Treasuries Fall Amid Oil Spike in Run-Up to CPI: Markets Wrap
(Bloomberg) — A surge in oil prices rekindled concern about any impacts on inflation that could hinder the Federal Reserve’s ability to cut rates more aggressively, driving bond yields higher. Stocks rose amid solid earnings.
In the run-up to a reading on consumer prices – the first major report since the start of the government shutdown – crude jumped 5% as the US announced sanctions on Russia’s biggest oil companies in a bid to end the war in Ukraine. As a result, Treasuries snapped a three-day advance. The S&P 500 rebounded, with energy shares leading the charge.
The surge in oil comes at a time when some policymakers have shown caution about the outlook for inflation even though they have signaled a bigger focus on the other side of the Fed’s dual mandate: jobs. As money markets brace for a Fed reduction next week, traders are likely to look past any evidence of stubborn inflation in Friday’s consumer price index report.
With employment remaining the biggest fear, “we don’t think the CPI number tomorrow will carry much weight as the Fed meeting starts next Tuesday,” said Andrew Brenner at NatAlliance Securities. “As for oil, we see some shortages on the horizon, although the number of ships carrying oil in the world is very large and Russians have been very good bypassing sanctions in the past.”
On the trade front, China said Vice Premier He Lifeng plans to meet with US officials from Oct. 24 to 27 for the next round of negotiations. He and Treasury Secretary Scott Bessent are setting the stage for expected talks later this month between Donald Trump and Xi Jinping.
Treasury 10-year yields climbed five basis points to 4%. The S&P 500 hovered near 6,725. All megacaps but Tesla Inc. gained. The electric-vehicle giant lost 1.5% as profit plunged despite a record quarter of sales. Intel Corp. will report results later Thursday.
Gold advanced, paring some of the week’s steep declines. The dollar wavered. Bitcoin gained.
After being delayed by the US government shutdown, the Bureau of Labor Statistics will release of the September CPI on Friday. The data, originally slated for Oct. 15, will give Fed officials a critical piece of information on inflation ahead of their policy meeting the following week.
Economists in a Bloomberg survey forecast the core CPI, which excludes food and fuel for a better snapshot of underlying inflation, to have climbed 0.3% for a third straight month as higher import duties continue to gradually filter through to consumers. The projected monthly gain will keep the annual core CPI at 3.1%.
Although inflation is stuck above the Fed’s goal, officials are expected to announce their second rate cut of the year following a two-day meeting on Oct. 28-29 because of the fragile labor market.
Sales of previously owned homes in the US rose modestly last month as lower mortgage rates and tamer price gains sparked some activity in the nation’s long-stagnant housing market.
US breakevens — which measure inflation expectations — have picked up, coinciding with the rally in oil.
Friday’s CPI is important in the sense that it’s one of the few economic data points that we will see given the government shutdown, according to Emily Bowersock Hill founding partner of Bowersock Capital Partners.
“But since the Federal Reserve is likely more focused on the labor market, we don’t expect Friday’s CPI to weigh heavily on next week’s Fed decision,” she said. “We will likely see two more rate cuts this year, in October and December.”
JPMorgan Chase & Co.’s trading desk sees a roughly 65% chance the S&P 500 will advance following the release despite economists expecting an elevated print. The team including Andrew Tyler laid out scenarios for stocks on CPI day that are “less volatile than usual,” with investors’ expectations that the Fed will ease again on Oct. 29 likely offsetting any inflation-related angst.
“We agree with the market’s view and think it would take the largest of tail-risks to push the Fed to the sideline,” Tyler wrote in a note to clients.
“We think the equity bull market has further room to run, and have reiterated that an easing Federal Reserve, durable earnings growth, and AI investment spending support our attractive view on US equities,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
Hoffmann-Burchardi noted that while it’s important to have adequate exposure to US stocks, she also believes investors should diversify their portfolios.
“Any setbacks in US-China relations or potential concerns about the durability of the AI-driven rally could trigger bouts of volatility. Against the current backdrop, we see appealing opportunities in select equity markets in Asia, quality bonds, and gold,” she concluded.
Corporate Highlights:
International Business Machines Corp. reported disappointing revenue in two key software categories, including its closely watched Red Hat unit, sparking concerns among investors who see those businesses as essential to the company’s growth. Super Micro Computer Inc., which emerged as a favorite stock among artificial intelligence-obsessed investors last year, unexpectedly issued first-quarter guidance on Thursday that fell far short of Wall Street’s expectations. Microsoft Corp. is asking its Xbox gaming division to produce profit margins that are well above the industry average, ratcheting up pressure on its video-game makers during a difficult time for the field at large. Palantir Technologies Inc. will provide AI software to Lumen Technologies Inc. in a new partnership, part of a push by the telecom company to support more AI services, and a bid by Palantir to reach more customers. American Airlines Group Inc. reported a smaller-than-expected loss in the third quarter, and the carrier joined rivals in predicting a strong end to the year as corporate and premium leisure travel remain the industry’s growth drivers. Southwest Airlines Co. tumbled after the carrier said the US government shutdown is starting to ripple across domestic flying, threatening the record sales it expects during the crucial holiday period. T-Mobile US Inc. gained 1 million new mobile phone subscribers in the third quarter and raised its outlook for the year, buoyed by its recent acquisition of smaller competitor US Cellular. Union Pacific Corp.’s quarterly profit slightly outpaced Wall Street estimates, a sign of resilience for rail volume in the face of tariffs and economic volatility. Honeywell International Inc. raised its full-year profit outlook and reported third-quarter earnings that topped Wall Street expectations, boosted by the company’s aerospace unit ahead of a planned breakup. Moderna Inc. said its vaccine to prevent cytomegalovirus, a common cause of birth defects, failed to meet its goal in a late-stage trial, a setback for the company still struggling to move past the pandemic. Molina Healthcare Inc. reported a steep quarterly earnings miss and cut its guidance for the third time in recent months, warning profit won’t grow next year as medical costs climb. Binance co-founder Changpeng Zhao has received a pardon from President Donald Trump after he went to jail for failing to safeguard the world’s largest crypto exchange against money laundering. Ventyx Biosciences Inc.’s mid-stage clinical trial results showed significant reductions in cardiovascular risk factors in patients with obesity. Las Vegas Sands Corp. reported adjusted earnings per share for the third quarter that beat the average analyst estimate. Blackstone Inc. has amassed $508 billion of assets in credit as the private capital giant targets higher-grade debt investing. Dow Inc.’s improved volumes in the industrial unit helped reduce its loss from the previous quarter more than analysts expected. Tractor Supply Co., a rural lifestyle retailer, narrowed its full-year guidance toward the low end of its range, as the impact of tariffs start to bite and consumer demand gradually softens. Rogers Communications Inc. beat analysts’ estimates in the third quarter, lifted by growth in wireless and media after the company completed a major sports deal and as the Toronto Blue Jays baseball team that it owns made a run to the playoffs. Nokia Oyj’s adjusted profit in the most recent quarter blew past analyst estimates, driven by demand for artificial intelligence and cloud services. Roche Holding AG Chief Executive Officer Thomas Schinecker signaled that a new investigation into drug costs conducted by the Trump administration might pressure countries to review their own drug prices. Galderma Group AG lifted its sales and margin guidance, driven by the continued outperformance of its blockbuster eczema cream Nemluvio, particularly in the US — in spite of tariffs. Unilever Plc third-quarter sales rose more than expected, driven by strong demand in developed markets, particularly North America, in a boost to the company’s turnaround plan. STMicroelectronics NV forecast fourth-quarter revenue that missed analysts’ expectations, signaling that a long-awaited recovery in the chip industry may be faltering. Volvo Car AB reported better-than-expected profit in the third quarter, benefiting from its 18 billion-kronor ($1.9 billion) cost-saving program. How should regulators react to the blurring line between investing and gambling? Let us know in the latest Markets Pulse survey.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 12 p.m. New York time The Nasdaq 100 rose 0.7% The Dow Jones Industrial Average rose 0.1% The Stoxx Europe 600 rose 0.4% The MSCI World Index rose 0.3% Bloomberg Magnificent 7 Total Return Index rose 0.5% The Russell 2000 Index rose 0.8% Tesla fell 1.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1613 The British pound fell 0.2% to $1.3323 The Japanese yen fell 0.5% to 152.72 per dollar Cryptocurrencies
Bitcoin rose 2.2% to $110,028.26 Ether rose 2.7% to $3,882.78 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.00% Germany’s 10-year yield advanced two basis points to 2.58% Britain’s 10-year yield was little changed at 4.42% The yield on 2-year Treasuries advanced two basis points to 3.47% The yield on 30-year Treasuries advanced five basis points to 4.58% Commodities
West Texas Intermediate crude rose 5.8% to $61.92 a barrel Spot gold rose 1.1% to $4,143.66 an ounce ©2025 Bloomberg L.P.
