Oil Near $104, Yields at a Three-Year High, and Two Economists Who Can't Agree on the Fed

Oil and Yields Climb Together, Again

Brent crude traded above $104 a barrel, up nearly 3%, after the U.S. destroyed Iranian oil tankers and Iran fired on ships near the Strait of Hormuz. Advisers to President Trump have privately said the war could run through 2029, the Journal reported, well beyond what markets are pricing.

The 10-year Treasury yield climbed above 4.88%, its highest level since November 2023, even as August wholesale prices rose 0.4% from July, matching estimates. Economists expect the year-over-year rate to accelerate to roughly 5.3%-5.4%, from July's 4.7%. U.S. stock futures were mixed, Nasdaq underperforming the S&P and Dow. Wednesday closed lower for a third straight day.

Market Implication

Two respected economists are on opposite sides of next week's Fed decision. Joseph Lavorgna, a former Trump Treasury official now at SMBC Americas, says the Fed hikes "unless the data are very weak." Steven Blitz of TS Lombard says Chair Kevin Warsh "will find a way not to hike" unless the data leaves him no choice. Friday's CPI, not today's PPI, is what actually settles it.

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Treasury Raised the Buyback Again. One Trader's Word for It: "Underwhelmed."

The 10-year yield is higher now than when this buyback program began, despite two expansions since. Wednesday's announcement raised the operation to $6 billion, 1.5 times the $4 billion floor Treasury set last month (a doubling of the original $2 billion size) and 3 times that original level. The yield kept climbing anyway, extending Thursday's move to a fresh multi-year high.

Mike Lorizio, head of rates and mortgage trading at Manulife Investment Management, called the reaction plainly: "the market seems to be underwhelmed." Many dealers had penciled in up to $8 billion, putting Wednesday's number at the low end rather than a show of force.

President Trump separately promised $5,000 to every American adult if Republicans hold Congress in November, a pledge estimated at more than $1 trillion with no funding detail beyond a vague nod to tariffs. It's his second unfunded cash-payment promise; an earlier $2,000-check pledge to lower-income Americans never materialized, and most forecasters still expect Democrats to retake the House, leaving this one short of votes regardless. Yields ticked higher after the announcement, though the Journal's own analysis attributes that move mostly to oil, not the pledge.

Structural Setup

Treasury's $4 billion floor holds through the early-November refunding announcement, the real lever on long-end supply. Congress still has to approve the pledge on its own timeline. Friday's CPI remains the print that matters most.

The Chip Beat Got Ignored. The Phone Launch Didn't.

Taiwan Semiconductor (TSM) reported August revenue up 53% from a year earlier, a clean signal AI-chip demand hasn't slowed. Its U.S.-listed shares slipped in premarket trading regardless, as risk appetite stayed cautious ahead of this week's inflation data.

Apple (AAPL) gained about 1% premarket, a day after unveiling its first foldable iPhone under new CEO John Ternus. Macy's (M) beat second-quarter estimates and raised full-year guidance, and its shares still fell 3% to 4% premarket. Copper miners fared worse, with Freeport-McMoRan and Southern Copper both down about 7% as copper slid.

Sector Read

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Saudi Arabia Is Down to One Export Route. The ECB Already Moved Twice.

Houthi forces seized the Yemeni port of Mokha on Thursday, tightening their hold on the Bab el-Mandeb strait, the route Saudi Arabia has used to move crude around the closed Strait of Hormuz. OPEC's own monthly report shows Saudi output falling to 6.238 million barrels a day in August, the kingdom's lowest level since 1990.

The European Central Bank raised its deposit rate a quarter point to 2.5% Thursday, its second hike since the war began in February, after Eurozone inflation hit a three-year high of 3.3% in August. The Federal Reserve, by contrast, hasn't hiked once this cycle and remains split over next week's move, per the Lavorgna and Blitz disagreement above, even as CME Group data shows most investors still expect a hike at that meeting. The Bank of England isn't expected to move until November.

Watch Signal

Saudi Arabia's exposure is now a two-chokepoint problem, with a further Houthi push toward Dhubab and the Perim strait the next marker. Whether the Fed follows the ECB's lead next week is just as live a question.

SB Energy Wants You to Pay Now for Revenue That Arrives in the 2030s

SB Energy, the SoftBank-backed data-center developer going public, disclosed $430 billion in potential IPO revenue. About 82% of that backlog doesn't arrive for at least eight years, and the filing reportedly includes a clause giving OpenAI free rent if projects run late.

The headline number reads as proof of AI-datacenter demand. The delivery schedule says otherwise. Investors underwriting today's valuation are being repaid on an infrastructure fund's timeline, not a growth stock's, with real execution and counterparty risk in between.

The Read

Oracle reports after Thursday's close, with its own $638 billion backlog and a Street estimate near 28% revenue growth. The nearer-term version of the same question SB Energy raises on a longer clock., if AI-infrastructure backlogs convert into revenue on the timeline the market is paying for.

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Economic Data: August PPI, 8:30 a.m. ET (released: +0.4%, in line with estimates); weekly initial jobless claims; August existing home sales; July wholesale inventories; weekly crude-oil supply data.

Earnings: Macy's (before the open, reported). Oracle and Adobe (after the close). Kroger reports Friday.

Overnight: Nikkei 225 +0.20%, Shanghai Composite -0.43%, FTSE 100 -0.45%, DAX -0.62%

Thursday's real test isn't the PPI print, which already crossed the tape almost exactly as forecast.

It's whether $104 oil and a three-year-high 10-year yield can keep coexisting with a Fed call two economists genuinely can't agree on, one week out, with the ECB already twice ahead. Oracle's earnings tonight and Friday's CPI are what actually answer it. Everything else this morning is the setup.