The Opener
Published
Wednesday's split personality, equities leaning into the AI and nuclear power trade while the Middle East energy crisis kept compounding, is giving way this morning to a broader pullback. The VIX is up 3.3% premarket, and the very names that carried the rally are reversing: Constellation Energy is down 2.1%, Micron is off 2.1%, Strategy is down 3.4%, Curtiss-Wright is down 3.1% and Ciena is down 2.8%. Constellation Brands is down 5.1% after its soft full-year sales guidance.
The bigger driver may be the bond market. The US 30-year yield climbed 5 basis points to 5.70%, its highest since 2002, and that pressure is showing up in rate-sensitive assets: the SPTI intermediate Treasury ETF is down 3.5%. Even gold, which had been the steady hedge against the Gulf conflict, slipped nearly 1% to $4,123.91 an ounce, with silver down 2% as well, a sign that higher yields are starting to outweigh the safe-haven bid.
Geopolitics stayed combustible overnight. Zelenskiy said Russia launched one of its largest strikes yet on Ukraine's energy sector, with the death toll revised up to 11, prompting European Commission President von der Leyen to accuse Russia of a "strategy of terror." Secretary of State Rubio, in Greece to sign a new security memorandum, reiterated that Iran must not be allowed a nuclear program, keeping that front unresolved alongside the EIA's upgraded Brent forecasts from Wednesday night.
IMF Managing Director Georgieva added a macro overlay, warning that AI investment could exceed historic spending on railways, power grids and telecom combined, that hyperscaler leverage carries financial risk even as AI could lift global growth by half a point, and that energy, tariffs and high debt are stacking up against growth. She singled out Germany as a "positive outlier," a view bolstered by data showing German industrial production rose 2% in August against a 0.5% expected gain.
Elsewhere, the EU moved to set temporary import limits on Chinese hybrid cars, lifting European automakers ahead of the measure, while Mercedes-Benz flagged weaker China sales. Markets now look to be pricing a tug-of-war between the AI buildout narrative and a bond market that is no longer cooperating.