- US September PPI 6.3% vs 5.3% expected
- US October Philly Fed business index +20.9 vs +28.4 expected
- US October Empire Manufacturing index +25.50 vs +10.25 expected
- US retails sales for September 0.8% MoM vs 0.3% estimate. Prior month 1.3%
- Canada August manufacturing sales +1.5% vs +1.1% expected
- US initial jobless claim 199K vs 200K estimate
- US August business inventories +0.4% vs +0.4% expected
- US weekly EIA crude oil inventories -8557K vs -288K expected
- Atlanta Fed GDPNow holds at 3.6% for Q3 as consumer spending outlook improves
Markets:
- WTI crude oil up $2.50 to $97.59
- US 10-year yields down 9.9 bps to 5.09%
- S&P 500 up 0.4%
- Gold up $61 to $4166
- CHF leads, USD lags
The most-interesting development of the afternoon in US trading was that an AI focused fund that may have had $40 billion AUM blew up. The fund’s latest holdings correspond strongly with some of the worst performers lately so the story fits, including top holdings Nebius, Bloom, Lumentum and CoreWeave. After that rumor began to do the rounds, there was some dip buying in stock markets that snowballed. The thinking may follow what happened with Situational Awareness where once it was clear what happened, the buyers returned.
At the same time, the Treasury market continues to flash concerning signals and the rout in South Korea reverberated. US yields fell again despite one of the hottest PPI reports on record. That could indicate fears of a credit blowup in AI names like CoreWeave as its debt has been struggling. With the fall in yields, the US dollar also fell across the board in a sign of what’s to come if/when the AI trade sees a real rout.
Also factoring into the dollar trade is the Fed and at 11:30 pm ET, Warsh will participate in a round table in Asia at the IMF meetings. Pricing for an October hike sits at 27% but even if he tries to give no signal his usual “we will bring down inflation” rhetoric could risk sounding like a hawkish sign. If so, we could see more turmoil in markets to end the week and uncertainty until the Oct 28 FOMC.
This article was written by Adam Button at investinglive.com.