On Friday the Revolutionary Guard claimed responsibility for striking a tanker in the Strait of Hormuz and setting its engine room alight, and said it had taken control of the administration of the strait. It warned that vessels it deems in violation would be pursued and punished anywhere in the region, not only inside the strait. American Central Command answered with its own account, that the main shipping lanes had been cleared, mines had been lifted from the key transit routes, and the lanes stood open to vessels that respect American sanctions. The two accounts cannot both be true, and the count of incidents is the one measure that neither claim governs: ship reports collected by UKMTO counted twelve attacks, attempted attacks, or harassment incidents against oil and gas carriers in the strait between September 28 and October 5, the highest weekly total since the war began on February 28. What has not moved is the American role. The President’s pledge that the United States will not attack Iran before the midterm elections still holds, and the prediction markets price the standoff around it, a ceasefire continuing through Monday at 95.4 percent against an American announcement ending the blockade by October 15 at 5.5 percent.

The administration and the rule of law

The Register’s window, October 9 through October 10, holds 89 documents: one presidential document, nine rules, three proposed rules, and 76 notices. Every one of them carries an October 9 publication date, and nothing has appeared since, so the newest material on this beat is the issue this report covered yesterday morning. One item from it is still open, and its clock closed today.

Executive Order 14435, signed October 5 and published October 9, directs the Secretary of the Treasury to determine within five days whether relief is authorized under 26 U.S.C. 7508A and, if it is, to defer payment of the diesel taxes incurred between October 5 and December 31 without penalty, interest, or addition to the tax. A second determination runs on the same five-day clock: the Internal Revenue Service is to announce that it will not penalize the highway use of dyed diesel during the same period. The order is dated October 5, so the fifth day is today, and no document announcing either determination appears anywhere in the Register’s window. Section 4 directs the Secretary to “explore avenues, including legislation, to eliminate the obligation to pay the amounts deferred,” which is the whole distance between a delay and a forgiveness, and it is the section carrying no deadline at all.

The courts

The Supreme Court filed no opinion in the window. The D.C. Circuit filed one, and it is a fraud case. In United States v. Trankle, No. 23-3233, decided October 9, a panel of Chief Judge Srinivasan, Judge Childs, and Senior Judge Rogers affirmed the conviction and the sentence of a man who registered an entity in the District called Good Charity Church Inc. and sent nationwide solicitations under trade names that mimicked real charities. Judge Childs wrote for the court, and her first paragraph states the case in a line: “Yet his charities were charitable in name only.” The court upheld the exclusion of the defendant’s own writings as hearsay, found the evidence sufficient to support the verdict, affirmed three sentencing enhancements, and affirmed the forfeiture order. Senior Judge Rogers concurred in the judgment, agreeing that every challenge fails while differing on the evidentiary question: she would have reviewed the exclusion for plain error, because the objection was never preserved.

The District Court for the District of Columbia took sixteen new docket entries on October 9. Eight are civil and eight are criminal, and the criminal entries cover four matters, each of which appears twice. The civil captions name Democratic Party of Wisconsin v. Trump, Baptist Medical Center Nassau v. Kennedy, Alignment Healthcare, Inc. v. Department of Health and Human Services, Democracy Forward Foundation v. U.S. Immigration and Customs Enforcement, Judicial Watch, Inc. v. U.S. Department of State, Mwafy v. Rubio, Hill v. D.C. Government, and IAM National Pension Fund v. Culp. The collector carries captions and docket numbers and not causes of action, so this report does not say what any of them seeks.

Two of the three watched dockets recorded a filing. Beatty v. Trump, the Kennedy Center case, took ECF 103 on October 9. Phang v. Blanche, the Epstein files case in the district court, took ECF 57 the same day. The consolidated appeal of that case in the D.C. Circuit recorded nothing.

Markets

Friday’s close was higher across the board. The S&P 500 finished at 7,811.54, up 46.18 points or 0.59 percent; the Nasdaq Composite at 27,366.17, up 172.83 points or 0.64 percent; and the Dow Jones Industrial Average at 51,654.95, up 423.31 points or 0.83 percent. The VIX closed at 14.84, down 0.57 or 3.70 percent, and the dollar index at 102.231, up 0.093.

The futures quotes carried later stamps than the cash market, both dated October 10. Gold’s front month stood at $4,220.30, up $63.30 or 1.52 percent, and West Texas Intermediate at $91.66, up $0.17. Gold above $4,200 while the VIX sits under 15 is a hedge being bought alongside a stock market that is not pricing trouble, and that pair is the morning’s most useful signal.

The 10-year Treasury note yielded 5.242 percent on its own October 9 stamp, up nine-tenths of a basis point. The Treasury’s daily curve for October 9 put the 2-year at 4.80 percent, the 10-year at 5.24 percent, and the 30-year at 5.60 percent, leaving a 2s10s spread of positive 44 basis points against 47 basis points for October 8. The curve flattened by three, and the front end did the work: the 2-year rose five basis points while the 10-year rose two.

Total public debt outstanding stood at $40,305,316,210,830 as of October 8, up $21,280,063,463 on the prior business day. Debt held by the public was $32,454,086,117,711, and $7,851,230,093,118 of the total sat in government accounts.

The economy

No series in the pack posted a new observation in this window, so the newest readings are the ones that stood yesterday. The consumer price index for all urban consumers was 334.980 in August, against 333.918 in July and 333.952 in June: prices slipped a hair in July and then rose about a third of a percent in August. The unemployment rate was 4.2 percent in September, a tenth of a point above the 4.1 percent readings of July and August. Total nonfarm payrolls were 159,044 thousand in September, against 159,015 thousand in August and 158,882 thousand in July, so the monthly gain fell from about 133,000 to about 29,000. Read together, the three say that the labor market is cooling rather than breaking, and that one month is not a trend.

Elections and the midterms

On Polymarket, the House market gave the Democratic Party 90.5 percent on $137,806 of 24-hour volume and the Republican Party 9.5 percent on $306,418. The Senate market gave the Democrats 62.5 percent on $46,335 and the Republicans 37.5 percent on $18,406. The balance-of-power market put a Democratic sweep of both chambers at 61.5 percent on $81,883, a Republican Senate with a Democratic House at 29.5 percent on $103,563, and a Republican sweep at 8.5 percent on $127,203.

Three state races carry books large enough to read. In the Texas Senate race, James Talarico stood at 63.5 percent on $122,830 and Ken Paxton at 37.5 percent on $230,240. In Michigan, Abdul El-Sayed stood at 71.5 percent on $58,211 against Mike Rogers at 29.5 percent on $26,908. In Iowa, Josh Turek stood at 43.5 percent on $13,923. Two single-district books were thinner than these: PA-11 had Lloyd Smucker at 95.6 percent on $10,859, and NY-24 had Alissa Ellman at 0.9 percent on $12,062.

Against this report’s own reading yesterday morning, the movement was small and toward the Republicans in the Senate markets. The Republican share of the Senate rose from 35.5 to 37.5 percent and the Democratic sweep fell from 62.5 to 61.5, while the Democratic candidates gained about a point each in Texas and Michigan. These are the venues’ prices and not this site’s view, and the gap between the House market’s 90.5 percent and the sweep market’s 61.5 percent is still the Senate, which the same venue prices as a much closer question than the House.

The world

The strait is the war’s center of gravity this month, and Friday’s reporting measured it three ways. The first is the claim. The Revolutionary Guard said its forces struck a tanker that had taken what the Guard called an unauthorised route through the strait’s southern section, setting its engine room alight, and that the Guard had taken control of the administration of the strait; it added that action against vessels it deems in violation would reach beyond the strait, and that companies it accuses of working with the American military would see their ships sanctioned. The second is the American answer. Central Command said it had cleared the strait’s main shipping lanes and opened them to vessels that respect American sanctions, and it called the claim that the waterway is closed false.

The third is the traffic, which neither side controls. About a fifth of the world’s oil and gas shipments normally transit Hormuz, and the strait has been effectively shut since the war began. Individual incidents are common enough to be routine: an LPG carrier was hit by unknown projectiles west of Al-Jazira in the United Arab Emirates, and an oil tanker north of Qatari waters was struck by several projectiles with casualties the day before, the first attack of that kind in six months. Regional exports other than Iran’s have lately returned to pre-war levels, which the reports attribute to shuttle runs and ship-to-ship transfers rather than to any reopening of the strait.

Diplomacy has narrowed to the strait and stalled there. Iran’s president, speaking at a summit in Turkmenistan, said dialogue holds meaning only when it rests on mutual respect and mutual commitments, and Russia’s president said Moscow is ready to do everything within its power to help settle the situation. The war is seven months old. The last American strike on Iran was September 1.

The venue prices the standoff rather than the rhetoric: a ceasefire continuing through October 12 at 95.4 percent on $690,904 of volume and through October 31 at 75.5 percent; an American announcement ending the blockade by October 15 at 5.5 percent on $207,348 and by October 31 at 15.5 percent; and a United States invasion of Iran before 2027 at 15.5 percent on $130,022. The venue’s largest book this morning, Brazil’s presidential runoff, is not carried here.

Sources

Fetched for this edition

Federal Register documents

Court dockets

Market and election prices

Data

  • Bureau of Labor Statistics, public data API, series CUUR0000SA0, LNS14000000, and CES0000000001.
  • The U.S. Treasury daily yield curve, the Treasury’s debt-to-the-penny figures, and the CNBC quote service. These three carry no link in this edition: their endpoints were read by the collector, which did not record a URL for them, and this report does not construct one.

PRH | huffmanwrites.org | © Philip Huffman