Page One
Briefing.com Summary:
*Bond yields and oil prices are driving swings in the equity futures trade.
*The 10-yr note yield went as high as 5.04% overnight, reaching a high last seen in 2007.
*NVIDIA CEO Jensen Hunag says we're not going to let an AI slowdown happen.
Will the 10-yr note yield remain above 5.00%? Will oil prices remain above $100.00/bbl? Will the FOMC raise the target range for the fed funds rate by 25 basis points to 3.75-4.00% on Wednesday? Will there be a slowdown in AI model development?
These are among the pressing questions confronting market participants today. The answers, not all of which are clear, will have market-moving implications.
What has been clear is that there has been a pretty good correlation between the movement in bond yields and oil prices with the movement in equity futures. Earlier, the 10-yr note yield reached 5.04%, and WTI crude futures pushed above $104.00/bbl. As they did, the equity futures dropped to their lows for the morning.
They soon started to recover, however, as the 10-yr note yield dropped back to 4.99% and WTI crude futures retreated close to $102.00/bbl.
Currently, the 10-yr note yield is at 4.99%, and WTI crude futures are flat at $101.42/bbl. The S&P 500 futures are down four points and are trading fractionally above fair value, the Nasdaq 100 futures are down 19 points and are trading fractionally above fair value, and the Dow Jones Industrial Average futures are down 83 points and are trading fractionally below fair value.
The signaling here is that the major indices are on track for a mixed and somewhat flattish start to the day, which will also include Treasury Secretary Bessent providing his annual testimony at 10:00 a.m. ET before the House Financial Services Committee, a $13 billion 20-yr note auction at 1:00 p.m. ET, and a key procedural vote in the Senate this afternoon on the Clarity Act, which is intended to solidify a regulatory framework for cryptocurrencies and digital assets.
Earlier, the September Empire State Manufacturing Survey was released. The general business conditions index fell 13 points to 7.6 (Briefing.com consensus: 14.1). The dividing line between expansion and contraction is 0.0, so the September reading suggests there was an expansion in business activity in New York State but at a slower pace than the prior month.
Where things accelerated were in the prices paid index (to 63.1 from 58.6), which hit a four-year high, and the prices received index (to 28.1 from 22.7), so score another one for proponents of a rate increase at this week's FOMC meeting.
That policy decision will be out at 2:00 p.m. ET on Wednesday, along with the updated Summary of Economic Projections. The CME FedWatch Tool shows a 92.5% probability that the FOMC will vote for a 25-basis point increase in the target range for the fed funds rate.
Hearing that the FOMC voted to raise rates, then, won't be a surprise. The real surprise would be if the FOMC left the target rate unchanged or raised rates by an even larger 50 basis points.
There haven't been any real surprises in the corporate headlines this morning to hold convincing sway over the major indices, although it is worth noting that NVIDIA (NVDA) CEO Jensen Huang told President Trump during an investment conference yesterday that he isn't going to let an AI slowdown happen.
That pronouncement has taken a little edge off the slowdown push, but it hasn't put the AI momentum trade fully back on track. That trade needs some additional help from the bond market.
