The Overnight RateThree moves
Markets. US crude settled at $88.12 on Wednesday, down 8.3% from $96.09. Brent settled at $94.62, down 8.7% from $103.60 (CNBC, CNBC). Second large daily drop this week after Monday. The move tracks an unwind of the Gulf risk premium priced into the barrel; Hormuz-normal-by-year-end odds on Polymarket US stay at 9%. Distillate stocks are only 99.3 million barrels, down 3.6 million in the week ended Oct. 30 (EIA). New York Harbor diesel was still $4.82 on Tuesday’s EIA daily. The Gulf risk that had been sitting in the barrel is coming out faster than product stocks can rebuild. Households and fleets buy diesel and heating oil, not the futures contract, and when distillate inventories are this tight an 8% drop in WTI does not show up at the rack the same week. Crude cut the premium; product has not. The crude print is the headline; the product market is the bill people actually pay.
Corporate. CVS Health said Wednesday it intends to split into two publicly traded companies, and the stock fell 12.5% to $79.96 (Nasdaq). CVS Health would keep Aetna, Caremark, Specialty, Oak Street Health and Signify Health; CVS Pharmacy would take about 9,000 retail pharmacies, mail pharmacy, MinuteClinic and Health100, aimed at the first half of 2028 and meant to be tax-free (SEC). David Joyner stays CEO of the solutions company; Prem Shah will run Pharmacy. Both sides are expected to keep investment-grade ratings. We’d say the stock marked the plan down the same day.
Foreign. September US imports of computers, computer accessories and semiconductors totaled $86.9 billion. Annualized, that is about $1.04 trillion (Census). Computers were $41.7 billion, up $7.6 billion from August. Accessories rose $5.7 billion to $30.9 billion; semiconductors slipped $1.2 billion to $14.3 billion. Korea’s October exports hit $115.28 billion, and semiconductors were $56.44 billion, up 259% from a year earlier (MOTIR). One month annualized is a pace, not a year of receipts. The upshot: US AI build-outs show up as a trillion-dollar-class import bill for compute hardware.
What could move prices
Kalshi traders put a December hike at 80% as of 2:50 a.m. ET, up 4 points from Wednesday. Polymarket (International) has two hikes this year at 78%. The near test is this morning’s claims and productivity prints at 8:30 a.m. ET. A soft labor read would lean on the December odds; a hot one would firm them. Friday’s employment report is the week’s main labor print.
The calendar
Initial jobless claims from the Labor Department and preliminary third-quarter productivity and unit labor costs from BLS both print at 8:30 a.m. ET (BLS). Freddie Mac updates its weekly mortgage average at noon. The EIA natural gas weekly is at 10:30 a.m. ET. The employment report for October is Friday at 8:30 a.m. ET.
Who pays: the distillate buyer
Crude fell more than 8% on Wednesday, but distillate stocks are still 99.3 million barrels, 11% under a year ago (EIA). New York Harbor diesel was $4.82 a gallon on Tuesday’s EIA daily print, and AAA’s national diesel average is still about $6.26 as of 4:50 a.m. ET Thursday. Heating oil and trucking fuel have not marked the risk-premium unwind the way the barrel has. A household on heating oil and a fleet buying diesel are still paying last week’s product market.
Net net: when crude crashes and product stocks stay tight, the people who burn distillate keep the high price.
Footnotes
- Mortgages: Mortgage News Daily’s 30-year average fell 8 bp to 7.22% on Wednesday, the first print under 7.25% since Sep. 22, with Freddie’s noon survey still pending (MND).
- Credit: Meta priced €9.0 billion of euro senior notes in six tranches on Wednesday, with mid-swap spreads from +103 to +333 bp and Aa3 / AA- ratings (SEC).
- Corporate: Uber’s third-quarter Gross Bookings rose 20% to $59.8 billion and adjusted EBITDA rose 31% to $3.0 billion (Uber via SEC).