The 10-year Treasury yield touched about 5.35% in European trading Thursday. Wednesday’s 5.36% peak was the highest since April 2002.
Then it closed at 5.23%, down roughly 6 basis points. Yields fell even though oil rose 4% and two Fed officials talked about rate hikes. That gap is this morning’s puzzle.
Chips Carry the Damage
The Philadelphia Semiconductor Index fell 3.39% to 12,623.72. Arm, Intel and Marvell each dropped more than 6%.
The trigger was a Financial Times report that OpenAI’s annualized revenue is near $50 billion. That is about $20 billion below a figure that circulated last month.
Lower yields gave tech no cushion, which makes this an earnings question rather than a rates one. The Nasdaq’s 1.25% slide to 27,193.34 was its second straight loss since Tuesday’s record.
Oil Rides the Iran Headlines
Brent settled up 4.07% at $104.28, and WTI rose 3.64% to $91.49. U.S. crude is up more than 60% this year.
A Trump post ruling out strikes on Iran before the Nov. 3 midterms knocked about $1.50 off crude within minutes, per BabyPips. Energy led S&P 500 sectors, and the Dow edged up 0.10% to 51,231.64.
The Fed Talks Hikes
Fed Governor Christopher Waller said he expects more hikes if the data meet expectations. St. Louis Fed President Alberto Musalem said policy needs more firming.
Futures already lean that way. CME FedWatch shows about 77% odds of a late-October hold (Admiral Markets) and roughly 69% odds of a December hike.
A $22 billion 30-year bond auction cleared at 5.618% with solid demand, which may help explain the pullback from the 2002 high. That leaves the hawkish case resting on today’s inflation data.
Calm Beneath the Selloff
The VIX rose 2.19% to 15.41. That is still below its long-run average of roughly 19, even after chips lost 3.4%.
The dollar index slipped about 0.2% to 102.0, and gold gained 0.43% to $4,158.30, per Rio Times and Yahoo Finance. Neither moved like investors were rushing to safety, so Thursday reads as an AI repricing rather than a broad retreat.
The Day Ahead
Kansas City Fed President Jeffrey Schmid speaks at 9:30 a.m. ET. His remarks will show whether other Fed officials share the hawkish tone from Waller and Musalem.
The University of Michigan’s preliminary October sentiment reading posts at 10 a.m. Consensus is 47.6, down from 48.1.
The figure that matters is one-year inflation expectations, expected at 4.7% from 4.6%. A higher print after Brent’s $104 close would challenge Thursday’s yield retreat.
August factory orders also post at 10 a.m. The Baker Hughes rig count follows at 1 p.m., against 456 oil rigs last week.
