Macro Bites – AI Selloff Shakes Global Stocks as Investors Turn to Bonds

Houthi attacks on Saudi Arabia are demonstrating the limits of the Kingdom’s military prowess.  Despite defense spending outstripping its regional neighbors, Houthi missiles and drones have wreaked havoc in Saudi Arabia, killing at least 18 people and forcing the closure of the country’s main international airport in Riyadh.  On Wednesday, the Iran-backed Houthis struck the offices of Saudi state-owned oil company Aramco, damaging the offices of the firm’s chief executive and other top officials.  The strike, in the eastern Saudi Arabian city of Dhahran, was the latest demonstration of the Houthis’ ability to attack high-profile targets.

Ukrainian President Volodymyr Zelenskyy has ordered attacks on Russian oil refineries to resume in a spiraling confrontation with President Trump over restrictions on U.S. intelligence assistance.  Zelenskyy said he’s ending a three-day pause on strikes in response to Trump’s Sunday call for an “energy ceasefire” after he accused Trump and billionaire Elon Musk of restraining Kyiv’s ability to defend itself against Russian missile and drone attacks.  Hours after Zelenskyy announced the move, normal service on Starshield internet terminals used by Ukraine’s military appeared to have resumed.  Starshield operations have been restored and the Defense Ministry in Kyiv is continuing to talk with the U.S. about why previous service was restricted.

Swiss commodity-trading giant Mercuria announced an agreement to pay up to $250M to secure access to three years of copper supplies in the DRC from the Hongkong and Singapore Excellen Mining units of Shanghai Jayson New Energy Materials Group (incl. the new Kinga Kila project).  The agreement is the latest example of how trading houses are paying large sums in advance to secure access to copper as prices soar.  The DRC has rapidly expanded its copper partnerships with Mercuria designed to pivot the DRC away from historical passive mining stakes toward active, direct commercialization of its resources.

Separately, Europe’s biggest copper smelter Aurubis announced it will charge customers a record premium of $347/t for refined copper in ’27.  The premium, paid on top of LME contract prices, is up 10% from the German company’s ‘26 European premium of $315/t.  An Aurubis spokesman commented, “In 2027, we expect to have a very strong demand side, from a range of mega-trends” including the AI buildout, EVs and renewable energy.

AI watch: Global equities are retreating Thursday morning as an AI selloff gathers speed on Anthropic’s lower than expected $16.8B in Q3 revenues disappointed potential roadshow investors  and pushed global investors toward the safety of bonds.  South Korea’s KOSPI index plunged more than 8% intraday triggering a Level 1 circuit breaker suspending all trading for 20 minutes.  The KOSPI pared losses slightly to close down 7.57% at 5,554.22.  CoreWeave is trading 5% lower in early Thursday trading (after falling as much as 17% on Wednesday) while its ‘32 bonds are trading at less than 78 cents on the dollar (yielding 15%) which investors bought at par just 4 months ago.  Stay tuned…

San Francisco Fed President Mary Daly [2027 FOMC Voter] said the Fed will probably need to raise rates further to rein in inflation, but signaled there was no need to do so at the Oct. FOMC meeting. "We are more likely than not to need additional adjustments, but the timing of those adjustments to me is something we’re still deliberating…Why force urgency when you don’t need to have urgency?”  Separately, Fed Vice Chair of Supervision Michelle Bowman [Permanent FOMC Voter] said the Fed has time to wait ​and see how financial markets and the economy ‌evolve after its Sept. rate hike.  "I don't feel any urgency for taking further ​action at this point, we really need to take ⁠some time and understand how things will evolve," Bowman ​said during the IMF-World Bank meetings in Bangkok.