Analysis: Global — 06 October 2026
US completes Iraq withdrawal while the Iran war continues
On September 30 the United States completed its troop withdrawal from Iraq, and Baghdad marked the date as Sovereignty Day. The force that left was the remnant of the 2014 return against ISIS, not an occupation army. Responsible Statecraft argues the timing is what matters: with the US-Iran war still underway, a residual garrison would have been a target for Iranian strikes and a pretext for Iran-aligned militias to keep their weapons. Baghdad has already signaled it will not renew a status-of-forces agreement.
Washington and Iraqi commanders certified Iraqi forces as large enough, and sufficiently equipped, to handle internal and external threats. A security-cooperation office is to remain in the US embassy, so training and intelligence sharing can continue without permanent bases. Nine days before the exit, the Kurdistan Regional Government announced unification of the Peshmerga under one ministry. Salaries now run through a central account, but the two regional commands remain led by the KDP and the PUK.
Militia disarmament was supposed to precede the withdrawal. The groups said foreign forces should leave first, and they remain too strong for Baghdad to compel. The KRG still has no new government two years after elections, so party command has not ended with the ceremony. Leaving removes a tripwire into the Iran war. It does not decide who commands force in Baghdad or Erbil.
Sources: Responsible Statecraft.
French yields near 5% as debt stress spreads past Paris
France’s 10-year yield is approaching 5%, and the premium over German Bunds is the highest since the euro-area debt crisis, Naked Capitalism reported on October 6. Italy’s 10-year now yields about 20 basis points less than France’s. Non-residents hold 57% of French debt, the highest foreign share among major advanced economies, so rollover depends on managers outside the country. Insuring Société Générale senior debt now costs more than insuring Deutsche Bank; BNP Paribas and Crédit Agricole also trade wider than major peers.
France has not posted a primary surplus since 2001, and public debt is higher than at the worst of the pandemic. Spain is nearly back to its pre-COVID ratio; Italy has cut its ratio by 18 points, to 136%. The 2027 budget seeks a 5% deficit through €43 billion in cuts, including freezes on the employment bonus, civil-service pay, and pensions above €1,260. The government has no majority. Three cabinets have fallen in less than a year.
A systemic crisis is not yet a fact. The ECB can again try to cap yields, but France is the euro area’s second-largest economy and home to three global systemically important banks, so using German fiscal space to cover others is politically thinner as the AfD rises. April’s race is polling toward a Le Pen–Mélenchon runoff, and Mélenchon’s proposal to cancel the 18% of debt held by the Bank of France has been called illegal by the governor. Spain has called elections for mid-November. Bond markets and political calendars are now moving together.
Sources: Naked Capitalism.
US services prices hit a four-year high as fuel costs bite
The ISM services index fell to 54.9 in September from 55.4, a 27th month of expansion but below the 55.2 consensus, BigGo Finance reported from the October 5 release. The prices index rose to 74.0, the highest since July 2022. Employment returned to 50.1. New export orders fell 9.4 points to 46.9, the first contraction in eight months, and business activity cooled from 61.7 to 56.5.
The print sits inside a war economy. Brent was about $102, roughly 30% higher since the US-Iran conflict began in late February, and the survey chair said fuel was cited twice as often as any other supply-chain pressure. Tariffs were the other recurring complaint. The Federal Reserve raised its policy rate by a quarter point last month, to 3.75–4.00%, the first hike in three years, and still projects one more increase this year. The 10-year Treasury yield was reported at 5.32% on Monday.
ISM maps the reading to about 2.1% annualized real GDP, so this is not a recession signal. Domestic new orders remain elevated at 59.8. The strain is in exports and input costs, not in a collapse of activity. A December hike is more plausible if services prices stay near 74, but it would land on an economy already paying wartime energy prices. Equities treated the print as tolerable: the S&P 500 rose 0.44%. That prices resilience, not relief.
Sources: BigGo Finance.