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👀 Today’s Stories at a Glance
📉 Meta drags the Nasdaq down: Meta fell 6.98% and the Nasdaq 2.6%, its worst day since June, as Nvidia, AMD and CoreWeave slid.
🏦 Bond yields drop below 5%: The 10-year Treasury yield fell to 4.95%, its biggest one-day drop since March 2023, as rate-rise bets faded.
🛢️ Brent closes at a 5-month high: Brent settled 4% higher at $113.17 after Saudi Aramco evacuated its Dhahran headquarters yesterday.
🚀 SpaceX gives back its jump: SpaceX fell 9.14% on unlock day as volume doubled, erasing the 7.79% gain that followed its results.
🧠 Anthropic’s filing could land today: Anthropic may publish its IPO prospectus as early as today, with Wall Street talking about a $2 trillion valuation.
🛍️ UK shoppers pull back: Retail sales fell 0.4% in September against a 0.1% fall expected, and consumer confidence dropped 11 points.
🪙 Bitcoin funds lose $635 million: US spot bitcoin ETFs saw $635.49 million leave yesterday, their biggest daily outflow since 25 June.
🇯🇵 Japan’s inflation picks up: Prices excluding fresh food rose 2.1% in September, up from 1.7%, a week before the Bank of Japan meets.
📈 Gold tests very important support: Chart of the Day covers about $4,000, $4,210.78 and $4,400, and the lower levels if support breaks.
🧠 One Big Thing
Money ran out of AI stocks and into US government bonds yesterday. The Nasdaq fell 2.6% after Meta dropped 6.98%, and the 10-year Treasury yield fell to 4.95%, its biggest one-day drop since March 2023. That yield sets the price of mortgages and company loans across the US, so a lower one eases borrowing costs well beyond tech. Traders now put the chance of a Fed rate rise next week at 7.2%. A month ago it was 55.4%. Oil went up at the same time. Brent closed at $113.17, its highest since May, after Saudi Aramco evacuated its headquarters.
⚖️ Fear & Greed
📉 The Number That Matters
7.2%
Traders put the chance of a Fed rate rise at the 28 October meeting at 7.2% yesterday, CME FedWatch data showed. A week earlier it was 27.7%. A month earlier it was 55.4%.
✅ 5 Things to Know
📉 Meta drops 6.98% and drags the Nasdaq down 2.6%
Meta closed down 6.98% at $648.85 yesterday, the first full session after its results. On Wednesday night the shares had traded higher after hours. Revenue was a record, and investors sold anyway, on doubts that its AI data-centre spending will pay off. Meta has $825 billion of spending commitments and raised the bottom of this year’s spending range to $135 billion. The Nasdaq Composite fell 2.6%. Yahoo Finance
So who else was sold? Nearly every big AI name. Nvidia fell 4.4%, AMD 8.1% and CoreWeave, which rents out AI computing power, 10%. It was the Nasdaq’s worst day since June, and the S&P 500, down 1.2%, had its worst since July. Nvidia boss Jensen Huang told CNBC yesterday that demand for capital is “much greater than the availability of the capital.” The Dow finished slightly higher, helped by an 8% rise in Blackstone. CoinCentral
Sensei’s Insight: Yesterday’s issue said the AI bill had run ahead of Meta’s cash. The market gave its answer in one session, down 6.98%. Huang now says money is the limit on the build. What I am watching is who lends to the AI builders next, and at what price.
🏦 Treasury yields drop below 5% as hike bets fade
4.95%. That was the US 10-year Treasury yield yesterday, down 19.3 basis points in a day, the biggest one-day fall since 10 March 2023. A basis point is a hundredth of a percentage point. It is the first time the yield has been below 5% in about a month. On 7 October it reached 5.36%, its highest since April 2002. The 2-year yield fell 18.8 basis points to 4.64%. The Herald Business
Why did bonds rally while oil climbed? Investors sold AI stocks and bought government debt for safety. “The ‘flight to safety’ is winning in the Treasury market right now,” said Thomas Urano, co-chief investment officer at Sage Advisory. Traders also cut their bets on a Fed hike. CME FedWatch put the chance of a rise at the 28 October meeting at 7.2%, down from 27.7% a week earlier. JKN
Sensei’s Insight: A month ago the market saw better than even odds of a hike next week. Now it sees 7.2%. Oil at $113 points to higher prices, and the bond market is leaning toward a slower economy. What I am watching is the US business surveys at 2:45pm UK today, 9:45am in New York.
🛢️ Brent closes at a 5-month high as Aramco evacuates
Saudi Aramco ordered the evacuation of its headquarters in Dhahran yesterday, on the Gulf coast near Bahrain, as fighting with Yemen’s Houthis intensified. Brent crude settled up 4% at $113.17, its highest close since 4 May. By 7:39am UK today, which is 2:39am in New York, Brent was at $114.47, up 1.2%, and WTI was at $100.84. Brent is on course for a third straight weekly gain. Business Recorder
Aramco told staff to keep working from home. The reports did not show any new halt to Saudi oil output. ING said “re-escalation seems the most likely path.” In Libya, closing a pipeline valve cut production at the Hamada and Tahara fields, the head of the national oil company told Reuters. US crude stocks fell about 3.06 million barrels in the week to 16 October. Profile News
Sensei’s Insight: Yesterday’s issue had Washington and Tehran giving opposite accounts of the talks. Since then the attacks have reached Aramco’s own headquarters, and Brent has settled at its highest since May. What I am watching is any sign of lost Saudi output, which the reports so far do not show.
🚀 SpaceX falls 9.14% as unlock-day volume doubles
196.2 million. That is how many SpaceX shares changed hands yesterday, about twice the 97.7 million average, on the day up to 1.3 billion pre-listing shares became free to sell. The stock fell 9.14% to $144.75. That gave back all of Wednesday’s 7.79% jump after its first profit as a listed company, and left it below Tuesday’s close of $147.79. It traded between $143.21 and $154.26. Motley Fool
The bill for SpaceX’s AI build is also getting dearer. SpaceX is finalising a $40 billion debt deal at sharply higher interest rates than when it last borrowed from bondholders, Semafor reported yesterday. The company has guided $35 billion to $40 billion of capital spending this quarter, and its cash flow is negative, so more borrowing looks likely. Phil Stock World
Sensei’s Insight: Yesterday’s issue said the number I was watching was trading volume against the 1.3 billion freed shares. Volume doubled and the price fell 9.14%, below where it stood before results. Holders took the money. The next test is the price SpaceX pays on $40 billion of new debt.