The 10-year Treasury yield closed Tuesday at 5.202%, down about 4 basis points as bond trading resumed after Columbus Day. The dip only looks like relief next to last Thursday.
That day the yield briefly neared 5.37%, its highest level in more than 24 years. This morning’s CPI print decides how far it is from that ceiling.
A Flat Index, a Lopsided Tape
The S&P 500 closed at 7,805.45, down 0.02%. The Nasdaq slipped 0.15% to 27,204.38, and the Dow lost 0.35% to 51,670.10.
That calm is misleading. 24/7 Wall St. noted the selling stayed concentrated, yet Apple and Mastercard still printed 52-week highs.
With the index stuck in place, today’s open comes down to inflation data rather than momentum. A 5.2% 10-year leaves less room for an equity rally to absorb a hot number.
Memory Loses Its Footing
Micron fell 3.9% Monday and was down another 4.5% Tuesday morning. The trigger is CXMT, the Chinese memory maker now aiming at server DRAM.
The Fool notes that the last CXMT scare cost Micron 36% in under a month. Schwab says only about 36% of S&P 500 stocks sit above their 50-day average, so the market leans on the mega-cap leaders Micron has been part of.
A hot CPI would test that leadership just as one of its pillars weakens.
Banks Split the Verdict
Goldman earned $17.01 a share against $13.02 expected, and its shares rose about 4% early. JPMorgan missed at $5.57 versus $5.90, yet its stock still traded higher.
Higher yields help lenders. Schwab reports Wells Fargo’s net interest income rose 5%.
Bank of America and Morgan Stanley report before the bell. Their results will show whether 5% rates are lifting margins faster than they are cooling deal activity.
Oil Eases, Energy Inflation Stays
WTI traded near $92 and Brent near $104 early Tuesday, both down about 2%. CNBC linked part of the bond rally to the dip, as traders priced in more Russian diesel supply.
Brent remains up about 68% from a year ago. The dollar index eased to about 102.3 from an 18-month high, according to FXStreet.
That year-over-year oil gain is already baked into the September CPI data due today.
The Day Ahead
September CPI lands at 8:30 a.m. ET. CNBC cites consensus at 3.7% headline, up from 3.4%, with core at 2.5%.
The 1.2-point gap between headline and core is mostly energy. With CME FedWatch pricing about an 85% chance of a December hike, a core surprise would move yields more than a headline one.
Bank of America, Morgan Stanley and BlackRock report before the open. Fed Governor Bowman speaks at roughly 5:40 a.m. ET.
Richmond Fed President Barkin speaks at about 1:30 p.m. ET. The Beige Book follows at 2:00 p.m. ET and will show whether firms are passing the energy shock through to prices.
