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👀 Today’s Stories at a Glance
📈 Services prices hit 2022 high: the ISM prices index rose to 74.0, and the 10-year Treasury yield closed at a 52-week high of 5.32%.
📊 Stocks shrug off 2002 yields: third-quarter earnings are forecast to grow 29.5%, and the S&P 500 sits about 0.3% below its record.
🛢️ Brent slips under $100: Saudi Aramco cut its November price for Asia to a $5 discount, and Brent traded at $98.67 by midday on Tuesday.
🇧🇷 Brazil’s best day since 2020: the Ibovespa jumped 7.70% to a record 206,912 after the first round, led by the big banks.
🪙 Bitcoin stalls at $87,000: a third rejection since 23 September, even as Washington scrapped a $10,000 self-custody wallet reporting proposal.
🇩🇪 German orders drop 10.6%: one lumpy category did it, with transport equipment down 61% and everything else down just 0.1%.
🟢 Nvidia’s record close: Nvidia closed at $238.90, its first record since May, and Taiwan Semiconductor also hit an all-time high.
🚚 C.H. Robinson buys RXO: a $5.8 billion cash-and-shares deal at a 29% premium, and the buyer’s shares fell about 11%.
🔓 Hyperliquid’s unlock went private: 3.75 million HYPE, about $337 million, unlocked on Tuesday and went to a single buyer off-exchange.
📈 Lululemon sits above $84 support: Chart of the Day covers the $82.46 to $84 support, the $110.79 line overhead and a P/E of 7.6.
🧠 One Big Thing
Prices are still rising fast across America’s service economy. The ISM’s prices index hit 74.0 in September, the highest since July 2022, and firms named fuel twice as often as anything else. That pushed the 10-year Treasury yield to a 52-week closing high of 5.32% on Monday, on the same day the Nasdaq closed at a record. Futures still give a Fed rise on 28 October only about a 1 in 5 chance. Bond investors are pricing inflation that lasts. Wednesday’s minutes of the September meeting and September’s inflation figures on 14 October are the 2 dated tests of who is right.
⚖️ Fear & Greed
📉 The Number That Matters
74.0
The ISM services prices index hit 74.0 in September, its highest since July 2022 and above 70 for the sixth time in 7 months. Fuel was the issue firms named most often.
⚔️ Winners vs Losers
🟢 Top Gainers
SPCX 0.00%↑ +5.05% SpaceX shares rose after Morgan Stanley analyst Adam Jonas reiterated his $300 price target, 3 days before the next tranche of locked-up shares becomes free to trade on 9 October.
OPCH 0.00%↑ : 21.10% Option Care Health shares surged after the Financial Times reported that McKesson and private equity firm Clayton Dubilier & Rice are close to a deal to buy the home infusion provider for more than 5 billion dollars including debt. Under the proposed structure CD&R would own 51% and McKesson 49%, and a deal could be announced as soon as today.
APOG 0.00%↑ : 20.33% Apogee Enterprises shares jumped after fiscal second quarter adjusted EPS of 1.17 nearly doubled the 0.63 consensus, with revenue of 391.1 million beating forecasts. The architectural glass maker also raised its full-year EPS guidance to 3.00 to 3.40, with the midpoint well above the 2.87 consensus.
CEG 0.00%↑ : 6.12% Constellation Energy shares climbed after it signed a 20-year deal to supply Google with 890 MW of new nuclear capacity by upgrading 11 existing reactors on the PJM grid, backed by 4.3 billion dollars of new investment. The deal also covers 2,700 MW from Constellation’s existing plants over 15 years and comes days after a separate 20-year nuclear deal with Amazon.
SHOP 0.00%↑ : 3.03% Shopify shares extended Monday’s 5.76% rally after Piper Sandler reiterated its Overweight rating and 180 dollar target, saying more merchants are moving to the platform as AI shopping agents catch on.
🔴 Top Losers
XRPN 0.00%↑ : -48.68% Armada Acquisition Corp. II shares gave back a large part of their 266% one-month surge as traders took profits a day before the SPAC completes its merger with XRP treasury company Evernorth. About 80% of public shareholders redeemed, leaving a tiny float that exaggerates moves in both directions.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $86,289 (▲0.62%)
Ethereum (ETH): $2,715 (▲0.20%)
XRP: $1.51 (▲0.30%)
Equity Indices (Futures):
S&P 500: 7,860 (▲0.43%)
NASDAQ 100: 31,511 (▲0.62%)
FTSE 100: 10,537 (▲0.14%)
Commodities & Bonds:
10-Year US Treasury Yield: 5.26% (▼0.96%)
Oil (WTI): $87 (▼2.14%)
Gold: $4,174 (▲0.79%)
Silver: $61.48 (▲0.72%)
Data as of: UK: 12:50 pm BST / US: 7:50 am EDT / Asia (Tokyo): 8:50 pm JST
✅ 5 Things to Know
📈 Services prices hit a 2022 high, lifting the 10-year
74.0. That is where the services prices index landed for September, the Institute for Supply Management said on Monday. It is the highest reading since July 2022. The headline services index slipped to 54.9 from 55.4, its 27th straight month of growth. Employment rose to 50.1 from 47.8, back above the 50 line that separates firms hiring from firms cutting. “Fuel costs were mentioned twice as often as any other single issue impacting performance,” said Steve Miller of ISM. PR Newswire
The bond market moved on the prices line. The 10-year Treasury yield rose 3.8 basis points on Monday and closed at 5.32%, a new 52-week high, TheStreet reported. The 30-year rose 4 basis points to 5.67%. The 2-year, the yield most tied to Fed expectations, barely moved at 4.82%. Futures put the chance of a Fed rise on 28 October at about 20% to 24%, depending on the source, up from about 18% after Friday’s jobs report. TheStreet FXStreet
The minutes of the September Fed meeting land on Wednesday at 7pm UK, which is 2pm in New York. September’s inflation figures follow on 14 October.
Sensei’s Insight: The number I named on Monday came back at 50.1, so services hiring is holding up. The prices line is what the bond market heard. What I am watching on Wednesday is how many officials in the minutes saw a second rise as likely.
📊 Why stocks set records with yields at 2002 highs
How does a stock market set records while the 10-year Treasury pays the most since 2002? The Nasdaq Composite closed at a record 27,477.31 on Monday, and the S&P 500 finished at 7,773.99, about 0.3% below its August record of 7,798. In the same session the 10-year yield closed at 5.32%, and it had eased to 5.26% by 12:50pm UK on Tuesday. TheStreet reported that it had again touched levels last seen in 2002, above 5.3%, and that the 30-year passed 5.7% at one point, its highest in 24 years. TheStreet The Epoch Times
The answer is profits. Analysts expect S&P 500 earnings for the third quarter to rise 29.5% from a year earlier, FactSet’s John Butters wrote on 2 October. That would be a third straight quarter above 25%, and the forecast for all of 2026 is 32.4%. Because profits have grown faster than prices, the index has not become more expensive. Its forward price-to-earnings ratio was 19.0 at the 30 September close, below its 5-year average of 19.8 and its 10-year average of 19.1. FactSet
The pressure point sits on the bond side. A P/E of 19.0 works out at an earnings yield of about 5.26%. In plain terms, that is $5.26 of expected profit for every $100 of the index over the next 12 months. A 10-year Treasury pays 5.32%, guaranteed by the US government. So the expected profit on a dollar of shares now sits slightly below the yield on a dollar of 10-year Treasuries. Investors holding shares at that gap are counting on profits to keep growing at this pace.
Who buys all those bonds? Ray Dalio warned on Bloomberg Television in Singapore on Tuesday that China and Japan may pull back from Treasuries. Japan, the largest foreign holder, held $1.1 trillion in July, down $12.8 billion on the month. China held about $618 billion, down from a $1.3 trillion peak in 2013. “The Chinese don’t want to continue to accumulate,” Dalio said, citing geopolitical as well as economic reasons. The Edge Malaysia
Treasury sells $58 billion of 3-year notes at 6pm UK, 1pm in New York, then 10-year notes on Wednesday and 30-year bonds on Thursday.
Sensei’s Insight: Profits are doing the work here. Earnings are forecast to grow almost 30% for the quarter, and the P/E still sits below its 5-year average. Who buys the bonds if Japan and China step back? Wednesday’s 10-year auction is the first test, and it is what I am watching.
🛢️ A Saudi price cut pushed Brent under $100
$5 a barrel. That is the discount below the regional benchmark Saudi Aramco set on its Arab Light crude for Asian buyers in November, against $2 for October. Rigzone called it a 6-year low. Brent settled down 1.9% at $100.32 on Monday, and West Texas crude fell 1.8% to $89.43. Rigzone
Brent fell further on Tuesday, to $98.67 by 12:25pm UK, TheStreet reported. West Texas crude was down 2.14% near $87 at 12:50pm UK. TheStreet
Why would the biggest exporter cut its price when stockpiles are thin? Aramco chief executive Amin Nasser called global oil stocks “scarily thin” and said “refined fuel prices have risen even more sharply.” Ole Sloth Hansen of Saxo Bank gave the other reading. “Emergency releases and the Saudi price cut, which I mostly read as an attempt to build market share, are weighing on prices,” he said. A seller fighting for buyers is a seller with oil to ship. Kpler tanker data put flows through Hormuz at 19.5 to 22.5 million barrels a day over 27 to 29 September, back to pre-war levels, OilPrice reported. Other estimates are far lower, at about 76% of pre-war. OilPrice
The route is still dangerous. Projectiles hit 3 tankers in the strait over the weekend, CBS News reported, and another tanker turned back on Monday after threats from Iran’s Revolutionary Guards. Iran’s president called talks with Washington “meaningless”. CBS News
Sensei’s Insight: The biggest seller in the market just cut its price to win buyers. That tells me Gulf crude is moving again, tanker attacks and all. What I am watching is diesel, because Aramco’s own boss says fuel has risen faster than crude.
🇧🇷 Brazil’s market had its best day since 2020
7.70%. Brazil’s Ibovespa closed up that much on Monday at 206,912, its first close above 200,000 and its biggest one-day gain since 24 March 2020, the Rio Times reported. The real strengthened 4.12% to about R$5.00 per dollar, the dollar’s weakest against it since May. The rally followed Sunday’s first round, where Flávio Bolsonaro took 47.04% to President Lula’s 45.15%, beating the polls. Rio Times
Who won the day? The banks. Bradesco’s preferred shares rose 13.57%, Banco do Brasil 11.00% and Itaú 10.37%. Exchange operator B3 jumped 22.63%. The exporters fell, because a stronger real shrinks what their dollar sales are worth at home. Pulp maker Suzano lost 5.39% and planemaker Embraer 3.31%. Interest rate futures fell to about 12% across the curve.
The economy underneath is softer than the rally. Brazil’s services PMI fell to 49.2, below the 50 line that marks growth. The runoff is on Sunday 25 October.
Sensei’s Insight: The open held all day, and the close was the best since March 2020. Markets priced the result before a single runoff vote. What I am watching is the first runoff polls, because a first-round gap under 2 points can close in 3 weeks.
🪙 Bitcoin stalled at $87,000 for a third time
Bitcoin was turned back at $87,000 for the third time since 23 September, CoinDesk reported on Tuesday, and slipped 1.2% to about $85,600 overnight. It was back at $86,289 at 12:50pm UK, up 0.62% on the day. The whole crypto market was worth $2.93 trillion, CoinDesk said. US spot bitcoin ETFs had $89.8 million of outflows on Monday, Farside data showed, after $189.9 million of inflows on Friday. CoinDesk Farside
Washington removed a rule on Sunday. FinCEN, the Treasury’s financial crimes unit, withdrew a December 2020 proposal to require reporting of crypto transfers over $10,000 to self-custody wallets. A self-custody wallet is one the owner controls directly, with no exchange in the middle. FinCEN also withdrew a 2023 proposal on crypto mixers. Neither ever took effect, and FinCEN said the move was part of making digital-asset rules “fit-for-purpose.” CoinDesk
The price did not react. “The price has approached the apex of the triangle formed by horizontal resistance and rising support,” said Alex Kuptsikevich of FxPro.
Sensei’s Insight: A rule that sat unresolved for nearly 6 years was scrapped, and the price still could not clear $87,000. Regulation headlines moved nothing. Fund flows have moved this market, and Monday’s were negative. What I am watching is whether Friday’s inflows return before Wednesday’s minutes.
Stories You Might Have Missed
🇩🇪 German factory orders fell 10.6% in a month
German factory orders fell 10.6% in August from July, data showed on Tuesday, against forecasts of a 1.0% fall. Almost all of it came from transport equipment, down 61% after doubling in July. Orders outside those large contracts fell just 0.1%, and the total was still 2.7% higher than a year earlier. The euro dipped toward $1.12. FXStreet also reported the gap between French and German government bond yields at levels unseen since 2009, with political gridlock in France and Spain heading to a snap election on 29 November. FXStreet
🟢 Nvidia closed at a record for the first time since May
Nvidia closed up 2.12% at $238.90 on Monday, its first record close since May, Yahoo Finance reported. Taiwan Semiconductor also hit an all-time high after Elon Musk confirmed talks over the Texas Terafab chip project, while Intel lost about 4% during the session. The next big chip number comes from Seoul. Samsung reports preliminary third-quarter results on 8 October, with forecasts of operating profit above ₩110 trillion, which would be a record. Yahoo Finance Seoul Economic Daily
🚚 C.H. Robinson buys RXO for $5.8 billion
C.H. Robinson agreed on Monday to buy freight broker RXO for $17.25 in cash plus C.H. Robinson shares for each RXO share. That package was worth $30.25 a share, a 29% premium to Friday’s close. The combined company would have an enterprise value above $25 billion. C.H. Robinson expects about $300 million a year of cost savings within 2 years. RXO rose about 20% before the open, and C.H. Robinson closed down 10.85%. “The next natural step in the company’s transformation,” said chief executive Dave Bozeman. Yahoo Finance TheStreet
🔓 Hyperliquid’s team tokens went to one buyer
Hyperliquid’s monthly team unlock landed on Tuesday, with 3.75 million HYPE claimed, worth about $337 million. The schedule allowed 9.92 million, so 6.17 million stayed unclaimed this month. Co-founder iliensinc said on Discord that the full 3.75 million is being sold over the counter to a single institutional buyer. Over the counter means a private trade agreed off the exchange, so those tokens do not hit the public order book. Neither the buyer nor the price was disclosed. Unlocks