The yields on United States Treasuries with a remaining maturity of 10 and 30 years soared on Friday as investors digested mixed results on the country’s labor market, as the last data on nonfarm employment before presidential elections showed weaker-than-expected job additions in October, but a steady unemployment rate. The activity in the US manufacturing sector expanded last month, seemingly raising uncertainty around the Federal Reserve’s monetary policy before the end of the year. Personal consumption expenditure increased in line with expectations, while an underwhelming reading of jobless claims appeared to point to the labor market’s resilience. The return on the 10-year Treasury note climbed 4.9 basis points to 4.331%, reaching its highest point since July. The yield on the 30-year bond rose 6.3 basis points to 4.538%.NN: ZEROES here we come
Iran may change nuclear doctrine over ‘existential’ threats
n a recent interview for Al Mayadeen, Dr. Kamal Kharrazi, former Iranian Foreign Minister and head of Iran’s Strategic Council on Foreign Relations, addressed Iran’s nuclear policy. Dr. Kharrazi stated that while the Iranian leader’s religious decree is what prevents nuclear weapon development so far, this could change if Iran’s survival is at stake. Kharrazi also noted that if Western European countries “do not respect our concerns, especially regarding Iran’s sovereignty and territorial integrity” as Iran considers theirs, then Iran “sees no reason to continue taking their concerns into consideration.”
Iranian leader Khamenei said to order reprisal attack on Israeli military sites
NYT says decision made after briefing on extent of damage caused by Israel retaliatory strike; separate report claims Iraqi militias will fire drones, missiles for Tehran
Iran’s supreme leader has ordered his military officials to prepare a reprisal attack against Israel, a report said Thursday, as senior Iranian officials warned of “harsh” and “unimaginable” responses to Israel’s strikes on Iranian military sites earlier this month.
The report in The New York Times, citing Iranian officials, said Tehran’s response would not come until after US voters go to the polls on November 5, though other news outlets have quoted sources saying Iran’s response could come ahead of the vote.
Iranian leaders have been threatening to carry out a reprisal action after the Israeli Air Force attacked anti-aircraft batteries and radar sites across Iran on October 26 in retaliation for a massive Iranian ballistic missile attack on Israel on October 1. But Iran has so far been seen as seeking to minimize the chances for escalation or a repeat engagement. The Times, citing three officials familiar with Tehran’s war planning, said Supreme Leader Ali Khamenei had ordered plans drawn up by his Supreme National Security Council on Monday after being briefed on the extent of the damage from the Israeli strikes. According to the Times, Khamenei felt that the deaths and the scale of Israel’s attack necessitated a response to avoid being seen as admitting defeat. The report noted that Iranian military officials were drawing up possible lists of Israeli military targets. A separate report in US news site Axios said Israeli intelligence was girding for an attack in the coming days involving a large number of ballistic missiles and drones launched by Iran-backed groups in Iraq. Carrying out the attack through pro-Iran militias in Iraq could be an attempt by Tehran to avoid another Israeli attack against strategic targets in Iran, the report said. Both Axios and a CNN report Wednesday citing a source with knowledge of Iran’s war planning said the reprisal strike could be launched ahead of the US election on November 5.
However, sources who spoke to the Times said Iran would hold off until after the election, fearing that increased tensions could boost former president Donald Trump’s chances against Democrat Kamala Harris.
Speaking Thursday at the end of an IDF combat officers training course at a base near Mitzpe Ramon, Prime Minister Benjamin Netanyahu boasted that Israel’s sorties had targeted Iran’s “soft underbelly” and left it without an air defense umbrella. “The brash words of the leaders of the regime in Iran cannot cover up the fact that Israel has greater freedom of action in Iran today than ever before,” he said. “We can reach anywhere in Iran as needed.” “The recent action of the Zionist regime in attacking parts of our country was a desperate move and the Islamic Republic of Iran will give it a harsh and regretful response,” he said, according to the Tasnim news agency. Also speaking on Thursday, General Hossein Salami, head of the Islamic Revolutionary Guard Corps, a branch of Iran’s military, warned of an “unimaginable” response to Israel “Israel has reached the stage of collapse and these days it acts blindly and without abiding to any rules it commits every crime,” he added, according to Tasnim. Threatening further tit-for-tat attacks should Iran hit back, the IDF on Thursday announced the establishment of new bodies in the Intelligence Directorate and Air Force that will enable “repetitive actions” in Iran. A new Iran department was established in the Intelligence Directorate’s Research Division, and a so-called “depth” department was established in the Air Force’s Intelligence Department, the army said.
Speaking at the officer graduation, Netanyahu said the army’s supreme goal in Iran remained stopping the country from obtaining nuclear weapons.
“I have not removed, we have not removed and we will not remove our eyes from this goal. For obvious reasons, I cannot detail our plans for achieving this supreme goal,” he said.
Oil climbs as Middle East tensions rise…… Iran said to see not reacting as admitting defeat
Oil prices grew by more than 2% on Friday as the ongoing crisis in the Middle East pushed prices higher, fueled by fears regarding the stability of oil supplies. The increase was prompted by reports suggesting that Iran might be planning an assault on Israel using Iraqi territory in the near future. Media outlets have indicated that this potential offensive could involve the use of drones and ballistic missiles. West Texas Intermediate (WTI) for December delivery climbed to $70.30 per barrel, while Brent for February settlement was going for $74.73 per barrel.
Iran said to see not reacting as admitting defeat
Iranian Supreme Leader Ayatollah Ali Khamenei instructed a response to Israel’s recent attack after determining not reacting would signal conceding defeat, The New York Times (NYT) reported on Thursday. According to three Iranian officials, Khamenei’s decision came only after reviewing how much damage was done and what not retaliating would mean. Then, he told the Supreme National Security Council to plan a counterattack. The sources added that the Iranian army is scheming a series of attacks on military targets in Israel, which are probably to happen after the United States presidential election on November 5 as Tehran allegedly does not want its actions to contribute to former head of state Donald Trump’s victory.
Meanwhile, it was reported that Israel suspects Iran’s retaliation could come from Iraq’s territory and potentially before the US election.
Israel said to expect Iran’s new attack from Iraq
Israel’s intelligence services suspect Iran is preparing a new attack on the country’s territory, this time from Iraq, Axios reported on Thursday.
According to two Israeli sources familiar with the matter, the agencies predict the action could happen in the next few days, potentially even before the United States presidential election on November 5. They also expect Iran to launch the attack using drones and ballistic missiles.
The report came after Islamic Revolutionary Guard Corps (IRGC) Commander-in-Chief Hossein Salami warned that Iran’s response to Israel’s recent counterattack will have “bitter consequences” and be “different from any scenario.” Israel’s actions were a retaliation to Iran’s missile attack on October 1, which, in turn, was a reaction to the deaths of Hezbollah’s senior militant Fuad Shukr and Secretary-General Hassan Nasrallah in Lebanon and Hamas Political Bureau Ismail Haniyeh in Tehran.
nn: this is big shit
Israel says it hit Hezbollah facilities in Syria
The Israel Defense Forces (IDF) said on Thursday that it carried out an airstrike targeting Hezbollah command centers and munitions warehouses in Syria, near the border with Lebanon. They did not the number of casualties. The IDF said the facilities were also used by Hezbollah’s special operations unit, the Radwan Force. The Israeli military also claimed its strike was part of a larger action aiming to destroy Hezbollah infrastructure supporting weapon transfer from Iran through Syria to Hezbollah in Lebanon.
Locked in Mideast wars and battered by sanctions, Iran is wary over US presidential election
TEHRAN, Iran (AP) — America’s presidential election next week comes just after Iran marks the 45th anniversary of the 1979 U.S. Embassy hostage crisis — and for many, tensions between Tehran and Washington feel just as high as they did then. Iran remains locked in the Mideast wars roiling the region, with its allies — militant groups and fighters of its self-described “Axis of Resistance” — battered as Israel presses its war in the Gaza Strip targeting Hamas and its invasion of Lebanon amid devastating attacks against Hezbollah. At the same time, Iran still appears to be assessing damage from Israel’s strikes on the Islamic Republic last Saturday in response to two Iranian ballistic missile attacks.
Iran’s currency, the rial, hovers near record lows against the dollar, battered by international sanctions over Tehran’s nuclear program of enriching uranium closer than ever to weapons-grade levels.
In public spaces, women still openly defy Iran’s mandatory law on the headscarf, or hijab, a result of the mass demonstrations over the 2022 death of Mahsa Amini that still haunts the country. That has left a feel of fatalism among some on the streets of the capital, Tehran, as Americans cast ballots for either Vice President Kamala Harris or former President Donald Trump. Both candidates have either undertaken or expressed tough stances on Iran. In 2018, Trump unilaterally pulled America out of Tehran’s nuclear deal with world powers, setting off years of attacks across the Middle East even before Hamas’ Oct. 7, 2023, attack on Israel. Trump has been briefed on Iranian plots to retaliate against him, as well over his decision to launch a 2020 drone strike that killed Iran’s top general, Qassem Soleimani, in Baghdad. Harris, meanwhile, vowed at the September presidential debate that she would always “give Israel the ability to defend itself, in particular as it relates to Iran and any threat that Iran and its proxies pose to Israel.”
Biden Envoys Set to Head to Israel to Discuss Lebanon Truce Plan
Israel is considering a US-led proposal to end the conflict in Lebanon and keep Hezbollah fighters away from the countries’ frontier. It is set to host White House mediators in what appears to be a push by Washington to make progress before the American presidential election on Tuesday. Six weeks after launching a campaign of sabotage, air barrages and ground incursions against Hezbollah, Israel says it has driven back and cut down the Iranian-backed faction, whose cross-border rocket and drone launches persist but at a reduced rate. Israel’s Prime Minister Benjamin Netanyahu met top aides late on Tuesday to discuss a fresh proposal, his spokesperson said. On Thursday, he will meet US President Joe Biden’s most senior Middle East envoys, Brett McGurk and Amos Hochstein, as part of the talks, another Israeli official said. The new plan, which faces plenty of obstacles, would lead to a 60-day suspension of hostilities. In that period, the parties would test an enforcement mechanism to ensure Hezbollah doesn’t receive any more arms from Iran and withdraws north of Lebanon’s Litani River, according to a separate person familiar with the negotiations. That would be in line with a long-standing United Nations Security Council resolution named 1701. Israeli troops would maintain positions along the border and be able to strike Hezbollah if they saw infractions, the person added. The Lebanese army would have a role in reining in Hezbollah, including seizing its weapons and dismantling its infrastructure, according to Israeli public broadcaster Kan. Hezbollah is yet to signal it’s interested in the proposal and its new leader says it’s able to keep fighting. Similar to Gaza, where Israel-Hamas truce talks have stalled in recent months, there’s no guarantee the US will be able to bridge the gaps between the two sides anytime soon. In a televised speech on Wednesday, Naim Qasem, appointed head of Hezbollah on Tuesday, struck a note of defiance. While he seemed to soften the group’s long-standing stance that it can only accept a cease-fire when there’s one in Gaza, he suggested the group can fight a war with Israel for many more months, if not longer. The Lebanese state, meanwhile, has said it can’t accept any Israeli demand to retain the right to strike Hezbollah even after a truce. A draft plan cited by Kan included a stipulation that neither country would be precluded “from exercising their inherent right to self-defense” — phrasing likely designed to appease Israel. Lebanese Prime Minister Najib Mikati, speaking on Wednesday, said there was a “glimmer of hope” a cease-fire could be agreed within days. He said his government was prepared to deploy more troops in south Lebanon and ensure there are no Hezbollah fighters in the areas close to Israel.
The Lebanese government, however, has little influence over Hezbollah’s decisions and only exists in caretaker form.
The country — in economic crisis for years before the Israel-Hezbollah conflict started last October — has no president, with political parties bickering over who should get the role. NN: HA\HA HA HA\HA
Oil Prices Rebound
Oil rebounded with traders focused on Middle East tensions and tightening US crude stockpiles. West Texas Intermediate advanced 2.1% to settle near $69 a barrel after tumbling over the previous two sessions. Brent settled above $72, climbing 2%. While one Israeli minister suggested that the war with Hezbollah could be over by year-end, the country’s military chief vowed to strike Iran “very hard” should the OPEC producer launch another attack.
“We think the oil market has relaxed too quickly,” Standard Chartered analysts including Emily Ashford said in a note. “We see the risk of an escalating series of attacks over an extended period, with no immediate prospect of either military or diplomatic resolution.”
Also supporting prices was a government report showing US crude inventories shrank by 515,000 barrels last week. While that was a smaller drop than projected by an industry group, it was more bullish than Bloomberg users’ estimate of an 871,000-barrel increase. US gasoline and distillate inventories also fell. Looking ahead, all eyes are on OPEC+’s plans to gradually revive production from December, with traders split on whether the alliance will press ahead.
Reuters reported that OPEC+ nations could delay plans to revive oil production in December, citing unidentified sources.
Commodity and financial markets are also gearing up for two crucial events next week — the US election and a meeting of China’s top legislative body, with investors watching for any additional stimulus efforts to revive the economy. The Asian nation is the world’s biggest crude importer. NN: Oil Is A Screaming BUY!!
Iran’s Energy Infrastructure More Vulnerable To Future Attacks
- Recent Israeli strikes on Iranian air defenses near energy facilities raised concerns but avoided direct oil infrastructure.
- StanChart notes that damage to air defenses on Iran’s energy infrastructure has increased their vulnerability to future attacks.
- Standard Chartered thinks that the market underestimated the risk of an attack on Iranian energy infrastructure after the U.S. Presidential elections.
Two days ago, benchmark crude oil futures fell by their largest one-day margin in more than two years after Israel launched limited retaliatory attacks on Iran but largely avoided energy facilities, thus easing fears of disruptions to global supplies. Israel mainly bombed air defense systems and missile production sites in three Iranian provinces, with analysts saying the lack of strikes on oil infrastructure or nuclear facilities leaves the door open for both sides to de-escalate the conflict. Meanwhile, Iran’s Supreme Leader Ayatollah Ali Khamenei toned down the war rhetoric by refraining from talks about immediate retaliation. However, commodity analysts at Standard Chartered have taken a more nuanced view of the situation. Whereas energy infrastructure was not a direct target in the latest tranche of Israeli missile strikes on Iran, the country’s oil and gas facilities did not emerge from the attacks entirely unscathed. Three days ago, the Guardian reported that Israel used precision air and drone strikes to principally target air defense systems protecting crucial oil and gas facilities, as well as military sites linked to Tehran’s nuclear programme and ballistic missile production.
Some of the targeted air defense systems include the Abadan oil refinery, the Bandar Imam Khomeini petrochemical complex, the gasfield Tange Bijar, and the Bandar port in the south of the country. Overall, Israeli media reported about 20 hits.
StanChart notes that damage to air defenses on Iran’s energy infrastructure has increased their vulnerability to future attack, a development that the market appears to be overlooking, or at least underappreciating.
That said, oil prices have pared back some of Monday’s heavy losses, with Brent crude for December delivery up 2.1% to trade at $72.50 per barrel at 13.00 pm ET in Wednesday’s session while the corresponding WTI crude contract gained 2.0% to change hands at $68.62 per barrel. The latest oil price rally comes after the U.S. Energy Information Administration reported inventory draws in gasoline and middle distillates for the week to October 25. Gasoline stocks fell by 2.7 million barrels, with production at an average of 9.7 million barrels daily compared with an inventory build of 900,000 barrels for the previous week, when production stood at an average of 10 million barrels daily. Meanwhile, in middle distillates, EIA estimated an inventory decline of 1 million barrels, with production averaging 4.9 million barrels daily compared with a stock draw of 1.1 million barrels for the previous week when production stood at an average of 5 million barrels daily.
Last week, StanChart reported that global oil demand hit an all-time high of 103.79 million barrels per day (mb/d) in August, an upwards surprise of about 450 thousand barrels per day (kb/d) above their (pre-JODI data release) forecast. August becomes the third successive month in which a new all-time demand high has been set, with StanChart working out that demand growth clocked in at 1.32 mb/d in August.
Whereas this is lower demand growth than in all other post-pandemic Augusts, it can hardly be considered weak. StanChart has reported that the largest demand gains in August came from Korea (219 kb/d), Italy (185 kb/d), Saudi Arabia (117 kb/d), Türkey (99 kb/d) and Spain (88 kb/d). StanChart has now revised its 2024 global demand growth estimate upwards to 1.45 mb/d, thanks to the bigger-than-expected growth in August.
In yet another bullish development, Europe’s gas prices have seen an unexpected rally with markets remaining cautious due to recent supply outages in Norway and the U.S. According to StanChart, the latest trend over the past week has been of weekday withdrawals and weekend injections suggesting that the seasonal peak in inventories is either imminent or has already passed. The prospect of an earlier-than-usual start to inventory withdrawals and (in contrast to the oil markets), the continuation of security concerns about the Middle East as well as Russian gas flows have combined to push European gas prices sharply higher.
StanChart notes that the YTD increase in both EU and UK gas prices now exceeds 30%, only slightly lagging the YTD performance of gold.