Top Overnight News The US is preparing for a protracted conflict with Iran, even as the Trump administration hopes its bombing campaigns and economic sanctions will force major concessions from the Islamic republic. Mike Waltz, Donald Trump’s ambassador to the UN, acknowledged that a year from now the US could still be mired in a stalemate with Iran, without a deal on Tehran’s nuclear program or a return to prewar shipping through the Strait of Hormuz. FT Iran’s message is stark: If the U.S. and Israel restart their air campaign, Tehran will respond with strikes not only on American bases and warships but on airports, pipelines and other civilian targets in the neighboring countries of the Persian Gulf. WSJ The movement of “illicit vessels” through the Strait of Hormuz has “completely halted” after the latest Iranian attacks against ships, Iran’s semi-official Fars news agency cites an official close to the IRGC as saying. BBG A tanker carrying diesel left the Russian port of Primorsk and intermittently signaled New York, potentially marking the first such shipment following a fuel-supply agreement between Vladimir Putin and Donald Trump. BBG SpaceX aims to secure a minimum of 80,000 cell sites across the US, and is in talks with at least one major cellular infrastructure firm to reach that goal. BBG OpenAI, which is seeking to raise around $30 billion in a fresh funding round, is now targeting a valuation of $1.25 trillion during the final stages of negotiations, a $150 billion drop from the $1.4 trillion it was seeking last month. BBG Global hedge funds suffered one of their broadest declines since the Covid pandemic following the stock market selloff on Thursday, according to Goldman’s prime brokerage desk. BBG Metrics across global bond markets are signaling their biggest risk-off sentiment in more than a year, as a selloff in AI stocks and growing geopolitical tensions caused investors to seek out safe-haven assets. BBG The BOJ may maintain a continued fast pace of rate hikes given price trends and a view at the bank that the impact of increases on the economy so far has been limited, with December the next potential move, people familiar said. BBG Japan’s key price gauge rose above the Bank of Japan’s target level for the first time this year, supporting the case for a widely expected BOJ interest rate hike in December. BBG The ECB will lift rates for the final time in December following a pause next week, economists said. That’s at odds with market bets on far more hikes lying ahead. Central bank data showed inflation expectations among households increased slightly last month. BBG Eurozone flash PMIs for Oct were soft, w/the composite number coming in at 51.9 (down from 53.1 and below the Street’s 52.7), w/a lot of the weakness stemming from the French services sector (due to unrest in that country), while manufacturers reported a spike in input cost inflation. S&P France is bracing for a new round of protests tomorrow, rolling out the military to back up police in a bid to prevent a repeat of last weekend’s riots that led to violence, looting and arrests. BBG Brazil’s President Luiz Inácio Lula da Silva and challenger Flávio Bolsonaro are tied at 50% each of valid votes before Sunday’s runoff election, a new poll showed. BBG SK Hynix scrapped plans for a potential $10 billion US listing of its Solidigm unit. BBG BASF is said to increase its bid for rival Evonik to about €24 per share. BBG The Trump administration is looking to restrict US investment in Chinese biotech companies, proposing the addition of biotechnology to a list of sensitive technologies. BBG Russia's central bank left its key rate at 14.00%, in line with estimates, as Ukrainian strikes spur inflation. BBG US President Trump will deliver remarks in Florida on Friday, Georgia on Saturday and Michigan on Sunday: The White House Goldman's Prime desk says Global Fundamental L/S funds fell 1.4% Thursday, their worst day since July 16, while TMT funds are down 9.6% month-to-date. GS JPM's Feroli expects the October flash manufacturing PMI to decline to 54.5 from 55.9 and the services PMI to ease to 58.0 from 58.8. JPM

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Top Overnight News For most of the war, Iran had an invaluable cushion: dozens of oil tankers holding millions of barrels of crude sitting safely in waters in Asia. Tehran steadily sold the oil to China, bringing in billions of much-needed cash. Now, that floating storage is gone. By mid-October, the reserves were fully depleted, according to analysts at Kpler, as a U.S. naval blockade prevented Iran from replacing the crude it normally sells to Chinese refineries. WSJ The US ordered some diplomats and their families to leave Saudi Arabia because of the threat from Houthi militants, as the Iran-backed group carried out more strikes from Yemen; four people were killed in two attacks on an Aramco oil field and an airport in Saudi Arabia's Eastern Province. BBG The US and Israel have drawn up plans for renewed strikes on Iran after the midterm elections, with targets likely to include Iran's energy infrastructure, nuclear facilities and missile and drone arsenals. NYT Aramco told staff to leave its headquarters in Dhahran and work remotely. RTRS Iran's IRGC threatened US bases in the region if Washington keeps escorting ships through what it calls an “illegal” Hormuz route. BBG Saudi Arabia is in talks with foreign governments to give state-owned Aramco access to their strategic oil storage, as the kingdom seeks to make its supplies to customers more resilient during disruptions, Chief Executive Officer Amin Nasser said. BBG The risk-off mood boosted havens, with Treasuries, the yen and Swiss franc gaining. The 30-year US yield touched its lowest since Sept. 23, but there was no relief for embattled French bonds which led a slide in European peers. BBG France's 10-year bond risk premium over Germany widened as much as 18bps to 177bps, the widest since 2011. BBG Over the past two weeks, HFs aggressively net sold global Info Tech stocks at the fastest pace in the past decade (-3.3 SDs), driven by long-and-short sales. Net allocation to Global AI stocks now sits in the 38th percentile while aggregate long/short ratio is in the 6th percentile vs. the past year. Goldman Apple shares have become investors’ preferred Big Tech hedge against AI volatility as the company largely sits out the infrastructure spending boom. BBG DeepSeek raised about $15 billion from investors including CATL and Tencent. BBG JPM's HY AI credit basket is trading at all-time wides, 97bps wider than its widest level in July, with most of the move led by CoreWeave; Oracle has widened far more than the rest of the IG hyperscalers. JPM Japan’s largest labor union group is seeking another year of wage increases big enough to anchor pay growth against persistent inflation. WSJ Japanese monetary policy: the BOJ will keep rates unchanged at its meeting next week according to a report this morning in the Nikkei (this is consistent w/market expectations). Nikkei The Philippine central bank surprised markets with a bigger-than-expected interest rate hike as it seeks to keep inflation in check during one of the worst energy crisis in decades and looming weather-driven shocks. WSJ Turkey's central bank cut its one-week repo rate by 100bps to 36%, its first cut since the start of the Iran war, in line with estimates. BBG The EU reached a provisional deal to overhaul securitization market rules that would unleash billions of euros to finance initiatives in key areas such as defense and climate resilience. BBG Barclays said it’s cutting 5,000 jobs, or about 5% of total headcount, as part of a “technology-enabled” effort to reduce costs as it adopts artificial intelligence across the bank. BBG The US signed a deal with Lockheed Martin for a minimum of 850 F-35 jets. BBG A federal judge barred the DHS from knocking on doors to check on people’s immigration status in nine states through election day, saying the practice likely violates the Voting Rights Act. BBG BofA Total Card Spending (week to October 17th) +4.9% Y/Y (prev. +5.1%); lower-income spending growth has consistently outpaced higher-income spending growth over the past several weeks. Newsquawk Some US banks are reportedly detecting unauthorized AI agents operating within accounts: Axios. The report added that the banks affected include Morgan Stanley (MS), Bank of America (BAC), JPMorgan (JPM), Wells Fargo (WFC).