G7 Agrees to Release 100 Million Barrels of Emergency Oil Reserves; Weak Nonfarm Payrolls Curb Rate-Hike Expectations; Micron and Samsung Step Up HBM

On October 2, international markets saw a flurry of changes around energy supply and Federal Reserve policy expectations. A statement by Group of Seven (G7) leaders said they will coordinate the release of 100 million barrels of strategic oil reserves through the International Energy Agency (IEA), with the action to begin “immediately” and last for four months; in the first 20 days, G7 members and partners will take the lead in large-scale, front-loaded releases of diesel reserves. The G7 also pledged to avoid imposing export restrictions on energy and energy products among member states, and called on other oil-producing countries not to adopt export bans that could further exacerbate market tightness. ^[1]

After the G7 decision was announced, losses in international crude oil futures widened notably during the early U.S. trading session. Reports showed U.S. WTI crude briefly fell below $88.10 per barrel, down nearly 5.2% intraday; Brent crude fell below $98.50 per barrel, down nearly 3.8% intraday. ^[1] In an earlier trading session, French President Emmanuel Macron called on the G7 to take coordinated action, avoid imposing export restrictions, and jointly curb rising fuel prices; in a call among European Union member governments, France's proposal was discussed: European countries releasing 50 million barrels of diesel and IEA members releasing 50 million barrels of crude oil. After the news emerged, WTI crude was at $89.38 per barrel, down 3.76% intraday; Brent crude was at $99.69 per barrel. ^[5]

On the macro front, data released Friday by the U.S. Department of Labor showed that September nonfarm payrolls increased by only 29,000, far below the market expectation of 90,000 and below the lower bound of all forecast ranges; the unemployment rate edged up to 4.2% from 4.1% in August. After the data was released, U.S. Treasury yields fell across the board, and U.S. stock futures strengthened. The CME FedWatch tool showed traders' probability expectation for a Federal Reserve rate hike at its October meeting fell to 17% from 22%, while the cumulative rate-hike premium for the remaining two meetings this year dropped to about 21 basis points; the two-year Treasury yield fell about 10 basis points in the day to 4.69%, S&P 500 index futures rose 0.8%, and Nasdaq 100 index futures gained 1.1%. ^[6]

Before the nonfarm payrolls data was released, dovish signals from Federal Reserve Vice Chair Jefferson had already led markets to sharply scale back bets on an October rate hike, with the probability plunging to about 27% from about 70% earlier in the week. At the same time, the German 10-year government bond yield fell 10 basis points to a three-week low of 3.41%, while the French bond risk premium rose to 150 basis points, the first time since 2012. ^[5]

On the corporate front, Micron Technology's latest quarterly revenue and profit both beat market expectations, and it made clear for the first time that HBM capacity supply in 2027-2028 will be even tighter than in 2026. The company is simultaneously expanding HBM production at its four major manufacturing bases in Taoyuan, Taichung, Tongluo, and Tainan in Taiwan, China. Morgan Stanley maintained its “Overweight” rating on Micron with a price target of $1,200; Micron CEO Sanjay Mehrotra previously said data center customers' current purchasing intent is about 150% of the company's committable supply, meaning demand exceeds supply by about 50%. ^[2]

Samsung Electronics, meanwhile, was reported to have set next year's HBM4 supply quote in the mid-to-high range of $4 per gigabit, more than triple the roughly $1.50/Gb price of its current flagship HBM3E, and has begun annual contract negotiations with major customers. The report said Samsung's HBM4 has stably achieved a data transfer rate of 11.7 Gbps, with peak rates up to 13 Gbps; TrendForce forecast that, driven by both a higher HBM4 mix and a supply shortage, the average selling price of HBM next year will rise 121% from this year. ^[3]

In consumer electronics, Gurman revealed in a podcast aired by Bloomberg on October 2 that Apple's AI smart home hub, internally codenamed “J490,” features an approximately 6-inch square touchscreen, adopts a brand-new operating system, with voice to become the primary interaction element, and that “warehouses around the world” are already packed full from top to bottom. Gurman also said Apple could launch its first touchscreen-supported MacBook Pro as soon as October this year or delay it to November, introducing OLED for the first time. ^[4]

In addition, the United States is asking Europe to further draw on fuel reserves. The report said the United States wants the European Union to release 120 million barrels of diesel into the market over the next six months; France consumes about 600,000 barrels of diesel per day, about half of which relies on imports. ^[5]