The Overnight RateThree moves
Corporate money. Cleveland-Cliffs sold steel at an average $1,177 a net ton in the third quarter, up from $1,032 a year earlier, a 14% rise by our math (Cleveland-Cliffs). Adjusted EBITDA, the operating profit it reports, more than doubled from the second quarter to $612 million, and the company now expects 2027 to top $4 billion. CEO Lourenco Goncalves credited trade: “Imports remain well below historical levels, lead times are extended.” With fewer foreign mills bidding, domestic mills set the price, and equipment makers, infrastructure contractors and builders pay it. The counterpoint: shipments rose 3% from a year ago, so some of the gain is volume. Our read: the tariff is being collected at the mill gate.
AI and data centers. American Electric Power will study a 960 MW nuclear plant, 12 small reactors of 80 MW each, at a retired coal site in Sullivan County, Indiana, with Amazon funding development (AEP). If it’s built, Amazon intends to buy the output under a long-term contract covering the plant’s costs, and says it will “pay our full costs without passing them to others.” Separately, Nscale is in talks on a second deal, worth about $45 billion, to sell Anthropic computing power from a new 460 MW building in West Virginia, a source told Reuters (Reuters via CNA). The counterpoint: there’s no final investment decision, and reactor timelines run long. Our read: AI money now follows whoever has power lined up.
Policy. The Graham Act waiver now has a clock. Secretary of State Marco Rubio said the President will take up to 60 days to weigh what the waived Russia sanctions and tariffs would do to the economy, Reuters reported (Reuters via The Straits Times). The Oct. 16 order set a 100% duty on goods from the five largest buyers of Russian crude and natural gas, then waived it (White House). Sixty days runs to mid-December, so importers pricing next year’s contracts from those countries carry an open tariff risk until then. The counterpoint: the President said Sunday he wants to avoid driving Russia “away from the bargaining table,” which favors keeping the waiver. Our read: it’s a tariff with a review date.
What could move prices
Yemen’s Houthis said Monday they hit an Aramco site in Yanbu and the Shaybah oilfield; Saudi authorities didn’t confirm, and Reuters couldn’t verify it (CNBC). Brent rose as high as $110.70, its highest since May 20, and was $110.10 early Tuesday. Yanbu is Saudi Arabia’s Red Sea export port, the outlet that keeps its crude out of Gulf shipping lanes, so a hit there would reach diesel and jet fuel first. Our read: a Saudi confirmation or a loading halt at Yanbu is the trigger.
The calendar
Census publishes September housing starts at 8:30 ET today (Census). Single-family starts ran at a 918,000 annual pace in August, up 7.6% from July (Census). With builders this gloomy, we’d call single-family starts under 850,000 news that they’re pulling back, and anything above 950,000 news that price cuts are still moving homes.
Who pays: the home builder
Builder confidence fell three points to 29 in October, the lowest since June 2012, and 43% of builders cut prices, the highest share of the 2020 to 2026 period, by an average 6% (NAHB). Another 65% used sales incentives. The mechanism, once: a builder pays interest on its construction loan every month a finished house sits, so it trims the price before carrying costs eat more margin. Payer: the builder. Payee: the new-home buyer with time to bargain. The counterpoint: NAHB says demand persists, and rising costs limit how far cuts can go.
Net net: the builder is paying for the buyer’s patience.
Also moving
- Fed and rates: Kalshi has an Oct. 28 hike at 14% and December at 74% (Kalshi); prime-based cards and HELOCs are pricing December.
- Shipping: Energy Secretary Chris Wright says idled sanctioned tankers can switch to legal oil, with Gulf-to-Asia freight over six times prewar (Bloomberg via gCaptain); refiners pay first.
- Weather: NHC expects coastal flooding along parts of the East Coast from a storm-force low off North Carolina (NHC); coastal owners and insurers carry it.