets and following mixed geopolitical headlines over the weekend, in which US President Trump rejected Iran's proposal for a peace deal to reopen the Strait of Hormuz, but expects talks to resume this week.
ASX 200 traded higher with gains led by strength in the top-weighted financial sector, but with the upside capped heading into a widely anticipated rate hike by the RBA tomorrow.
Nikkei 225 swung between gains and losses with the index fading an initial rally amid higher yields and as participants also digested firmer-than-expected Services PPI data, while former BoJ official Momma touted the possibility of the central bank hiking rates again in October.
KOSPI suffered on return from a 4-day closure with notable selling in the local tech behemoths.
Hang Seng and Shanghai Comp were mixed as the Hong Kong benchmark edged higher, while the mainland was heavily pressured at the start of a holiday-shortened trading week following a slowdown in Industrial Profits, while the PBoC's liquidity efforts and a US-China agreement for a USD 30bln reciprocal tariff reduction framework failed to spur risk appetite.

NOTABLE ASIA-PAC HEADLINES

Australian Treasurer Chalmers confirmed Australia's 2025-2026 budget deficit was AUD 6bln less than forecast.

NOTABLE APAC DATA RECAP

Chinese Industrial Profits YY (Aug) 4.2% (prev. 11.2%).
Chinese Industrial Profits (YTD) (Aug YY) 15.7% (Prev. 17.6%).
Japanese Services PPI YY (Aug) 3.7% vs Exp. 3.6% (Prev. 3.6%).