Flagship

Yemeni forces repel Houthis from Red Sea

Saudi-backed Yemeni forces said Monday they had expelled the Houthis from key areas surrounding the Bab el-Mandeb Strait on the Red Sea following a major counteroffensive. Reclaiming coastal areas seized during the Houthis’ lightning advance last month curtails the rebels’ ability to significantly disrupt energy flows, but the counteroffensive — a hoped-for “zero hour” — among some Saudi and Yemeni pundits, could widen the Iran war, further upending energy markets: Saudi Aramco’s chief told the Financial Times that global oil stockpiles are now “scarily thin.” The kingdom’s previous war against the Houthis resulted in a yearslong quagmire and devastating humanitarian crisis, but former Saudi intelligence chief Prince Turki Al-Faisal told Arab Views that restraint “is no longer operable.”

WH under pressure to ease diesel prices

US President Donald Trump is preparing to issue an executive order expanding access to tax-exempt diesel, as he faces mounting pressure to ease near-record fuel prices with less than a month remaining before midterm elections. “Refiners and fuel sellers are likely to absorb almost all of the added benefit,” a Bloomberg expert said, as the administration resorts to a kitchen-sink strategy to stem cost increases: Trump previously floated a controversial diesel export ban, but walked back the threat after winning emergency fuel releases from G7 nations. Some long-haul truckers report paying one-and-a-half times pre-war prices, with one telling The Wall Street Journal he blames Trump despite voting for him in his first election as a US citizen.

The Fed has an AI problem

An AI-stock rally powered the Nasdaq to a record close Monday, as investors looked to Big Tech’s third-quarter earnings this month. SpaceX, Nvidia, Meta, and Microsoft all gained, suggesting a kind of “inverse bond trade,” an investor told CNBC: “It’s buy tech, sell everything else.” Demand for compute is strong enough that hyperscalers remain undeterred by higher borrowing costs, a dilemma for the US Federal Reserve: The AI investment boom is adding to inflation even as interest rates begin to bite elsewhere, suggesting the Fed may have to “hurt the part of the economy that is more rate sensitive,” Barclays’ global chairman of research told The New York Times.

NY Fed reviews private credit exposure

The Federal Reserve Bank of New York has visited JPMorgan, Wells Fargo, Barclays, and Morgan Stanley to review their exposure to private credit, Semafor’s Ellen DiMauro reported, as policymakers ramp up scrutiny of a financial industry that has unnerved investors. The review was prompted in part by JPMorgan’s move in March to mark down large swaths of loans in private credit portfolios, particularly those to software companies threatened by AI, after funds were inundated with withdrawal requests over fears of the so-called “SaaSpocalypse.” Redemption rates have since declined, and some investors are finding their way back to software: Thoma Bravo is selling a $1.5 billion stake in cybersecurity-software company Imprivata, with JPMorgan and Evercore leading the sale process.

Brazil stocks surge on Bolsonaro lead

Brazilian stocks surged Monday after Flávio Bolsonaro emerged as the presidential frontrunner following first-round voting, with investors betting the right-wing candidate would win with a large enough majority to push fiscal reform. “The conditions have never been this favorable,” an asset manager told Bloomberg, after Bolsonaristas won up and down the ballot Sunday, strengthening a potential Bolsonaro presidency that could target major spending cuts, bolstering the case for lower interest rates: Brazil has some of the highest rates in the world, which are partly to blame for the slowing economy that has weakened the incumbent. Still, “neither candidate will have a free hand” on spending, given the difficulty of getting reform through the Brazilian Congress, a macro strategist told the Financial Times.

Japan 30-year bond yield hits record

Japanese Prime Minister Sanae Takaichi told investors to “rest assured” Monday after the country’s 30-year bond yield jumped to an all-time high on concerns over her government’s stimulus plans, though analysts cautioned that a change in rhetoric didn’t equal a change in policy. Despite being “peppered with remarks aimed at… maintaining market confidence,” Takaichi’s speech to parliament “does not necessarily mean that policy will actually be adjusted out of consideration for financial markets,” a Nomura economist wrote. Washington has urged Tokyo to rein in fiscal spending to shore up the weak yen, amid an intensifying global bond sell-off: The US 10-year Treasury yield hit its highest level in two decades Monday.

Gulf funds unfazed by war

Gulf sovereign wealth funds are on track to have their second-busiest year of dealmaking ever, despite the war disrupting businesses and economic growth. Regional funds are forecast to invest $136 billion by year-end, with Abu Dhabi’s Mubadala leading the pack with $26.2 billion invested so far in 2026, according to consultancy Global SWF. Nearly half of Gulf sovereign fund investment went to the US, showing that American assets remain attractive despite the debate about the future of Gulf states’ relationship with their main strategic ally, Semafor’s Matthew Martin noted. Gulf funds are major backers of Paramount’s $110 billion takeover of Warner Bros.

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US, EU monitoring Russia plague reports

US and EU officials said on Monday they were closely monitoring a suspected case of pneumonic plague in Russia that killed a lab worker in a Siberian research institute, prompting authorities there to quarantine dozens of people. “We don’t have a lot of intel,” one US health official told The Washington Post: “We should be alert but not panicked.” Central Asian countries tightened sanitary border controls, even as the Kremlin denied reports of plague and urged media to “to ignore various rumors” amid widespread censorship, The Insider reported. “Russia is well known to have an active military biological weapons program,” the Biden administration’s coronavirus response coordinator noted, suggesting that Moscow’s lack of transparency means “we have to build up our biodefense accordingly.”

Neuroscience discovery wins Nobel

Three scientists won the Nobel Prize in Physiology or Medicine on Monday for developing a method of controlling brain cells with light, work that one expert said had ushered in a “golden era” for neuroscience. The technique, created by Karl Deisseroth, Peter Hegemann, and Georg Nagel, has been used to understand psychiatric disorders that affect millions such as obsessive-compulsive disorder and schizophrenia, as well as to explore the neural circuits involved in memory. Roughly 3% of people worldwide will experience OCD in their lifetime, according to a recent study, while