The Overnight RateThree moves
Bonds and Treasuries. Treasurys acted like a hiding place again Thursday. The 10-year yield fell to 4.96% from 5.13% a day earlier, and the 2-year dropped to 4.65% from 4.81% (Treasury). That put the 10-year under 5% for the first time since Sept. 23, CNBC reported, with fund managers pointing to a tech selloff, Gulf risk and higher oil (CNBC). Lower long yields feed into car loans and card rates with a lag. To be fair, the 10-year and 30-year hit their highest in more than two decades earlier this month, and oil is still climbing. Our read: one scared day doesn’t settle the inflation fight.
Prices and commodities. Brent rose 4% to settle at $113.17, its highest close since May 4, and WTI added 2.4% to $99.47 as traders priced more supply risk in the Gulf (Reuters via Business Recorder). The cushion at home is thin. The Strategic Petroleum Reserve held 282.7 million barrels in the week to Oct. 16, the least since October 1982 (EIA). That’s 0.3 million barrels below two weeks earlier. The other side: Reuters says Brent has been technically overbought three times in a week, and those runs can unwind fast. In our view, with the stockpile this low, the next supply scare lands on fuel prices with little to soften it.
AI and data centers. OpenAI is close to raising up to $30 billion at a $1.25 trillion valuation, led by investors from the UAE and Coatue, CNBC reports (CNBC). It’s pitched as a bridge to a possible IPO, with signatures wanted by the end of next week, and OpenAI is negotiating for more computing capacity from the UAE alongside it. In February it told investors it’s targeting about $600 billion of compute spending by 2030. By our math this round covers about 5% of that. Nvidia’s Jensen Huang told CNBC Thursday that demand for neoclouds is “off the charts” but capital is scarce (CNBC). Counterpoint: a $1.25 trillion price says plenty of buyers still want in. Our take: the buildout now leans on Gulf money to keep pace.
What could move prices
The Fed meets Oct. 27 and 28 (Federal Reserve). Kalshi puts a hike next week at 6%, down from 12% in Thursday’s issue, and a December hike at 72%, down from 75% (Kalshi). Bond prices say traders expect patience for now. If Brent holds above $110 and inflation expectations keep rising, we’d expect December odds to firm back up. A statement that leans on slower growth would push them the other way.
The calendar
The University of Michigan posts final October consumer sentiment at 10:00 ET today (UMich). The preliminary reading was 46.3, down from 48.1 in September, with year-ahead inflation expectations at 4.7%. We’d call a final reading under 45 news that prices are biting harder, and year-ahead expectations of 5% or more news the Fed can’t wave off.
Who pays: the taxpayer
The White House invoked the Defense Production Act for fuel, and the Energy Department plans up to $150 million in Title III money to restart and expand US refineries (DOE). It draws on $1 billion Congress appropriated for energy projects tied to national security, so by our math this one program takes 15% of the pot. No recipients have been named yet. The same day, Valero posted its highest-ever quarterly profit as fuel disruptions fattened margins (Reuters via Business Recorder). Taxpayers carry the startup risk. Drivers see relief only if new output arrives while prices are still high.
Net net: public money funds the capacity, and refiners keep the margin.
Also moving
- Labor: First-time jobless claims fell to 194,000 in the week ended Oct. 17, near the lowest since the late 1960s (CNBC); employers still aren’t letting people go.
- Power: Bloom Energy’s third-quarter revenue rose 138.1% to $1.24 billion, and it raised its 2026 forecast to $4.4 billion to $4.6 billion (Bloom Energy); data centers keep buying their own power.
- Recession odds: Polymarket (International) puts a US recession by year-end at 7%, down a point; Thursday’s stock slide barely moved that price.