The Morning Brief
Futures are steady but the bond market is doing the talking, with yields near 2023 highs forcing traders to weigh a still-resilient Fed against a credit market that's starting to protest.
Overnight:
The dollar bloc had a quiet session, but the bigger story is bonds. NY Fed President Williams, speaking at Oxford, said persistent supply shocks "can't be ignored" but reiterated the labor market isn't a source of inflationary pressure, an attempt to talk down a bond rout that's pushed mortgage rates to their highest since 2023. The iShares 20 Year Treasury ETF (TLT) is off 1.3%, and commentators like Ross Gerber are openly asking whether the U.S. can afford 5% yields. On the geopolitical front, U.S. airlines are pushing back against Xi Jinping's push for expanded China-U.S. flight links, a reminder that trade normalization talk hasn't erased friction on the ground. Reports also surfaced that Trump-Iran talks now include Strait of Hormuz access in exchange for blockade relief, while Houthi forces claim new attacks near Aramco facilities in Yanbu. Oil is responding: the United States Oil Fund (USO) is up 2.9% overnight, compounded by Peter Schiff's warning that Trump's diesel export ban could "backfire" into the next energy shock. Crypto caught a bid as yields spiked, with bitcoin, ether, XRP and dogecoin all higher on what one analyst called whales "buying the dip." In Europe, ArcelorMittal (MT) booked a roughly $1 billion non-cash impairment on its stalled Ukrainian operations, and TotalEnergies (TTE) renewed its CEO's mandate through 2027.
Rates remain the market's pressure point.
With Williams talking supply shocks and yields still elevated, the setup into today's open is a market pricing sticky inflation risk against a Fed that insists labor isn't the problem. Watch high-yield credit (HYG) and the long bond for confirmation either way.
AI's spending debate keeps escalating.
Meta Platforms (META) is the story, up 4.5% and now above $1.98 trillion in market cap as Mark Zuckerberg's "wartime CEO mode" and the Muse push draw bullish re-rating calls from analysts like Gene Munster. Amazon (AMZN) opened seller data to Anthropic's Claude days after blocking Meta's own AI tool, sharpening the platform war. Anthropic is separately said to be structuring a Palantir-style governance setup ahead of an IPO, giving founders majority voting control. Akamai (AKAM) announced an $11.6 billion, seven-year cloud deal with Anthropic, but shares still fell 6.7%, a sign the market is discounting AI infrastructure headlines unless margins are proven. Palo Alto Networks' CEO called AI-slowdown talk "unrealistic."
Single-stock movers:
Costco (COST) beat on both lines but slipped 0.9% after executives flagged slowing capex growth and non-food inflation from memory costs. Scholastic (SCHL) tumbled premarket after missing on both revenue and EPS despite affirming full-year guidance. Tesla confirmed Semi truck deliveries begin this week with DHL, Pepsi and US Foods as customers, while teasing an October 1 Roadster reveal. Blue Origin raised $10 billion to fund SpaceX rival efforts. Smaller names INLIF, AIFU and Fathom Holdings all posted outsized after-hours pops on turnarounds and deal news.
On the radar today:
Small-cap earnings from Celularity, NioCorp, Tamboran and Trio-Tech, plus continued headline risk from the Trump administration's push to review OpenAI and Anthropic models before UK testing.
Bottom line: the tape is fighting a two-front battle, rising yields against AI spending conviction, and today's open will show which one traders believe first.