The 10-year reached 4.97%, its highest since 2023, the morning the last inflation print before the FOMC hits. Oracle’s cloud infrastructure revenue doubled and it guided $90 billion for the year. Trump pledged $5,000 to every adult if Republicans hold Congress, a trillion-dollar promise into a market already short of buyers.
4.97%.
That is where the 10-year Treasury sat at Thursday’s close. The last time it was higher, Jerome Powell still chaired the Fed.
Stocks fell for a fourth straight session. The S&P 500 closed at 7,591. The Dow dropped 317 points.
Brent crude surged 6% to over $107. WTI cleared $102. Both are the highest since May.
PPI came in at 0.4% for the month, in line. But the annual rate hit 5.4%, above estimate. Diesel jumped 24%.
The CPI lands this morning. The FOMC meets in four days.
Hike odds sit near 70%. They were 35% two weeks ago.
Trump pledged a $5,000 “dividend” to every adult at the RNC midterm convention in Dallas.
Oracle (ORCL) doubled its cloud infrastructure revenue after hours. Adobe (ADBE) beat and fell.
PMD LENS
PMD has tracked this collision for two weeks. War, yields, and the Fed. Every send narrowed the window. Today the window closes. The CPI is the last number anyone can point to before the committee votes. Yesterday’s PPI sent diesel up 24% and annual wholesale prices to 5.4%. That is not the soft read Waller needed. This morning’s print either confirms the energy pass-through or interrupts it. The 10-year at 4.97% says the bond market is not waiting to find out.
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- Oracle’s remaining performance obligations hit $664 billion, up $26 billion in one quarter. Half converts in 36 months.
- Adobe reached one billion monthly active users. Its stock fell 2% after hours on soft Q4 guidance.
- Kroger (KR) reports before the open. Consensus is $1.06 EPS and $34.6 billion revenue.
- Trump’s $5,000 dividend would cost roughly $1 trillion. The proposal drew bipartisan criticism within hours. Palantir (PLTR) co-founder Joe Lonsdale called it “bread and circus bribes.”
- The Russell 2000 fell 1% Thursday and is on pace for its first quarterly loss since early 2025.
The 10-Year Reached the Doorstep of 5%. This Morning’s CPI Decides What Happens Next.
The 10-year climbed 18 basis points this week alone. At 4.97% it sits three ticks from a level it has not held since 2007. The 30-year closed at 5.34%, above the line analysts say Bessent has been defending. Bessent’s buyback operation landed at $5.2 billion against a $6 billion cap, roughly half of the $10.5 billion dealers offered. The market repriced through it.
The Print That Settles It
Waller’s case rests on a three-month inflation rate falling from 4.76% to 3.05%. He asked for one meeting to confirm. Friday’s jobs report at 162,000 took his labour argument. The CPI is his last ground. Core at or below 0.2% monthly gives him that confirmation. At 0.3% or higher the hawks have the full set, jobs, PPI, and CPI, and five days is not enough distance to argue the trend.
What PPI Already Said
Yesterday’s PPI said the energy shock is reaching wholesale costs. Headline at 0.4% was in line. But the annual rate printed 5.4%, a tenth above estimate. Diesel rose 24% in one month. Energy as a category climbed 4.2%. Core PPI was softer at 0.2%, a tenth below consensus. That split is the question the CPI answers. If the energy surge stays in goods and does not reach services, Waller’s case survives. If it reaches both, the committee has no room to wait.
The Rate Nobody Can Talk Down
This week proved what Bessent cannot do. He bought $5.2 billion of long bonds and yields rose. He called himself “the house” on the yen and the bond market ignored it. The 10-year is 18 basis points higher than it was Monday. The deficit, the war, and the AI buildout each compete for the same buyers, and none of them answer to a press conference. A 5% print today converts rhetoric into a line nobody in Washington can cross.
The Five Days Between
The CPI at 8:30. The FOMC on Monday and Tuesday. No Fed speakers in between. The data speaks for itself into a quiet room. A hot number prices a hike before the committee meets. A soft one buys a meeting, not a reprieve. Either way, 4.97% is now the floor the next move defends or breaks.
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SIGNAL 1: Oracle Doubled Its Cloud Infrastructure and Guided $90 Billion.
Oracle’s cloud infrastructure revenue hit $7.4 billion in the quarter, up 121% on a year ago. Total revenue reached $19.3 billion, up 30%. Adjusted EPS came in at $1.92, well above the $1.74 consensus. The stock rose 7% after hours.
The scale underneath is the story. RPO hit $664 billion. Oracle delivered 850 megawatts of new capacity and over 300,000 GPUs in the quarter, nearly triple the prior period. GPU utilization ran at 97.9%. Capex guidance holds at $90 to $95 billion for the year.
The Bill and the Rate
Oracle is building at record speed into the most expensive debt market since 2007. It raised $43 billion in debt last year and expects $40 billion more. Net cash capex ran $18 billion in the quarter. The buildout is real and the demand behind it is real. The cost of funding it rose 18 basis points this week. Nobody in the RPO carries that repricing yet.
SIGNAL 2: Trump Promised a Trillion Dollars the Same Week the Bond Market Ran Out of Buyers.
Trump told the RNC midterm convention in Dallas that every adult citizen would receive $5,000 if Republicans hold both chambers. The money must be spent in the United States. He offered no funding mechanism, no legislation, and no timeline.
The estimated cost exceeds $1 trillion. That lands on a deficit already near $2 trillion, into a September corporate calendar carrying $200 billion of new supply, with the 10-year three basis points from 5%. Vance said Thursday the dividends would come from tariff revenues. Tariffs currently bring in a fraction of the figure.
The Bid That Isn’t There
The fiscal promise and the bond market cannot coexist at today’s yields. Every dollar of unfunded spending adds to the supply the same buyers must absorb. The market that rejected Bessent’s $6 billion buyback is now told to price another trillion. Whether or not the cheques ever arrive, the promise lands in the same week yields reached a level where adding supply is its own inflation.
SIGNAL 3: Adobe Beat, Raised, and Still Fell. The Market Cannot Reward Good News at This Cost of Capital.
Adobe posted record revenue of $6.76 billion, up 13%. Adjusted EPS hit $6.13, above the $6.08 consensus. It reached one billion monthly active users. It raised full-year targets. AI-first ARR grew more than 150%.
The stock fell 2% after hours. Q4 guidance came in modest. Net new ARR dipped as Adobe shifted toward freemium. Narayen is stepping down, with Anil Chakravarthy taking over December 1.
The Beat That Did Not Work
Adobe and Oracle both beat Thursday evening. Oracle rose. Adobe fell. The difference is not the number. Oracle accelerated into the boom, doubling cloud infra and guiding $90 billion. Adobe is the company whose software the boom was supposed to disrupt. Its one billion users and raised guidance said AI is a tailwind, not a threat. The market heard that and sold it anyway. At a 10-year near 5%, good earnings need to be great. Great needs to be transformative. That bar is the yield, not the company.
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- Read the CPI this morning. Core at 0.2% gives Waller his hold. Core at 0.3% or above gives the hawks their hike.
- Watch the 10-year at 5%. A breach today has not happened since 2007. It resets every exit model priced below it.
- Track Kroger before the open. A trade-down commentary confirms the strained consumer.
- Mark the FOMC on September 15 and 16. The committee enters the quiet period now. Data is the only voice left.
- Watch the BOJ on September 18. A quarter-point hike unwinds more of the carry trade funding AI positions.
Capital Discipline
A yield curve is not a forecast. It is a price. Most exit models in your book were underwritten when the 10-year sat below 4.5%. Every assumption built on that level, the exit multiple, the refinancing cost, the buyer’s return requirement, now carries a spread to reality that has widened 50 basis points in six weeks.
Before Monday’s IC, take any position exiting inside 24 months. Replace the underwritten 10-year with 4.97%. Run the new cost of debt through the cap structure. Then read the equity IRR. Lose under a point and the operating plan carries it. Lose two or more and the equity was always a rate bet wearing a business plan. The CPI will tell you which direction the gap moves next. The committee will tell you whether Washington blesses it.
The bond market named the threshold. Oracle named the buildout accelerating into it. Trump named the fiscal claim competing for the same buyers. Adobe named the earnings bar at this yield.
Two weeks of PMD narrowed to one morning. The question was never whether the economy could handle higher rates. It was whether anyone could stop yields from getting there. Bessent tried rhetoric and a buyback. The tape moved through both. Trump tried a trillion-dollar promise, and the deficit behind it is the reason yields moved in the first place.
CPI prints today. By Tuesday the Fed votes. The 10-year at 4.97% is three basis points from the level where every model written below it is wrong. The number that lands this morning decides whether the line holds or breaks. Nothing else speaks until then.
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