ASML said its supply will not fully meet demand in 2027 and 2028. The IEA said diesel will stay tight well into 2027. New York Fed President John Williams sees room for one more rate hike and, for now, no more in 2027.
Wednesday opened on short supply, from chip tools to diesel.
S&P 500 futures edged higher early Wednesday, and Dow futures rose about 0.3%. Nasdaq-100 futures slipped about 0.1%. The 10-year Treasury yield held near 5.21%. Brent rose about 0.6% to near $106.35, gold fell about 0.4% to near $4,160, and bitcoin traded near $83,400.
Ether funds took in $24.8 million on Tuesday, their first inflow in 11 sessions. Bitcoin funds added about $176 million.
Buyers are waiting in line.
Sellers cannot keep up.
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The chip industry's key toolmaker says demand will outrun its supply for two years.
ASML said Wednesday that its planned supply for 2027 and 2028 will not fully meet customer demand. Some customers want to place orders for 2029 and even 2030, Chief Executive Christophe Fouquet said. ASML (ASML) already planned to lift capacity for its main tools by 30% in 2027. It is now looking for ways to add more than the 30% it had studied for 2028.
Third-quarter sales rose 55% from a year earlier to €11.66 billion. Net income more than doubled to €4.96 billion. A roughly €500 million gain on its Mistral AI stake helped. ASML expects fourth-quarter sales of €14.2 billion to €15.2 billion. The report came a day after chip-equipment stocks sold off in New York. Applied Materials (AMAT) fell about 7% on Tuesday, and ASML's U.S. shares lost 1.9%.
Sold Out Through 2028
The company closest to the chip buildout says demand will outrun supply for two years. Chip-equipment shares fell hard the day before. ASML no longer reports quarterly orders, so the order book came in words, not figures. If customers firm up later orders and funding holds, the shortage supports pricing well beyond this quarter. If AI spending slows, a sold-out schedule can still slip.
A senior Fed official sketched an end to rate hikes, hours before the inflation report.
New York Fed President John Williams said one more rate increase this year may still be appropriate. He said he has no reason now to expect more in 2027. Boston Fed President Susan Collins said rates should rise "a bit further" this year. The two-year Treasury yield closed Tuesday near 4.79%, about 90 basis points above the midpoint of the Fed's range. Futures pointed to a December hike and two more in 2027. September's consumer price index is due at 8:30 a.m. Economists surveyed by Bloomberg expect prices up 3.6% from a year earlier, with core prices up 0.2% for the month.
Bank of America (BAC) admitted it willfully broke money-laundering rules and was penalized more than $1.2 billion. A charge for the penalties cut its third-quarter profit to $6.9 billion, or 91 cents a share. Net interest income rose 8% to $16.4 billion. Investment banking fees fell 11%, and trading revenue also declined. The shares fell about 4% before the open.
One Hike or Several
Williams sees an end in sight, while the two-year yield prices a longer path. A hot core reading this morning would side with the market and with Collins. A soft core reading, with energy driving the headline, fits Williams's view that the shock fades. Bank of America shows both sides of higher rates, with lending income up and deal fees down.
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Energy costs are still moving down the supply chain, from refineries to factory gates.
The International Energy Agency said the diesel market will stay tight well into 2027. World diesel exports fell 700,000 barrels a day from a year earlier in September. U.S. diesel futures settled Tuesday near $4.93 a gallon, up 4.5%, and held that gain early Wednesday. That is about $207 a barrel, roughly $100 above Brent. The IEA said easing limits on Russian diesel will do little, because Russia lacks working refinery capacity. Saudi Arabia told OPEC it pumped about 8.4 million barrels a day in September. That was up more than 2 million from a war-hit August.
China's factory-gate prices rose 5% in September from a year earlier, the fastest pace since 2022. Coal mining prices jumped 35%, and oil and gas extraction about 25%. Consumer prices rose just 0.9%.
Refineries Set the Pace
More crude is reaching the market, yet diesel stays short because refining has not caught up. The IEA ties relief to the return of fuel supply from the Middle East. China's factories are paying more for raw materials, and so far little of it shows up in consumer prices. If that gap closes, goods bought from China could cost more. A recovery in Gulf refining would ease the diesel squeeze and some of China's fuel costs.
Saudi Arabia said a strike on an Aramco office in Dhahran caused a limited fire.
Writing about the Houthis, President Trump said he will "be there after the Elections." Polymarket's bet against a U.S. strike on Yemen by Oct. 31 rose to 88 cents.
The Supply Thread, Priced
Diesel relief depends on Gulf fuel returning. This contract prices one risk to that supply. Its 88-cent price implies about a 12% chance of a U.S. strike. Thin trading moves it easily.
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Wednesday's news came down to supply.
ASML's planned supply falls short of demand, and diesel will stay short into 2027. China's factories are paying more for materials, and little of it has reached shoppers. Williams sees room for one more hike, and the inflation report tests that view. Where supply runs short, prices do the rationing.
Capital moves early. Coverage catches up. The gap between the two is worth watching.
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The headline is usually the last place the story shows up.
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• Institutional money moves.
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And in all three cases, the story is still developing.