US stocks declined amid continued upside in oil prices and yields - Newsquawk Daily Asia-Pac Market Open

• US stocks were lower again as higher oil prices and Treasury yields weighed on sentiment, with the Russell 2000 the laggard and the equal-weight S&P declined by around 1%. Nearly all sectors declined, with Industrials, Consumer Discretionary and Real Estate the underperformers, while Energy was the only industry to close higher amid a roughly USD 3/bbl rise in WTI as prices were buoyed by geopolitical escalation following the recent tit-for-tat strikes between the US and Iran, which helped Brent reclaim USD 100/bbl.
• USD was more-or-less flat, and saw choppy trade on Wednesday. Through the US morning, the Greenback saw losses, albeit on no clear headline catalyst, but soon reversed, and more, as the US Treasury Buyback announcement disappointed; the Treasury is to buy back a maximum of USD 6bln in 10yr-20yr Treasuries on Thursday, which was against guidance for at least USD 4bln, but some had expected the figure to be as high as USD 10bln. Elsewhere, Dollar-specific newsflow was sparse, while traders await PPI and CPI on Thursday and Friday, respectively.
• Looking ahead, highlights include Japanese Securities Flows, Australian MI Inflation Expectations, Supply from Japan.

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LOOKING AHEAD

• Highlights include Japanese Securities Flows, Australian MI Inflation Expectations, Supply from Japan.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said he thinks war with Iran will end immediately after the election and doing much more than a nuclear deal, while he stated there is going to be a lot more on the table that was not on the table 3 months ago. Trump stated that he is not looking for negotiations to restart; it could happen, but it is not something they are looking at, and they are not seeking a deal.
• US Pentagon is said to be considering scenarios involving US Marine amphibious landings on strategic uninhabited Iranian islands near the Strait of Hormuz to establish observation and logistical bases and secure commercial shipping, according to Eram News sources.
• There are signs the US is working to devise a means of striking Iran's nuclear sites, according to CNN.
• An explosion was heard from the sea south of Jask, and it was reported that an oil tanker was being targeted in the Strait of Hormuz. However, a US official told NewsNation that there were no attacks being carried out by US forces in Iran near the Strait of Hormuz.
• Iran launched a drone at a tanker near Iraq and at a tanker near the Emirates, according to i24's Stein.
• Iran’s Foreign Ministry condemned US attacks on Iranian vessels and said Tehran’s strikes on US military bases and interception of American vessels constitute legitimate self-defence under international law.
• Iranian Parliament Speaker Ghalibaf reiterated that US energy assets in the region will be the next target, according to Tasnim.
• Iran official said they are ready for a more intense war with the US if required and will escalate strikes in response to US attacks.
• IRGC official warned that further US aggression against Iran could trigger more unprecedented Iranian responses, according to IRNA.
  IRGC spokesperson said if their enemy hits 2 of their targets, they will attack 20 targets,** according to Fars.
• Iranian IRGC spokesperson said ships passing through the restricted zone in the Strait of Hormuz will face sanctions, including suspension of maritime, insurance and support services, following the extension of the restricted zone, while "The embargoed zone starts almost from Chabahar and continues to part of the Sea of Oman and the Arabian Sea."
• IAEA's 35-nation Board of Governors passed a resolution reporting Iran to the UN Security Council for breaching its non-proliferation obligations.
• Israeli army artillery bombarded the northern parts of the village of Taranja near the outskirts of Quneitra, according to Tasnim.
• Yemeni sources reported 5 Saudi airstrikes in Saada, northern Yemen, while Yemeni Armed Forces spokesperson said the ongoing raids and aggression will not go unanswered.
• Saudi-led coalition in Yemen said Houthis attacked the Saudi cities of Khamis Mushait, Abha and Jazan with ballistic missiles and drones.
• Saudi-affiliated militias were reported to withdraw from Yemen's Hodeidah province, according to IRNA citing sources.
• Pakistani Ambassador said they believe that a better understanding will soon be achieved between the US and Iran, according to ISNA.
• Pakistan has warned Iran to restrain Yemen’s Houthi militants after a rise in Houthi attacks on Saudi Arabia, conveying the message on behalf of Riyadh, according to Reuters citing sources
• Pakistan is reportedly considering strikes against Houthi targets in Yemen under the “Makkah Pact” defence framework with Saudi Arabia and Turkey, according to Kann's Kais. Strikes may begin in the coming days, although a final decision is yet to be made.
• Iraqi Oil Ministry said that a vessel used to store fuel oil was struck by an unknown source in Iraqi territorial waters.

US TRADE

• US stocks were lower again as higher oil prices and Treasury yields weighed on sentiment, with the Russell 2000 the laggard and the equal-weight S&P declined by around 1%. Nearly all sectors declined, with Industrials, Consumer Discretionary and Real Estate the underperformers, while Energy was the only industry to close higher amid a roughly USD 3/bbl rise in WTI as prices were buoyed by geopolitical escalation following the recent tit-for-tat strikes between the US and Iran, which helped Brent reclaim USD 100/bbl.
• SPX -0.45% at 7,639, NDX -0.29% at 29,422, DJI -0.77% at 52,381, RUT -1.28% at 2,922.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Senator Slotkin said they are hearing rumours that President Trump is planning to allow Chinese cars to be sold in the US as part of a larger deal.

NOTABLE HEADLINES

• US Treasury is to buy back a maximum of USD 6bln in 10-20yr Treasuries on Thursday (vs guidance for at least USD 4bln).
• US Agriculture Secretary Rollins said some food costs have come down in the last two years.

DATA RECAP

• US ADP Employment Change Weekly 12K (Prev. 11.75K)

FX

• USD was more-or-less flat, and saw choppy trade on Wednesday. Through the US morning, the Greenback saw losses, albeit on no clear headline catalyst, but soon reversed, and more, as the US Treasury Buyback announcement disappointed; the Treasury is to buy back a maximum of USD 6bln in 10yr-20yr Treasuries on Thursday, which was against guidance for at least USD 4bln, but some had expected the figure to be as high as USD 10bln. Elsewhere, Dollar-specific newsflow was sparse, while traders await PPI and CPI on Thursday and Friday, respectively.
• EUR traded indecisively and eked slight gains amid few catalysts for the bloc and with the ECB expected to raise rates at its meeting on Thursday.
• GBP returned to flat territory after oscillating throughout in the absence of pertinent drivers and amid a quiet calendar.
• JPY remained firmer, with USD/JPY briefly testing the 153.00 level to the downside amid the backdrop of rate hike expectations and recent Bessent rhetoric on the yen.
• NBP kept rates unchanged at 3.75%, as expected. Polish Central Bank said it may intervene in the FX market and that further decisions depend on data.

FIXED INCOME

• T-notes sold across the curve amid higher oil prices and after the Treasury buyback announcement disappointed.

COMMODITIES

• Oil prices gained as US/Iran tensions continue to ramp up, with Brent climbing north of the USD 100/bbl level.
• US President Trump said after the election, oil prices will tumble lower, and gasoline prices will take a bit longer, but they will get gasoline below USD 2.
• EIA STEO: World oil demand for 2026 is seen at 102.6mln BPD (prev. 102.7mln BPD), and 2027 demand at 105mln BPD (prev. 105mln BPD).
• Russia's Kremlin said Europeans are harming themselves by buying gas on the spot market at a higher price than Russian gas, and Europe is in a difficult situation and will not be able to replenish its gas storage by winter, while it added that the Nord Stream pipeline could be brought back online instantly.
• Russian Finance Minister Siluanov said reducing the cutoff price to USD 50/bbl will ensure budget stability and that this is the baseline option, while others are not being considered.

GEOPOLITICAL

RUSSIA-UKRAINE

• Explosions were heard in Kharkiv, Ukraine.
• Russia's Kremlin said it hopes US-mediated talks with Ukraine will resume soon.
• Russian Kremlin spokesperson Peskov said Presidents Putin and Trump did not discuss the possibility of holding a new meeting at APEC, but there is an understanding that such a meeting could take place, according to Interfax.
• CIA director Ratcliffe was reportedly preparing to take a bigger role in the Russia-Ukraine negotiations as the White House reportedly considers paring back the involvement of Special Envoy Witkoff and Kushner, according to the FT. However, the White House denied the FT report on Ratcliffe and Russia-Ukraine talks.

ASIA-PAC

NOTABLE HEADLINES

• China's Commerce Ministry said China firmly opposes US cybersecurity announcements related to Chinese AI companies, calling the allegations baseless.
• Japanese PM Takaichi said Japan will strengthen and diversify energy supplies, including oil, while boosting cooperation on critical minerals and supply-chain resilience with the US, Australia and other partners, while she discussed energy supply with the US Commerce Secretary.

EU/UK

NOTABLE HEADLINES

• UK PM Burnham appears to rule out cutting welfare to fund defence spending and is said to be planning further measures on the cost of living this year, according to The Guardian.
• German Government spokesperson said regarding the planned EU budget that there is not yet a viable basis for talks and figures need to come down.