TQ Morning Briefing
Two senior Iranian officials told Reuters that Tehran wants oil high through the U.S. vote. The New York Fed's John Williams sees one more hike and none in 2027. ASML says it can't build enough tools. CPI lands at 8:30 a.m.
Futures Are Calm Into a Number Built on Oil
The S&P 500 finished Tuesday effectively unchanged. The Nasdaq ended slightly lower. The 10-year Treasury yield closed at 5.21%, down from 5.22% on Tuesday.
Futures were modestly higher before dawn. Brent traded near $106, a touch above Tuesday's $105.69 settle.
September CPI is the morning's event. FactSet's consensus has headline inflation at 3.6% from a year earlier, up from 3.4% in August. Core is expected up 0.2% on the month.
Market Implication
The consensus already expects the headline to jump on energy, and futures are calm into it. The number that can still surprise is core.
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Williams Put a Ceiling on the Hiking Cycle
New York Fed President John Williams, vice chair of the rate-setting committee, told Bloomberg News that one more hike "may be appropriate" this year. On 2027, he said: "I don't think at this time I have any reason to believe that we would need to do more."
That puts him short of many colleagues. Eight of the 18 officials who submitted forecasts in September penciled in another increase in 2027.
Williams said near-term price pressure reflects energy prices tied to the Middle East war and tech investment. He called AI the inflation driver he is watching most closely. He expects inflation near 2% next year.
Kalshi's October hike contract slipped to 18 cents overnight from 20 cents Tuesday afternoon, on thin trading.
Structural Setup
Williams said one more hike this year, and two meetings are left. Kalshi prices October at 18 cents, so the market has put that hike in December and wants this morning’s number first. A core print at 0.2% leaves the schedule intact. A hotter one pulls the hike into a meeting the market has nearly ruled out.
The Toolmaker Is Sold Out. Applied Materials Was Sold.
Chip-equipment stocks fell hard Tuesday, before ASML (ASML) reported. Applied Materials (AMAT) lost 6.7%, KLA (KLAC) 3.2% and Lam Research (LRCX) 2.7%. ASML's U.S. shares fell 1.9%.
Overnight, ASML posted record third-quarter sales of €11.7 billion and guided fourth-quarter sales to between €14.2 billion and €15.2 billion. It said planned supply for 2027 and 2028 "will not fully meet the demand of our customers." Some customers want to place orders for 2029 and even 2030.
The shares were up about 2.5% in Amsterdam just before 5 a.m. ET.
Crypto fund buyers returned before CPI. U.S. ether funds took in $24.8 million Tuesday, ending a 10-session outflow streak. Fidelity's bitcoin fund took in about $103 million.
Sector Read
ASML says it cannot meet demand through 2028, and some customers are asking about 2030. The shares gained 2.5%. Tuesday the market sold the beats; this morning it shrugged at a sold-out order book. It is grading what customers can finance, not what they want to buy.
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Iranian Officials Name a Target: The Price
Two senior Iranian officials told Reuters that Iran is changing tactics against ships in Hormuz. Their stated aims are to keep oil prices high and to sway the U.S. midterms. "Just when they think they are getting close to the point where prices will fall, we will push them away from it," one said. "It will be complete closure soon," one of them said.
The same report carries the counterweight. A U.S. military official said Iran had been unable to stop a ramp-up in oil exports through the strait.
Saudi Arabia's energy ministry said an Aramco administrative building in Dhahran was targeted Tuesday evening. It reported a "limited fire" and no casualties. Dhahran is home to Aramco's headquarters.
Event traders kept betting on U.S. restraint. Polymarket's contract on the U.S.-Yemen ceasefire holding through Oct. 31 rose to 87.5 cents from 85.5 cents Tuesday afternoon. It fails only on a direct U.S. strike.
Watch Signal
A U.S. official says the barrels are moving despite the threats, so Tehran's threat has to be enforced to matter. The Iranian officials said attacks would spread into the Gulf of Oman. An incident there would test whether this is policy or talk.
AI's Listing Money Now Competes With 5% Treasuries
AirTrunk put off a $1.5 billion Singapore listing until next year. The data-center operator is backed by Blackstone (BX). The Wall Street Journal first reported the delay. The data-center trust would have been valued near $15 billion.
To win buyers, AirTrunk had weighed raising the payout to about 6% from 5.5%, Bloomberg reported. People familiar with the matter cited the Fed's September hike and the prospect of more. Singapore's main REIT index has fallen 12% since late July.
For scale, the U.S. 10-year closed Tuesday at 5.21%.
Firmus dropped a planned $5 billion Australian listing last week. PLDT's data-center unit pushed its trust listing into next year.
The Read
ASML speaks for demand at the top of the AI chain. Trusts like AirTrunk's fund the buildings at the bottom, and their buyers compare payouts with bond yields. Rates are reaching AI through the financing before they reach the order book.
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Economic Data: September CPI, 8:30 a.m. Beige Book, 2 p.m. Producer prices, retail sales and jobless claims, Thursday.
Fed Speakers: Richmond's Tom Barkin, later today.
Earnings: Bank of America (BAC) was down 1.5% premarket after disclosing a $1.21 billion regulatory fine, Reuters reported. It reports before the open, along with Morgan Stanley (MS), BlackRock (BLK) and State Street. ASML's call is at 9 a.m. TSMC reports Thursday.
Overnight: Japan's Nikkei closed flat. In early European trading, the Stoxx 600 was up about 0.3%.
One question runs under this morning.
Williams is betting energy and tech-investment pressure fade and the hiking stops after one more. Two Iranian officials say Tehran wants oil kept high through Nov. 3. AirTrunk weighed offering 6% to win buyers while the 10-year sits above 5%.
Core CPI at 8:30 a.m. is the cleanest test. A 0.2% print lets Williams' ceiling stand even if the headline jumps. A hotter one hands the argument to the eight officials penciling in 2027 hikes, and to every yield buyer AirTrunk is waiting out.
3 Market Signals Most Investors Aren't Watching
The headline is usually the last place the story shows up.
By the time everyone is talking about a stock… the signals underneath it may have been changing for weeks.
• Institutional money moves.
• Options activity changes.
• Management confidence shifts.
• Fundamentals improve, or quietly begin telling a different story.
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