Stocks hit as oil and yields climb - Newsquawk US Market Wrap

• SNAPSHOT: Equities down, Treasuries down, Crude up, Dollar flat, Gold up.
• REAR VIEW: Punchy Bessent rhetoric on the Yen & said he has good insight when they intervene; US Treasury buyback disappoints some expectations; US/Iran trade further strikes; AAPL unveils Foldable iPhone; Very strong US 10yr auction; Supply chain reports indicate NVDA is significantly increasing prices; META launched Muse personal AI agent.
• COMING UP: Data: German Final CPI (Aug), Norwegian CPI (Aug), Swedish GDP (Jul), US PPI (Aug), Jobless Claims (Sep/05), Existing Home Sales (Aug), Atlanta Fed GDP (Q3). Events: ECB Announcement, CBRT Announcement, OPEC MOMR. Speakers: US President Trump; BoJ’s Masu; ECB’s Lagarde. Supply: UK, Italy, US. Earnings: Oracle, Adobe.

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MARKET WRAP

Stocks were lower again on Wednesday as higher oil prices and Treasury yields weighed on sentiment. The Russell was the laggard, while the equal-weight S&P declined by c. 1%. The majority of sectors were also lower, with Industrials, Consumer Discretionary and Real Estate underperforming, while Energy was the only sector to close higher amid a roughly USD 3/bbl rise in WTI. Technology and Communication Services also outperformed but still closed marginally lower.

Regarding stock specifics, the Apple (AAPL) event was in focus, where the Co. unveiled the foldable iPhone, iPhone 18 Pro and Pro Max, A20 Pro chip, AirPods 5, Apple Watch Series 12 and Ultra 4. Shares were sold throughout the event before paring losses once it concluded, with the stock closing lower by 0.3%, well off its earlier lows.

Energy prices were buoyed by geopolitical escalations, with the US and Iran striking tankers overnight, while Iran also targeted US bases in the region, helping Brent reclaim USD 100/bbl.

Treasury yields were firmer across the curve as oil prices rose, although the majority of the move occurred after the US Treasury's buyback announcement for Thursday's 10-20yr operation. Treasury announced it will purchase a maximum of USD 6bln of 10-20yr coupons, disappointing the market. Many had been expecting between USD 4-6bln, although some expectations were as high as USD 10bln. The announcement saw yields rise, supported the Dollar, and weighed on stocks and gold. The subsequent cheapening in Treasuries provided additional concession ahead of the 10-year auction, which ultimately saw a very strong reception. The auction stopped through the WI by 1.5bps, the largest stop-through since April 2025, while dealer participation was exceptionally low as both direct and indirect demand improved.

In FX, the Yen was supported by punchy commentary around intervention from US Treasury Secretary Bessent overnight, while the Kiwi lagged once again. CAD was hit despite rising oil prices as trade tensions with the US continue to mount after the US announced on Tuesday it will ban imports of some Canadian alcohol, dairy products and motorcycles. The Dollar was little changed overall, although it moved off lows after the Treasury's buyback announcement lifted yields.

Gold prices were bid and headed into APAC trade around USD 4,400/oz, off earlier highs of USD 4,435/oz. The precious metal was initially pressured by the rise in yields and the Dollar following the buyback announcement before chopping into the close.

Attention now turns to the US PPI report on Thursday, alongside the ECB rate decision and Treasury's 10-20yr buyback operation. The highlight of the week will likely be the US CPI report on Friday, which will help further shape Fed rate expectations ahead of next week's meeting. Markets currently assign a 60% probability of a 25bps rate hike.

FIXED INCOME

T-NOTE FUTURES (Z6) SETTLE 7+ TICKS LOWER AT 107-02+

T-notes sold across the curve after buyback announcement disappoints. At settlement, 2-year +2.5bps at 4.425%, 3-year +4.7bps at 4.519%, 5-year +4.5bps at 4.611%, 7-year +4.2bps at 4.715%, 10-year +4.1bps at 4.833%, 20-year +3.1bps at 5.286%, 30-year +3.6bps at 5.285%.

THE DAY: Treasury yields rose across the curve on Wednesday. Yields had already been moving higher alongside oil prices following overnight attacks on Iranian and US tankers, which helped push Brent crude above USD 100/bbl.

However, the highlight of the session was the Treasury's long-end buyback announcement. Treasury announced it will buy back a maximum of USD 6bln of 10-20yr nominal coupons on Thursday, above its previous guidance for operations to be "at least" USD 4bln. Despite the increase, the announcement disappointed the market and added further pressure to T-notes, with many participants expecting a USD 4-6bln operation but some expectations were as high as USD 10bln.

The subsequent move higher in yields provided additional concession ahead of the 10-year auction, which was ultimately very strong. The 10-year yield was already trading above the previous auction's high yield, while the buyback announcement added roughly another 5bps of yield ahead of the offering. The auction subsequently stopped through the WI by 1.5bps, the largest stop-through since April 2025, while the bid-to-cover rose notably and dealers were left with an exceptionally small takedown.

The strong auction helped T-notes recover from session lows. Futures traded within a 106-31+ to 107-13+ range, with the high seen during the morning before the buyback announcement sent T-notes to their session low. Futures subsequently reclaimed the 107-handle heading into settlement following the stellar auction results.

There was no major US data to digest on Wednesday, with attention now turning to Thursday's PPI report ahead of CPI on Friday. Focus will also be on Thursday's 10-20yr buyback operation, particularly the amount of securities offered to Treasury and how much of the USD 6bln maximum Treasury ultimately accepts.

SUPPLY

• US sold USD 39bln of 10-year notes; Stop through 1.5bps
• US sold 17-week bills at a high rate of 3.895%, B/C 2.73x

STIRS / OPERATIONS

• Fed Hike Pricing via CME FedWatch: Sept 15.1bps (prev. 14.9bps), Dec 36.4bps (prev. 35.1bps).
• EFFR at 3.63% (prev. 3.63%), volumes at USD 107bln (prev. USD 103bln) on September 8th
• SOFR at 3.64% (prev. 3.65%), volumes at USD 2.904tln (prev. USD 2.888tln) on September 8th
• NY Fed RRP op demand at 0.43bln (prev. 0.63bln) across 6 counterparties (prev. 3) on September 9th
• Treasury Buyback [Cash mgmt, 1mth-2year, max USD 12.5bln]: Accepts USD 12.5bln of 28.027bln offers; accepts 27 of 45 eligible securities. Offer to cover 2.24x

CRUDE

WTI (V6) SETTLED USD 3.02 HIGHER AT 96.05/BBL; BRENT (X6) SETTLED USD 3.29 HIGHER AT 101.21/BBL

The crude complex gained as US/Iran tensions continue to ramp-up. As such, WTI and Brent rose throughout the European session and US morning to hit peaks of USD 96.82/bbl and USD 101.58/bbl, respectively, before paring some strength in the US afternoon. Behind the move higher was numerous Middle East updates overnight; US forces struck multiple Iranian tankers tied to the IRGC in response to more attempted missile attacks on a US Navy warship, and in retaliation, Iran launched missiles at targets and launched at least 20 missiles at bases in Jordan. Heading into the cash close on Tuesday, the IRGC warned that oil tanker crews in Kuwaiti and Bahraini ports would be targeted in light of the US Army targeting several Iranian oil tankers. More recently, Al Hadath citing sources,ever-heightening reported that an oil tanker was being targeted in the Strait of Hormuz, but a US official swiftly told NewsNation that there are no attacks being carried out by US forces right now. Elsewhere, albeit still on the geopolitical footing, Pakistan is reportedly considering strikes against Houthi targets in Yemen under the “Makkah Pact” defense framework with Saudi Arabia and Turkey, and strikes may begin in the coming days. Ahead, any Middle East updates will of course be watched alongside the US inflation reports (PPI and CPI) on Thursday and Friday, respectively.

US President Trump spoke after the crude settlement, where he said that the war will end after the election - noting they could do a deal, but he is not looking for a deal with Iran. He said oil prices will tumble lower after the election, but gasoline prices will take a bit longer, but he aims to get gasoline prices below USD 2. His remarks had little impact on price action.

EIA STEO: World oil demand 102.6mln BPD (prev. 102.7mln BPD), 2027 demand 105mln BPD (prev. 105mln BPD).

EQUITIES

CLOSES: SPX -0.45% at 7,639, NDX -0.29% at 29,422, DJI -0.77% at 52,381, RUT -1.28% at 2,922

SECTORS: Energy +1.09%, Technology -0.16%, Communication Services -0.24%, Health -0.36%, Financials -0.42%, Materials -0.85%, Consumer Staples -0.94%, Real Estate -1.12%, Utilities -1.17%, Consumer Discretionary -1.39%, Industrials -1.51%.

EUROPEAN CLOSES: Euro Stoxx 50 -1.58% at 6,312, DAX 40 -1.74% at 25,554, FTSE 100 -1.31% at 10,670, CAC 40 -1.94% at 8,157, FTSE MIB -0.58% at 51,875, IBEX 35 -1.58% at 19,681, PSI -0.38% at 9,445, SMI -1.64% at 13,827, AEX -1.27% at 1,102.

STOCK SPECIFICS:

• Apple (AAPL) foldable iPhone event is later today
• ServiceTitan (TTAN) next quarter revenue guide short of expectations
• Alphabet (GOOGL) to invest a minimum of EUR 13bln in Finland’s AI infrastructure in 2027-28.
• Signet Jewelers (SIG) EPS & revenue beat alongside raising FY top line guidance
• Chime Financial (CHYM) entered a definitive agreement to acquire Stride Bank for USD 590mln in cash & raised Q3 outlook.
• Dow (DOW) reportedly weighs exit from USD 20bln Saudi chemicals venture
• Evommune (EVMN) phase 2b EV0756 trial did not meet primary & secondary endpoints.
• Independence Realty Trust (IRT) and Centerspace (CSR) have agreed to merge in an all-stock transaction.
• Meta (META) launched Muse personal AI agent. Muse can connect with Meta apps and third-party services including Google Workspace, Ticketmaster, OpenTable, Spotify and Apple Health.
• US Senator Slotkin said "We hear rumors that Trump is planning to allow Chinese cars to be sold in the U.S., as part of a larger deal". Following the post on X, upside was seen in Chinese autos (XPEV, NIO, BYDDY), with downside in US autos (F, GM, STLA).
• Apple (AAPL) announced foldable iPhone, named Duo, as well as iPhone 18 Pro and iPhone 18 Pro Max; will be AI focused with new Siri AI working across apps.
• Salesforce (CRM) reportedly held talks to buy Listen Labs, an AI customer research platform, for USD 2bln, according to Business Insider.
• Supply chain reports indicate that NVIDIA (NVDA) is significantly increasing prices to secure probe card and test socket production capacity from major test interface vendors, reports DigiTimes.

FX

The Dollar Index was more-or-less flat, and saw choppy trade on Wednesday. Through the US morning, the Greenback saw losses, albeit on no clear headline catalyst, but soon reversed, and more, as the US Treasury Buyback announcement disappointed; the Treasury is to buy back a maximum of USD 6bln in 10-20year Treasuries on Thursday, which was against guidance for at least USD 4bln, but some had expected the figure to be as high USD 10bln. Elsewhere, Dollar-specific newsflow was sparse, as there was no US data and of course no Fed speak amid blackout. Ahead, traders await PPI and CPI on Thursday and Friday, respectively.

G10 FX performance was mixed against the Greenback; the Yen was the clear gainer and the talk of the town, GBP, EUR, and AUD were all flat, while CHF, CAD, and NZD eked out varying degrees of losses. For the Yen, USD/JPY hit a low of 152.39, and came after very punchy US Treasury Secretary Bessent comments overnight; said he has good insight when they intervene on the Yen, and bet against him if you want and that he has information. Bessent added he has good insight into what the BoJ and policymakers will do. As such, focus will attentively be on the BoJ next week.

Loonie saw mild pressure following the US banning imports of some Canadian alcohol, dairy and motorcycles. Currency-specific newsflow for other G10s was light, with ECB the main risk event on Thursday away from the US; as a reminder, the ECB is set to raise the Deposit Rate by 25bps to 2.50%, whereby focus will be on the updated staff projections, where 2027 HICP is expected to be lifted slightly. In addition, focus will be on any guidance beyond September, though Lagarde will likely reiterate a data-dependant approach, albeit hawkish risks dominate.