Pre-Market: Oil Spikes, Yields Stay Sticky, Futures Give Ground
Rates are elevated again, and oil is doing the damage this morning.
WTI is up roughly 4–5%, trading near $92 after an $88.28 settlement, and Brent is back above $100, around $104–$105. The bid is geopolitical, not demand. Shipping attacks in the Gulf and the Strait of Hormuz are back in the headlines, a hurricane is threatening U.S. Gulf output, and a report that the White House asked the Pentagon for Iran strike options ahead of the midterms is keeping a risk premium in the barrel. No deal still exists to end the conflict. Crude does not need a new war to hurt equities at these levels. It just needs to stop falling.
That is feeding straight into bonds. The 10-year is around 5.33–5.34% after tagging 5.36% on Wednesday, the highest since 2002. The 30-year is in the mid-5.60s to 5.70% area, near a 24-year high. Yesterday’s $39 billion 10-year auction cleared fine at 5.30% and gave the market a brief exhale. It did not last. Today’s $22 billion 30-year auction is the real test of whether the long end still has buyers at these prices.
Futures are reflecting it. Around 6:40 a.m. ET, Dow futures were off about 1%, S&P futures down roughly 0.6%, and Nasdaq 100 futures down close to 0.9%. Europe is weaker across the board (DAX and CAC down more than 1%, Euro Stoxx 50 off about 1.5%). The Nikkei lost 1.4%, and the Kospi was hit harder, down about 2.6%. Wednesday already knocked the S&P and Nasdaq off record highs and snapped a four-day Dow win streak. Dow closed at 51,179.87 (−0.7%), S&P at 7,801.77 (−0.2%), Nasdaq at 27,538.69 (−0.2%). The follow-through is not dramatic, but the tape is no longer ignoring oil and the long bond.
Chips are the soft spot inside tech. Nvidia, Broadcom, and Micron are all red in the pre-market, even with Samsung’s strong profit outlook and TSMC’s September revenue up 54.6%. The overhang is financing, not demand. The Wall Street Journal reported Broadcom is lining up about $50 billion of financing tied to OpenAI, with Oracle also looking to raise. The market is starting to price in the idea that the AI buildout gets funded with much more debt, right as Treasuries compete harder for that capital. That is a multiple problem, not an orders problem.
Energy is the obvious relative winner in the pre-market. Exxon, Chevron, Occidental, and the European majors are bid with crude. Gold is flat to slightly higher near $4,120. Silver is softer. The dollar is firm.
On the calendar: jobless claims at 8:30 a.m. (prior 197,000), wholesale inventories at 9:00, PepsiCo on the earnings tape, and speeches from Fed Governor Waller and St. Louis Fed President Musalem. September minutes already left the door open to another hike before year-end. Oil at these levels does not help the inflation argument.
Levels that matter today are simple. If WTI holds above $90 and the 10-year stays north of 5.30% into the 30-year auction, dips in the high-multiple stuff are not automatic buys. Energy and anything with pricing power can work. The rest of the tape is trading the cost of capital again.