US and Israel Reportedly Weigh Renewed Strikes on Iran After Midterms; Brent Hits Highest Level Since May

Daily News

Summary:

Trump says Iran is doing everything it can to drive up oil prices ahead of the US midterm elections, while reports suggest that the US and Israel are considering strikes on Iran after the elections.

Highlights

1. Putin: Renewed Russia-US-Ukraine trilateral talks are not aimed solely at a temporary ceasefire.

2. Iranian parliament speaker: The US will face bitter consequences if it goes to war with Iran.

3. Trump says Iran is doing everything it can to push up oil prices ahead of the US midterm elections.

4. US initial jobless claims last week approached a 57-year low, highlighting labor market resilience.

5. Japanese government bond yields fall across the curve as safe-haven demand offsets inflation and rate-hike expectations.

6. Japan's manufacturing expansion slows to a seven-month low in October, while services activity edges higher.

7. US and Israel reportedly plan strikes on Iran after the midterms; Brent briefly tops $113 to reach its highest level since May.

Details

Putin: Renewed Russia-US-Ukraine Trilateral Talks Are Not Aimed Solely at a Temporary Ceasefire

Russian President Vladimir Putin said on October 22 that Russia and the United States had agreed to resume trilateral talks involving Russia, the US, and Ukraine. He stressed that the talks were not intended merely to secure a temporary ceasefire.

According to a statement published that day on the Russian presidential website, Putin made the remarks in an interview with Russian television host Pavel Zarubin. He said Russia and the US had agreed to resume trilateral talks following his meeting with US presidential envoy Steve Witkoff.

The goal of the talks is to discuss how to ensure the security of Russia and Ukraine after a final peace agreement is reached, rather than simply arrange a temporary ceasefire. Russia is prepared to resume contacts to achieve this objective.

Putin said Russia had consistently advocated a peaceful resolution to the Russia-Ukraine conflict and remained willing to seek a solution through negotiations. Moscow hopes to reach a peace agreement.

Iranian Parliament Speaker: The US Will Face Bitter Consequences If It Goes to War With Iran

On October 22 local time, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the United States would be making a serious mistake if it believed that going to war with Iran would serve its interests.

He warned that such a decision would bring numerous bitter consequences for the US, ranging from a stock market crash and fighter jet losses to rising debt, accelerating inflation, and casualties among US service members. These consequences, he said, would affect American society.

Trump Says Iran Is Doing Everything It Can to Push Up Oil Prices Ahead of the US Midterm Elections

Trump said Iran was doing everything possible to drive up oil prices ahead of the US midterm elections, adding that Tehran had even fabricated fake attacks, fake mine incidents, and various other events.

David Miller, head of enforcement at the US Commodity Futures Trading Commission (CFTC), said the agency was investigating suspicious oil trading activity around the period of the US war with Iran. It was also reviewing prediction-market trading related to the elections.

Yemen's Houthi movement claimed that it had attacked Saudi Arabia's Ministry of Defense, a Saudi Aramco facility in Yanbu, and Dammam airport.

US Initial Jobless Claims Approach a 57-Year Low, Highlighting Labor Market Resilience

According to the US Department of Labor, initial claims for unemployment benefits totaled 194,000 in the week ended October 17, down 6,000 from the previous week and below the market forecast of 200,000. The previous week's figure was revised to 200,000.

The four-week moving average of initial claims fell by 1,000 to 197,750. Continuing claims rose by 25,000 to 1.728 million in the week ended October 10, compared with market expectations of 1.71 million.

Initial jobless claims fell to their lowest level in nearly 57 years and remained at or below 200,000 for a sixth consecutive week, reflecting a low level of layoffs. The data suggest that employment growth picked up in October following a lackluster performance in September.

Japanese Government Bond Yields Fall Across the Curve as Safe-Haven Demand Offsets Inflation and Rate-Hike Expectations

Japanese government bond yields fell across the curve on Friday. Concerns related to artificial intelligence triggered a sell-off in equities, boosting demand for safe-haven assets. Gains in US Treasury prices also supported Japanese government bonds.

The benchmark 10-year Japanese government bond yield briefly fell 9 basis points to 2.79%, while the 20-year yield declined 5.5 basis points.

The Japanese bond market nevertheless rallied despite data showing that a key Japanese inflation measure had risen above the Bank of Japan's 2% target for the first time this year, reinforcing market expectations of a rate hike in December.

Masahiko Kuroda said inflation data had temporarily become less important as market attention shifted toward economic growth risks and concerns related to artificial intelligence.

Japan's Manufacturing Expansion Slows to a Seven-Month Low in October, While Services Activity Edges Higher

Japan's flash manufacturing Purchasing Managers' Index (PMI) fell to 53.3 in October from 54.1 in September, indicating the slowest pace of manufacturing expansion in seven months. A reading above 50 indicates expansion.

Growth in manufacturing output and new orders slowed in October, with both output growth and new-order growth falling to their weakest levels since March. Growth in new export business also slowed to a four-month low.

Manufacturing employment continued to rise moderately, while purchasing activity accelerated. Stocks of purchases recorded their largest increase in nearly four years.

Services activity edged higher. The flash services PMI business activity index rose to 52.0 in October from 51.3, reflecting faster growth in business activity and stronger sales.

The flash composite PMI output index remained unchanged at 52.3, marking the private sector's 19th consecutive month of expansion. Usamah Bhatti, an economist at S&P Global Market Intelligence, said overall business activity growth was unchanged from the previous month but remained below this year's average.

Growth in new business across the private sector slowed to a three-month low, while export business growth eased to a four-month low. Employment growth weakened to its slowest pace in 14 months, and business confidence for the coming year fell to its lowest level since July.

Input-cost inflation accelerated slightly in October, driven by rising raw-material and labor costs. Output-price inflation eased to a four-month low, although businesses continued to raise their selling prices.

US and Israel Reportedly Plan Strikes on Iran After the Midterms; Brent Briefly Tops $113, Its Highest Level Since May

Reports that the US and Israeli militaries had drawn up plans for renewed strikes on Iran after the US midterm elections raised concerns that an escalation in the Middle East could disrupt oil supplies, driving crude prices sharply higher on Thursday.

Brent crude futures rose 4% to settle at $113.17 per barrel, their highest settlement level since May 4. West Texas Intermediate (WTI) crude futures gained 2.4% to settle at $99.47 per barrel.

According to the reports, the US and Israel are considering a short, high-intensity military operation that could target Iranian energy infrastructure, nuclear facilities, and stockpiles of missiles and drones. However, it remains uncertain whether Trump would authorize such an operation, as he called off a strike that had been close to execution earlier this month. The outcome of Israel's parliamentary election on October 27 could also disrupt the plans.

Iran said the US expectation of completing strikes within 72 hours was a fantasy and warned that its retaliation would be more forceful and unlike anything seen before.

Trump said on Wednesday that the US and Iran were not currently negotiating, but added that something would happen soon.

Today's Economic Calendar

14:00 (UTC+8) UK September Retail Sales, month-on-month

15:15 (UTC+8) France October Flash Manufacturing PMI

15:30 (UTC+8) Germany October Flash Manufacturing PMI

16:00 (UTC+8) Eurozone October Flash Manufacturing PMI

16:30 (UTC+8) UK October Flash Manufacturing PMI

21:45 (UTC+8) US October Flash S&P Global Manufacturing PMI

22:00 (UTC+8) ECB Executive Board Member Piero Cipollone speaks

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