Morning Briefing
Published
S&P 500 futures point to a lower open, down 0.4%, as the historic bond selloff that dominated Tuesday's session extends into Wednesday even as oil spikes further on new Middle East escalation. The 10-year Treasury yield remains near its highest level since 2002, and UK 10-year gilt yields have jumped to 5.527%, the highest since 2007, with 30-year gilts at 6.047%, a level last seen in 1998.
Brent crude has extended its advance to as much as 5%, trading above $105 a barrel, after Saudi Arabia was hit by its deadliest Houthi attacks to date, with blasts reported in Riyadh. Iran's foreign ministry says a response to US proposals will come within days, through intermediaries, while Tehran's atomic energy chief insists the country will not back down on enrichment. The White House has reportedly asked the Pentagon for strike options against Iranian targets, with scope and targets undetermined. Separately, Ukrainian negotiators are set to visit Washington Friday and Saturday for talks, according to President Zelenskiy.
On rates, Fed Governor Christopher Waller said more increases are likely needed but don't have to come in consecutive meetings, and that the Fed can use signaling rather than firm forward guidance. ECB's Lane said core inflation should rise next year with upward pressure on food prices, while ECB officials generally called for a proportionate policy response. Germany's economy ministry raised its 2026 growth forecast to 1.3% from 0.5% and its 2027 forecast to 1.1% from 0.9%.
Energy is the standout sector pre-market, tracking the crude move, with oil and gas exploration names among the broad market's strongest. Technology and Financials are the weakest major sectors, pressured by higher yields, with large banks and semiconductor names, including VeriSign, Coherent, and NXP Semiconductors, among the softest individual movers. Defense and asset-manager names outperform, led by Huntington Ingalls Industries, Booz Allen Hamilton, Franklin Resources and Palantir Technologies.
Company News
- PepsiCo reports Q3 EPS of $2.34, topping estimates, with revenue of $25.27 billion slightly above expected; the company raised full-year revenue growth guidance but cut its core EPS growth outlook to 2.5%-3.5% from a prior 5%-7% range.
- General Dynamics' board elected Danny Deep, currently company president, to become CEO effective January 1, 2027, with Phebe Novakovic transitioning to Executive Chairman.
- Prudential Financial disclosed that its Japanese subsidiary found 146 current and former sales employees involved in inappropriate conduct, with dozens dismissed or suspended and most affected customers already reimbursed.
- Venture Global says an ICC tribunal found its Calcasieu Pass subsidiary breached an LNG sales agreement with Galp Trading, with damages subject to a $170 million liability cap and a hearing expected in 2027 or 2028.
Overseas Data
Japan's METI vice minister discussed building regional oil stockpiling infrastructure with producing countries as Gulf-linked supply risks mount.
Germany's economy ministry lifted its 2026 and 2027 growth forecasts, citing a brighter outlook despite the energy-driven uncertainty gripping European bond markets.