Geopolitical risk remains the dominant macro driver heading into Monday's US open, with Brent crude pulling back roughly $2 from Friday's $110 high after President Trump signed an executive order waiving select sanctions on Russian energy exports, though the measure remains under a 60-day review by Secretary Rubio and faces congressional resistance; separately, Iranian tanker incidents in the Strait of Hormuz, Saudi-Houthi clashes near Yanbu, and Ukrainian strikes on Russian oil infrastructure continue to sustain an elevated risk premium in energy markets. Fed Chair Warsh, speaking at IMF meetings in Bangkok, offered no fresh rate guidance but praised global tightening coordination and gave an upbeat US economic assessment, nudging October hike probability down to roughly 15-17%; ECB's Lagarde flagged upside inflation risks with Eurozone HICP running at 3.8% YoY, while BoJ Governor Ueda noted core inflation 'quite close' to 2%, reinforcing a globally hawkish-leaning policy backdrop.
Across assets, the Brent pullback to around $108 combined with a modest 3-9 basis point decline in US Treasury yields — the 10-year sitting near 5.10% and the 30-year at 5.43% — is offering some relief to rate-sensitive equities, with S&P futures pointing roughly 0.5% higher and Nasdaq futures up about 0.8% ahead of the open. The VIX's sharp 21% spike to just under 20 on Friday signals that the AI and semiconductor-led selloff has materially elevated near-term hedging demand, and with a heavy US data slate today — PPI, retail sales, and unemployment claims all at 08:30 ET — the session has clear catalysts to either confirm or reverse the defensive rotation out of technology and into energy and staples that defined last week's close.