Treasury Yields Resume Upward Trend — Market Talk
1144 ET - The respite from September payrolls was brief. Treasury yields resume their rise as markets turn attention to inflation data due in a couple of weeks. "For the Fed, the mediocre September jobs report isn't bad enough to shift the focus away from inflation," Fifth Third's Bill Adams writes. The October decision "will probably be swayed by the September CPI and PPI reports, geopolitical developments, and prices at the pump between now and then." Oil pares losses and Brent is back to $100. The 10-year rises to 5.252% from its intraday low of 5.155%. The two-year increases to 4.812% from 4.701%. ([email protected]; @ptrevisani)1116 ET - Bitcoin prices briefly rose back to the level they topped out at in last week's surge, but appear to have met resistance and are now paring gains. Bitcoin is now up 1.6% to $85,938 for the day, after topping out at $87,090 earlier. Analysts have identified $87,000 as a key resistance point for bitcoin, with a sustained rally seen as possible if the token can cross over $90,000. Bitcoin has been able to maintain its current levels despite the surge seen in Treasury yields — which is puzzling some analysts. "If a market is rallying on seemingly bad news, then there's something amiss," says James Stanley of StoneX in a note. Ethereum climbs 1%, and XRP is up 1.9%. ([email protected])1055 ET - Ford Motor expects the financial hit from a recent production issue will be contained within the full-year forecast it provided in July. The automaker earlier this week disclosed a temporary production halt at a plant that makes its F-150 due to a supplier issue, a development that it said dragged on its third-quarter wholesale performance. ([email protected])0944 ET - Airbnb is set up for a period of durable growth while trading at a discount to lodging peers, KeyBanc analysts write in a note, upgrading the stock to overweight and giving it a $191 price target. "Our thesis rests on three key pillars," the analysts write. "1) core growth appears increasingly durable and product-led; 2) hotels are emerging as a credible second growth engine; and 3) Airbnb is positioned to be an AI beneficiary." They write that a confluence of improved products, brand engagement, and growing market penetration has accelerated Airbnb's growth, both in expansion and core markets. The analysts also see a substantial growth runway for Airbnb's hotel business, and argue that AI will be a net positive for the company rather than a source of disruption. Shares gain 1.6% to $163.01. ([email protected])0900 ET - While Nike continues to contend with a number of challenges across its business, the brand's areas of strength are only gaining momentum, Oppenheimer analysts say in a note. "The most positive aspects of the company's ongoing, now elongated repositioning effort are the increasingly clear indications of sustained sales and profit improvements within the broader performance category," they say. The analysts say they are optimistic that Nike can replicate that success in categories that continue to struggle, like sportswear and its Jordan franchise. "But such efforts are likely to take meaningful time and investment," they say. ([email protected])0853 ET - The timing of Nike's rebound continues to look further away, Truist Securities analysts say in a note. While Nike still points to green shoots for its performance product, its larger sportswear and Jordan segments continue to face further pressure, the analysts say. Weak trends in China, meanwhile, have only gotten worse, they say. "With significant wood left to chop across multiple fronts, still-growing competitive pressures, and a choppy macro - we think visibility into a potential recovery is limited and believe it's best to remain on the sidelines," they say. The analysts cut their price target on the stock to $29 from $42 and keep their hold rating. ([email protected])0850 ET - Nike's new finance chief set lower guidance for the year than Wall Street expected, guiding for a high-single digit sales decline. But while "it's tempting to think Nike's new CFO has kitchen-sinked expectations," Raymond James analysts say they see reason for the worse-than-expected outlook. The analysts point to tougher comparisons across Nike's wholesale channel in North America and for performance products, as well as further weakness ahead in China, a region they say is key for the brand's rebound. "In short, line of sight to when revenue will rebound and the magnitude of durable growth remains an area of low visibility," they say. ([email protected])0847 ET - Lower-than-expected U.S. employment numbers deepen an overnight decline in Treasury yields from lofty levels. September payrolls come at 29,000, lower than WSJ consensus of 84,000. July and August numbers are revised down by a total of 60,000. The unemployment rate ticks higher to 4.2%, versus estimates that it would stay at 4.1%. The data bolsters forecasts of a more moderate pace of interest rate increases by the Fed. Oil prices also cooperate, falling over 3%. The WSJ Dollar Index falls 0.3%. The 10-year Treasury yield is at 5.178%, down from 5.239% before the payrolls. The two-year slips to 4.718% from 4.773%. U.S. stock indexes extend early gains, with S&P 500 futures up 61.5 points. ([email protected]; @ptrevisani)0742 ET - Uranium Energy is making big leaps in its plans to build out its uranium supply in Canada and the U.S., but there are risks to its ambitious expansion plans. RBC's Andrew Wong notes that the company is ramping uranium production in Wyoming and Texas, developing the Roughrider project in Saskatchewan, and plans to build new uranium conversion capacity in the U.S. "We see the industrial logic, US-origin benefit, and need for more domestic conversion capacity," Wong says, but notes that building greenfield conversion in the U.S. comes with significant risks and plan details are currently limited. RBC initiates coverage on the stock with a sector perform rating with a speculative risk qualifier, and a price target of $10. Shares are down 20% year-to-date at $9.36. ([email protected])0721 ET - Filtronic's largest-ever order is a sign of its exceptional operational progress this year, Berenberg analysts write. The defense and aerospace telecom company secured a $68.1 million follow-on order from Elon Musk's SpaceX to provide high-frequency telecom technology. "This record order is a strong endorsement of the relationship with SpaceX, and of Filtronic's ability to meet SpaceX's quality demands and pace of production," the analysts say. Though shares have pulled back from their highs in May, Berenberg sees significant upside with a buy rating on the stock and 440 pence price target. Filtronic shares are up 6% at 273 pence.([email protected])0619 ET - Oil prices extend losses, with front-month Brent crude futures falling back below $100 a barrel after media reports of talks on potential diesel stock releases. In afternoon European trading, the global oil benchmark is down 2.6% to $99.62 a barrel, while WTI drops 3.9% to $89.28 a barrel. European gasoil futures--a benchmark for diesel prices in the region--fall 5% to $1,377.50 a metric ton. The prospect of a U.S. diesel export ban is hanging over the market, with investors watching closely for any EU response. While a ban could replenish U.S. diesel stocks and lower domestic prices in the short term, it could also reduce incentives to process crude, tightening U.S. gasoline supply and pushing pump prices higher, analysts say. ([email protected])0613 ET - Wise Group seems to have done well in establishing itself among U.S. investors, J.P. Morgan's Craig McDowell and Sandeep Deshpande say. The analysts had previously been concerned that the fintech company would struggle to gain traction in the U.S. "We remain very optimistic on the long-term opportunity for Wise, with the view that the business has the potential to be a durable earnings compounder with attractive long-term earnings power," JPM says. However, there is a lack of confidence on the near and medium-term outlook, as well as high near-term multiples, the analysts note. This could prompt investor caution, JPM adds. Shares are up 1.9%. ([email protected])