The Overnight RateThree moves
Labor and consumers. Our line from Wednesday’s calendar was crossed, by a lot. BLS put the typical full-timer’s paycheck at $1,232 a week in the third quarter, 1.5% more than a year earlier, against a 3.5% rise in consumer prices (BLS). Our mark was 3.7%. By our math that’s a real pay cut of about two points. Employers are trimming too. eBay will cut about 1,000 jobs, roughly 9% of staff, after about 800 in February (CNBC). It’s a median, so more lower-paid hires can drag it without anyone’s raise shrinking. Still, we doubt holiday spending holds up on raises this thin.
AI and data centers. Meta spent $34.91 billion on capital projects in the third quarter, counting finance-lease payments, while operations brought in $32.79 billion (Meta). Free cash flow was negative $2.12 billion. A year earlier it was positive $10.63 billion. The company expects “to continue investing aggressively” next year. Some of the bill stays off its balance sheet. The Hyperion campus, about $30 billion of assets, sits in a joint venture with Blue Owl that raised $27 billion of debt, a Columbia Business School paper for Brookings shows (Brookings). Meta leases it in four-year terms and guarantees a minimum sale value if it walks. With $82.45 billion of cash and securities, it can cover plenty. Our take: bond buyers now carry a real slice of AI risk.
Credit. Getty Images filed a prepackaged Chapter 11 in Delaware Wednesday, with a plan its main creditors had already signed (SEC filing). Holders of its 14% and 9.75% unsecured notes get about $170.2 million in cash. Secured lenders swap into new first-lien debt with later maturities and a lower rate, and every existing share is cancelled (SEC filing). Getty family affiliates and Koch Equity Development commit about $533 million of equity and end up owning all of it. Fair point for the owners: that’s fresh money. In our view, public shareholders paid for debt that cost double digits to carry.
What could move prices
A Houthi drone aimed at a processing plant at Aramco’s Shaybah field, which produces about 1 million barrels a day, was shot down Wednesday. Debris killed two; the Saudi Energy Ministry said operations weren’t affected (The National). Hours later an attack on Dammam’s airport killed one, and Washington ordered non-emergency US staff out of the kingdom. Brent rose 1.7% to $110.63 early Thursday Gulf time. We’d watch the East-West pipeline around Hormuz, reported halted since Oct. 5. A restart would take fuel prices down first.
The calendar
The Labor Department posts weekly jobless claims at 8:30 ET today (DOL). First-time claims were 199,000 in the week ended Oct. 10, close to the 198,500 four-week average. We’d call anything over 220,000 news that cuts like eBay’s are spreading, and anything under 190,000 news that layoffs are still rare.
Who pays: the heating-oil borrower
The Energy Department will lend up to 315,000 barrels from the Northeast Home Heating Oil Reserve, about a third of its roughly 1 million barrels by our math (DOE, DOE reserve page). Bids are due Oct. 27, and deliveries wrap up by Nov. 13. It’s a loan paid back in oil. A dealer or terminal takes barrels now and returns the same volume plus a premium before the 2027 to 2028 heating season. The borrower pays that premium and is counting on the payback barrels costing less. The reserve gets refilled bigger, and Northeast households get supply in November.
Net net: dealers borrow this winter’s oil and repay it out of next year’s.
Also moving
- Utilities: Memphis’s utility board approved a budget with rate increases of 12% for residents, 20% for commercial and industrial customers and 30% for data centers (WMC Action News 5); the city council has the last word.
- Power bills: Colorado regulators opened hearings on Xcel’s tariff for data centers and other big users (Colorado Sun); 1.6 million customers find out who covers the new grid.
- Crypto policy: Polymarket (International) gives the Clarity Act 5% odds of becoming law this year; exchanges and stablecoin issuers keep living under today’s rules.
Correction: Wednesday’s calendar said BLS third-quarter usual weekly earnings would come out Oct. 28. BLS released them Oct. 21 at 10:00 ET (BLS).