Venezuela's Cardon refinery shut down due to fire, with daily processing capacity of 310,000 barrels

(1) In early European trading, French government bond yields rose, outpacing similar eurozone bonds. (2) French government bonds remain in focus as the government sticks to its plan to cap the deficit at 5% of GDP during budget negotiations. (3) In a report, ING rate strategists Michiel Tukker and Benjamin Schroder noted that far-right leader Marine Le Pen’s fiscal plans may temporarily support French bonds, but lack of credibility and future election uncertainty still point to risks of wider spreads. (4) Eurozone government bond yields also followed U.S. Treasury yields higher as the market awaits the release of the latest Federal Reserve meeting minutes. (5) The yield on the German 10-year government bond rose by 2.2 basis points to around 3.5%, while the French 10-year government bond yield climbed 5.4 basis points to roughly 4.8%.

(1) Diesel spot prices are holding steady above their previous breakout levels, demonstrating considerable strength. (2) Despite recent volatility in crude oil, diesel has refused to relinquish its gains, indicating that the physical refined products market remains robust. (3) Once diesel moves higher again, it is expected to drive crude oil prices upward simultaneously. (4) Crude oil itself is currently approaching cyclical lows. (5) When diesel confirms the start of its next rally from current levels, this could trigger the next major move in crude oil prices.

(1) Germany's industrial output unexpectedly rebounded month-on-month in August, marking the largest increase since March 2025 and exceeding market expectations. (2) Output had declined in July, but the rebound in August was mainly driven by a strong rise in construction output and growth in machinery and equipment manufacturing. (3) Automobile production declined month-on-month, with the statistics agency noting that part of the reason was related to factory vacation schedules. (4) Output also grew year-on-year, as manufacturing companies continued to adapt to the volatile environment caused by fluctuations in energy prices. (5) Since April, Germany's industrial output has generally increased, as companies, concerned about the situation in the Middle East, have built up inventories. Some producers have also gained a competitive edge due to disrupted raw material supplies from the Gulf region. (6) Germany's economy expanded steadily in the first half of the year, with unexpectedly strong demand for exported goods, while government fiscal stimulus continued to flow into defense and infrastructure investment. (7) However, data released on Tuesday showed a sharp drop in factory orders, mainly due to fewer large orders for aircraft and military vehicles. (8) Economists from German commercial banks stated that the output data at least offer hope that manufacturing activity did not decline in the third quarter, and that the German economy saw slight growth. (9) The statistics agency pointed out that the impact of rising energy prices was apparent in energy-intensive industrial sectors, where output declined. (10) The European Central Bank raised key interest rates last month for the second time this year, citing excessive rises in oil and gas prices, with Brent crude remaining above $100 per barrel on Wednesday. (11) German business confidence in September rose to its highest level in more than three years, indicating that businesses seem largely unaffected by war-induced economic turmoil, though household consumer confidence fell to a five-month low. (12) Economists added that recent positive sentiment indicators offer hope for higher output, but, considering structural challenges, tariff rhetoric from Trump, and fierce external competition, improvements may be limited.

(1) Deutsche Bank believes that silver may be shifting from a shortage to a surplus. According to the bank’s analyst Gary, the peak of the silver shortage has clearly passed, and a supply surplus could emerge as early as 2027. (2) Silver is currently trading at approximately $61 per ounce, up roughly 26% year-on-year. During the period of physical shortage in early 2026, it briefly reached about $120 per ounce. (3) As of the end of August, London commercial vaults held more than 914 million ounces of silver, with the freely available portion exceeding 300 million ounces, representing an increase of around 70% since October 2025. (4) Photovoltaic demand is shrinking rapidly, with Deutsche Bank expecting global silver consumption in the photovoltaic sector to decline by more than 20% this year. (5) Manufacturers are adopting finer contact wires and copper-coated pastes, with the amount of silver used per photovoltaic cell projected to decrease by about 17% by 2026. (6) Deutsche Bank forecasts an average silver price of approximately $70 per ounce in the second quarter of 2027.