Quarter · Market review
90 days: supply disruptions keep costs under pressure
Over 90 days, the recovery in energy supply was delayed, while greater inflation risks changed the direction of central-bank rates. The EIA’s forecast revision on 6 October shows that this pressure has not ended, even as some economic data weaken. Additional supply could provide relief for companies, but a commitment to release reserves is not yet delivered oil.
Period covered: 2026-07-10 – 2026-10-07Information as of 19 min read
The new EIA outlook projects more expensive oil at year-end, while the euro area retail release shows only a small rebound from July’s decline. US bond yields fell, reversing the direction of the previous session.
Oil supply depends on more than announced plans: reserves and Middle Eastern exports must actually reach buyers. Company profits also depend on whether higher costs can be passed on to customers.
Quarter
What happened
The starting point: interest rates had already risen on 17 June
This rolling 90-day period begins on 10 July. Before it began, on 17 June, the European Central Bank’s previously announced interest rate increase took effect. The rate on banks’ overnight deposits rose from 2.00% to 2.25%. These are the initial conditions before the period under review, not a new event within it.
Also on 17 June, the Federal Reserve left the federal funds target range at 3.50–3.75%. It made no change on 29 July. Europe also chose a pause on 23 July. For a business with debt, this meant that energy costs would not be offset by automatically and rapidly falling interest rates.
The starting backdrop: the 18 June agreement had not yet restored shipping
On 18 June, the US announced the signing of a memorandum with Iran. For oil buyers, implementation mattered more: whether ships could sail safely, insurance would be available and oil would actually reach them.
More reliable deliveries would have reduced importing industries’ need to hold expensive inventories. Hauliers would have found fuel and route planning easier. But the agreement itself was not a statistical record of restored flows. July and August data later required a more cautious assessment of precisely this assumption.
July: the supply recovery was not sustained
The International Energy Agency’s 10 July review described a partial recovery in June flows and ceasefire violations on 7–8 July. Its 12 August report said Persian Gulf oil exports in July, including routes bypassing the strait, averaged 15 million barrels per day. That was 2.1 million, or about 12%, below June.
This comparison describes two monthly averages, not a one-day shipping halt. It showed that June’s hopes had not been enough to deliver a lasting improvement. US military statements on 5 and 8 September about strikes on Iranian tankers were a reminder that delivery security remained unresolved. A particular price move cannot be attributed solely to these statements.
23 July: trade rules and sanctions added to the planning burden
The European Union’s 21st sanctions package against Russia expanded restrictions on energy, financial services and the shadow fleet. For companies, this matters beyond politics: payment, insurance and cargo transport options change. But an announced restriction is not a measured fall in exports of the same size.
On 23 July, the Office of the US Trade Representative announced tariff measures on imports from 60 economies, including the European Union. The action concerned insufficient bans on importing goods made with forced labour. Tariffs and exemptions depended on the product and its origin. US importers had to check whether ordered goods would become more expensive, while their overseas suppliers faced the risk that higher final prices would weaken demand.
Late July and August: technology suppliers earned revenue while customers invested
Technology suppliers’ revenue grew while their customers spent heavily on equipment and infrastructure. On 29 July, Microsoft reported capital expenditure, including finance leases, of 41 billion US dollars for the quarter ended 30 June. Cash purchases of property and equipment were 35.8 billion dollars. These amounts must not be added together: the first includes finance leases, while the second shows asset purchases paid for in cash during the quarter.
The company generated 55.4 billion dollars in operating cash flow. Subtracting cash purchases of property and equipment left 19.6 billion dollars. This explains why a rapid pace of construction is not automatically a bad signal: what matters is how much cash the business generates and how much more it needs from outside.
On 26 August, chip designer NVIDIA reported revenue of 96.221 billion dollars for the quarter ended 26 July, up 106% year on year. Operating profit grew 124%. Some customer spending had therefore already become real earnings for the supplier. For customers to earn a return on their investments, however, their new services need demand and must cover equipment, electricity and financing costs.
August and September: growth continued, but costs did not disappear
Both the US and euro-area economies grew in the second quarter. The third estimate of US gross domestic product, published on 30 September, showed annualised growth of 2.2%, or 0.6% quarter on quarter. The second US estimate released on 26 August had been lower. Euro-area growth was revised to 0.6% quarter on quarter on 7 September. On the same quarterly comparison basis, growth in the two regions matched.
The initial US estimate for August, released on 4 September, showed 162,000 additional jobs, but the gain was revised to 133,000 on 2 October. On 9 September, second-quarter revenue growth in selected US service industries was revised to 3.0% from the previous quarter. This revenue measure has not been adjusted for prices. Rising sales and a greater real volume of services delivered are therefore not the same thing.
9–11 September: a higher energy-price forecast was followed by an ECB rate increase
On 9 September, the US Energy Information Administration raised its second-half average Brent price forecast to about 90 dollars per barrel. Model inputs were finalised on 3 September. This is a conditional average for a future period, not the oil price in a particular September session and not an already measured effect of later military action.
On 10 September, the European Central Bank announced another interest rate increase of 0.25 percentage points. The deposit facility rate rose from 2.25% to 2.50% on 16 September. On 11 September, the US Consumer Price Index showed annual inflation of 3.4% in August, the same as in July. The seasonally adjusted monthly change accelerated from 0.1% to 0.4%. These data were known before the Federal Reserve meeting of 15–16 September, which subsequently raised the target range.
? How should we read GDP and price indices?
Gross domestic product measures the value of final goods and services produced in an economy. Real growth removes the effect of prices. US quarterly growth is often reported at an annualised rate, as if the same change continued for four quarters. The Consumer Price Index measures a basket of prices weighted by consumption. Its annual and monthly changes have different comparison bases. The Personal Consumption Expenditures Price Index also includes spending made on consumers’ behalf, uses different weights and accounts for changes in the composition of consumption; these two price indices should not be treated as interchangeable.
Mid-September: June’s hopes were not enough to restore supply
The International Energy Agency’s 11 September forecast projected a larger fall in oil supply than in demand this year. This is a forecast, not the final annual result.
Lower demand does not automatically mean cheaper oil. If the volume reaching buyers falls faster, fuel bills can remain high even as the economy slows. This can help an energy producer only if it can deliver its output. For a haulier or an energy-buying factory, the same situation raises costs.
16–24 September: US bond yields rose again after a brief decline
On 16 September the Federal Reserve raised its target range to 3.75–4.00%. An earlier European decision lifting the deposit rate to 2.50% took effect on the same day. The US ten-year yield fell to 4.96% on 21–22 September, but reached 5.18% on 24 September. The fall in US bond yields was therefore short-lived.
The preliminary S&P Global US PMI Composite Output Index, covering manufacturing and services activity, reached 58.4 in the release of 23 September, compared with 56.0 in August. Seasonally adjusted initial unemployment benefit claims of 197,000 for the week ending 19 September, released on 24 September, at that time added to the evidence that the economy was not weakening sharply. On 1 October, that week’s claims were revised to 198,000; the newer week ending 26 September recorded 197,000. Claims are not a count of jobs created or a final measure of an entire quarter’s growth.
? Purchasing Managers’ Index: what does the threshold mean?
The company survey compares activity with the previous month. Above 50 generally indicates expansion and below 50 contraction. A reading of 58.4 does not mean growth of 58.4%; the preliminary measure may be revised.
September’s decisions extended beyond the US and euro area. On 18 September the Bank of Japan set an overnight interest-rate target of 1.25%, effective from 24 September. On 17 September the Bank of England left Bank Rate at 3.75%. These different paths matter for Japanese bonds and yen-funded investments, as well as British companies’ borrowing costs.
25–28 September: uneven demand and trade relief not yet in force
US August durable-goods orders, reported on 25 September, reached $338.6 billion and were virtually unchanged from revised July. Orders for non-defence capital goods excluding aircraft nevertheless rose 1.6%, while shipments increased 0.6%. These are monthly changes adjusted for seasonality, but not for prices. On the same day, the University of Michigan’s final September consumer sentiment index stood at 48.1, compared with 51.7 in August. Business-equipment demand and households’ assessments were therefore sending different signals.
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30 September: spending remained resilient while energy prices rose
Figures released by the US Bureau of Economic Analysis on 30 September showed real consumer spending rising 0.6% month on month in August, while real disposable income was unchanged. The Personal Consumption Expenditures Price Index, or PCE, was 3.4% higher year on year; excluding food and energy, the increase was 3.0%. July’s annual readings were identical in the same revised data series.
Germany’s preliminary national September inflation rate rose from 2.9% to 3.3%, with energy inflation increasing from 10.5% to 14.9%, while the rate excluding food and energy remained at 2.4%. France’s measure under the common European methodology rose from 2.6% to 3.4%. On the same day, China’s manufacturing Purchasing Managers’ Index rose from 49.8 to 50.1, but its new-orders index fell from 50.6 to 50.5 and the raw-material purchase-price index increased from 56.6 to 60.8. The different indices showed growing activity alongside uneven cost increases.
US Energy Information Administration figures released on 30 September put commercial crude stocks at 427.3 million barrels in the week ending 25 September, 2.6% above a year earlier. Petrol inventories were nevertheless 7.4% lower, and distillates, including diesel and heating products, 14.9% lower. A rise in crude stocks therefore did not by itself resolve the question of finished-fuel supply.
30 September: memory-chip maker Micron reported higher revenue
US memory-chip maker Micron reported on 30 September that revenue for its fiscal quarter ended 3 September was $54.229 billion, compared with $11.315 billion a year earlier. This year’s quarter contained 14 weeks against 13 in the previous year, so the periods are not identical in length. The result added to the record of rising technology-supplier revenue. However, the value of the company’s shares depends on more than revenue already earned: it also matters how much future growth investors already expect.
1 October: orders held up while new borrowing cost more
The Institute for Supply Management’s September manufacturing survey, released on 1 October, put its Purchasing Managers’ Index at 54.5. Activity was still expanding, but the prices-paid index increased from 71.1 to 77.9. For a manufacturer, this means an opportunity to sell more without necessarily earning more if higher material costs cannot be passed on to customers.
On the same day, the European Central Bank reported that the euro-area new mortgage rate indicator rose to 3.60% in August, consumer credit rates to 7.92%, while the corporate borrowing cost indicator was almost unchanged at 3.77%. These are averages for new agreements, not changes in payments on existing Lithuanian loans. August statistics do not yet show the effects of the subsequent September rate increase.
Eurostat reported on 1 October that Lithuanian house transaction prices were 14.3% higher year on year in the second quarter, against 4.0% in the euro area. This April–June comparison describes prices, not rental income or net investment returns. A home buyer needs to consider both the purchase price and future mortgage payment, but later euro-area lending rates cannot be presented as the cause of earlier Lithuanian price growth.
2–4 October: US jobs growth slowed while energy risks persisted
On 2 October, the US Bureau of Labor Statistics reported that nonfarm payrolls rose by 29,000 in September, following a revised increase of 133,000 in August. The combined July and August result was revised down by 60,000. The weakness was not confined to the latest month: the earlier path of jobs growth was also lower than previously reported.
The September unemployment rate was 4.2%. Slower jobs growth can limit growth in household income and discretionary spending. These figures do not by themselves establish an economy-wide downturn, however.
? Unemployment rate: what is the denominator?
It is the share of the labour force who are not employed, are actively looking for work and are available to work, rather than a share of the whole population. Unemployment and payroll figures come from different surveys, so their monthly movements need not match.
Also on 2 October, Eurostat’s flash estimate showed euro area annual consumer inflation rising from 3.2% to 3.8% in September. These are prices paid by consumers, not the producer selling prices discussed below. On 4 October, seven countries in the OPEC+ group of oil producers retained September production targets for November; these are agreed volumes, not confirmed actual oil supply.
5–6 October releases: higher costs and uneven demand
On 5 October, the Nasdaq Composite share-price index rose 1.05% from its 2 October close, measured in US dollars. The US 10-year Treasury yield meanwhile increased from 5.28% to 5.31%. These are different market measures: rising share prices do not establish that companies can borrow more cheaply.
On 5 October, the US Institute for Supply Management’s September Services Purchasing Managers’ Index (ISM Services PMI) fell from 55.4 to 54.9, while its prices index increased from 72.6 to 74.0. Activity expanded more slowly but cost pressures became more widespread.
? Services and prices indices: what do they measure?
The services survey index gives equal weight to activity, new orders, employment and delivery times. A reading above 50 indicates prevailing expansion compared with the previous month. The separate prices index measures the breadth of price increases: 74 points does not mean 74% inflation.
On 6 October, Destatis reported that German manufacturing orders fell 10.6% in August from July, but only 0.1% excluding large contracts. The category covering ships, aircraft, trains and military vehicles had received unusually large orders in July. Even so, June–August orders excluding large contracts were 2.6% below the preceding three months, leaving regular demand weak.
? Manufacturing orders: how do they differ from revenue?
These are new orders adjusted for prices, seasonal effects and the calendar; August figures are preliminary. An order is not yet a finished product or collected revenue. The overall series and the population excluding large contracts are not additive components of the decline.
On 5 October, Eurostat reported that euro area industrial producer prices rose 1.9% in August from the previous month, with energy up 5.6% and industry excluding energy up 0.2%.
? Producer prices: what do they not show?
The Industrial Producer Price Index measures domestic selling prices, not a company’s entire input-cost basket or consumer inflation. August is compared with July; the energy group’s 5.6% rise is not its percentage-point contribution to the overall index.
Also on 5 October, ECB Executive Board member Philip Lane explained that costlier energy leaves households less money for other goods, while higher long-term interest rates constrain consumption and investment. This was his assessment, not a new interest-rate decision.
The oil forecast rose, but the new reserve plan is not yet included
On 6 October, the US Energy Information Administration (EIA) raised its forecast for the average Brent oil price in the fourth quarter of 2026 from $91 to $105 a barrel. That is an increase of about 15.4% in the forecast for the same period. The agency expects oil supply from the Middle East to increase, but assumes that constraints will not disappear during the quarter.
Why does more supply not necessarily mean fuel will become cheaper quickly? In the EIA’s assessment, oil inventories are still falling and tight diesel supplies encourage refiners to seek more crude. While transport routes remain constrained, individual additional cargoes may only reduce the shortfall rather than immediately restore normal market conditions.
However, the inputs for the new forecast were finalised on 1 October. It therefore does not include the additional effect of the Group of Seven (G7) plan announced on 2 October: member countries committed to a coordinated release of 100 million barrels of oil and petroleum-product reserves over four months. This is planned supply, not confirmation that the entire volume has already reached the market. The actual pace of deliveries could change the supply–demand balance projected by the EIA.
? Brent forecast: what is being compared?
Brent is an important international oil benchmark; the comparison is between two forecast releases for the same October–December average price, not daily prices. The percentage change is calculated from the earlier $91 figure using the EIA’s rounded values. The agency’s forecast is neither a current transaction price nor a guaranteed future outcome.
The US 10-year Treasury yield eased to 5.27%
On 6 October, the annual yield on the 10-year US Treasury fell from 5.31% to 5.27%. The two-year yield declined from 4.84% to 4.79%, while the 30-year yield moved from 5.66% to 5.64%. Investors buying US government bonds in the market therefore faced slightly lower yields than on Monday.
Friday provides a useful sense of scale: the 10-year yield was 5.28% on 2 October, almost the same as Tuesday’s reading. This was a small fluctuation, not sufficient evidence that a lasting decline in borrowing costs had begun.
? Bond yield: what does it show?
The US Treasury derives these indicative annual rates from market prices for each remaining maturity. Four basis points equal 0.04 percentage points; this is neither a bond fund’s return nor a reduction in the Federal Reserve’s policy rate.
Euro area purchases recovered only slightly after July’s decline
On 6 October, Eurostat reported that euro area retail trade volume rose 0.1% in August from July, when it had fallen 0.6%. The rebound did not offset the previous month’s loss. This measure of actual goods sales volumes adds to the earlier signs of weakness in European industry.
The headline masks different trends: non-food products excluding automotive fuel rose 0.5%, while automotive fuel sales in specialised stores fell 1.9%. Changes in energy prices alone cannot explain all consumption. Purchases of some goods increased while volumes of others declined, so one conclusion would not fit every retailer.
? Retail trade volume: how does it differ from revenue?
The measure tracks sales after removing the effect of price changes, and this monthly comparison is seasonally and calendar adjusted. It does not measure company profits or cover every service bought by households. Higher prices can increase cash revenue even when fewer goods are sold.
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Quarter
What matters now
Transport costs and oil producers’ revenue can move in opposite directions
For airline and road-haulage shares, the question is how much fuel costs will reduce profits and how much can be passed on to passengers or freight customers. Higher realised prices can support oil producers’ revenue if they can extract and deliver their output. Hedging contracts and sales volumes determine how quickly oil price changes feed through to each company’s results.
Consumer businesses need buyers, not just higher prices
For non-food retailers, rising sales volumes offer more scope to cover fixed store and logistics costs. Fuel retailers may offset lower volumes with higher cash sales, but profits depend on the difference between purchase and selling prices. European consumer-goods manufacturers still face the risk that rising essential household expenses will limit other purchases. The small overall recovery does not yet provide a broad foundation for sales growth across the sector.
A stronger euro helps importers but reduces the euro value of dollar assets
The European Central Bank reference rate was $1.1269 per euro on 6 October, compared with $1.1204 on 5 October. A stronger euro cushions the cost of dollar-priced oil for euro area importers. However, the currency move reduces the euro value of an investor’s unhedged dollar assets if their dollar price is unchanged. A rise in a US bond’s price can therefore differ from the change in its value in euros.
? ECB reference rate: how should it be read?
The figure shows the number of US dollars per euro; an increase means a stronger euro. It is an informational daily reference rate, not the price of a particular transaction. Its fixing time differs from the US market close, so these rates alone cannot precisely convert that session’s equity return.
Bondholders and future borrowers face different effects. When market yields decline, the prices of existing fixed-rate bonds generally rise; longer-maturity US bonds can respond more strongly. Shares in heavily indebted property companies have a different potential benefit: lower refinancing costs. However, a company’s borrowing rate also depends on its credit risk. A four-basis-point daily move does not alter an existing loan agreement. If inflation expectations or the assessment of the borrower’s risk deteriorate, that relief could disappear.
Quarter
What comes next
7 October, 09:00 Lithuania time. Germany’s statistical office Destatis is scheduled to release August production figures. Will the volume of goods already produced confirm the weak orders figures, or did earlier contracts keep factories busy?
7 October, 17:30 Lithuania time. The US Energy Information Administration is scheduled to publish its weekly petroleum report for the week ending 2 October. Will US crude oil and petroleum-product inventories point to growing shortages or stabilising conditions? This measures US inventories, not global stocks.
At 21:00 Lithuania time on 7 October, the Federal Reserve is scheduled to release the minutes of its 15–16 September meeting. The key question is how participants assessed inflation and the risk of slower economic activity; the minutes describe an earlier meeting, not a new decision based on October’s news.
8 October. The European Central Bank is scheduled to publish the account of its 9–10 September monetary policy meeting. It will help explain how the council assessed energy inflation and weaker demand, but will not be a new interest-rate decision.
At 11:30 Lithuania time on 8 October, Federal Reserve Governor Christopher Waller is scheduled to speak on the economic outlook. Will his assessment of US inflation and economic growth differ from the conditions discussed at the September meeting?
Important. This is general market analysis, not a personal recommendation to buy or sell. Historical data and company results do not guarantee future returns. Forecasts and conditional scenarios may not materialise.
How is the history preserved and updated?
All five periods in this edition share one information date. Week means the latest 7 days, quarter means 90 days, and year means the trailing 12 months. The next dated edition will have a separate URL. This text keeps its date and assessment; later events are not silently inserted into an older edition. Longer periods assess new evidence alongside earlier developments without repeating every headline.
