The Morning Brief
Traders close out the third quarter with a split overseas tape, a fresh multi-decade high in bond yields, and the Fed's favorite inflation gauge still on the clock before the bell.
Overnight, China surprised to the upside while Japan stumbled.
September PMIs out of Beijing beat across the board: manufacturing held at 50.1 but improved from 49.8 prior, non-manufacturing jumped to 50.2 versus a 49.2 estimate, and the composite climbed to 50.7 from 49.5. Private RatingDog manufacturing and services gauges also topped forecasts, suggesting stimulus is finally showing up in activity data. Japan told the opposite story, with August industrial production falling 1.7% against a call for a 1.4% gain, and Australian building approvals sank 6.1%. Europe was mixed but leaned firm: UK Q2 GDP was revised up on both a quarterly and annual basis and the current account deficit came in narrower than feared, while Germany's unemployment change rose more than expected even as the jobless rate held at 6.4% and retail sales grew 1.3% off a sharply downgraded prior.
Treasury yields hit a 24-year high overnight, pressuring long bonds (TLT), while crypto held mostly steady, bitcoin dipped even as ether, XRP and dogecoin firmed and spot bitcoin ETF inflows reportedly surged. S&P and Dow futures are pointing higher into the open as investors await today's PCE inflation print, the data point that will set the tone into month end. It's worth remembering today is the last trading day of both the month and the quarter, so expect rebalancing flows to add noise on top of the macro data.
The AI policy and mega-cap story dominates single-name flow.
Trump signed a White House AI declaration Tuesday with tech chiefs including Zuckerberg and Musk in the room, and Nvidia's (NVDA) Jensen Huang says it "has a lot of teeth." Nvidia shares still slipped after the market digested Monday's $150 billion buyback news, even as Cathie Wood added to her stake and trimmed AMD. Apple (AAPL) fell 2.6% after Bank of America flagged Meta's (META) new Muse AI agent as a threat to Apple's ecosystem, while Meta itself rallied 3.3%. Microsoft (MSFT) is pushing OpenAI's "Dots" AI agents into the enterprise, and Anthropic's IPO filing showed heavy reliance on Amazon and Google cloud infrastructure, underscoring how concentrated the AI buildout remains among a handful of hyperscalers.
On single stocks, Boeing (BA) is in focus after winning a $20 billion Pentagon contract for the Navy's next-generation F/A-XX carrier fighter. Concentrix shares fell after guiding Q4 and full-year numbers below estimates. Micron (MU), up 273% year to date, reports after today's close with split chatter swirling and analysts still bullish on the AI memory cycle. FingerMotion and KALA Bio are among the premarket and after-hours gainers. Oil fund USO dropped 4.4% after Trump's offer of 40 million barrels from the reserve found no buyers and a surprise API crude build, while gold (GLD) caught a bid.
On the radar today:
the PCE inflation report, Micron's after-hours print, morning results from Conagra, Jabil, FactSet and Cal-Maine, and quarter-end rebalancing flows into the close.
Bottom line: global data is sending conflicting signals, yields are at multi-decade highs, and the market's next move likely hinges on whether today's PCE print gives the Fed cover to keep easing.