CPI Morning: Record Diesel, Near-5% Yields and an Oracle Rally

The day opened with a tense wait for the CPI print. Around 5 a.m. New York time the US 10-year yield was pressing toward the 5% line while the 2-year had touched 4.58% the prior session. The Treasury Secretary insisted the bond market was in very good shape.

Asia was clearly risk-off. The MSCI Asia index fell about 1.3%, its worst day in more than a week. SK Hynix and Samsung Electronics led losses in South Korea, with DeepSeek's reportedly cheaper and more efficient new model seen cutting high-bandwidth-memory needs. Australia's 3-year yield hit its highest since 2011 while Chinese AI names sagged.

Europe told a slightly different story. With less tech weight, the Stoxx 600 rose 0.5% as oil eased a touch ahead of the CPI print. The UK 2-year fell eight basis points while the 10-year end barely moved. Hawkish ECB messaging added to the tone as a Governing Council member floated a return to restrictive territory, lifting year-end expectations.

Bond arithmetic anchored the broadcast. The 2-year stood 92 basis points above the effective funds rate, showing how wide the market-Fed gap had grown. Citing Gardini, a guest argued a 25-point hike next week plus extra buybacks would keep the 10-year inside a 4 to 5% band.

Oil heated up the political debate. Brent topped $107 before easing toward $104 while US crude slipped below $100. US average diesel hit $6.06 a gallon, the first $6 reading on record. The show noted the barrel-equivalent exceeded $200.

Futures pointed higher. After Oracle's surprise beat, Nasdaq 100 futures signaled a firm open and S&P 500 futures followed. Indexes coming off four straight down days flashed a relief bid.

Oracle was the stock of the day. Cloud sales more than doubled and shares rose about 7% premarket. Independent reports put fiscal first-quarter revenue up 30% at $19.3 billion with cloud revenue up 62% at $11.6 billion, framed as proof the data-center bets are paying off.

Software split in two. Adobe's slightly soft outlook knocked shares about 3% premarket and fed fears that AI startups are eating its business. The deal of the day was Copart's $1.9 billion all-cash purchase of car-auction platform ACV, sending ACV shares up 44%.

Guest economist Ben Rahm pushed back against calling the selloff noise. With inflation above target for years and gasoline at $6, he argued the deficit plus floated $5,000 checks keep structural pressure on the long end.

The Treasury Secretary's interview remarks drew attention. His casino-style metaphor translated in Japan as Domoto and drew a rebuke from Japan's finance minister; he later said he meant asymmetric information and market framing. Guests agreed it was an unhappy message for central-bank independence.

In the Middle East, fighting between the Houthis and Saudi-backed forces near Bab el-Mandeb kept Brent above $100. The IEA forecast 2026 world oil demand shrinking 1.6 million barrels a day amid the Hormuz closure and high fuel prices. Gulf ministers were expected to meet Iranian officials Monday in Oman, with the UAE calling a Hormuz tolling system non-negotiable.

AI produced three overlapping headlines. Sam Altman reportedly told staff OpenAI is open to slowing frontier development. Bridgewater co-CIO Greg Jensen told Odd Lots that deaths may precede AI regulation, citing the Hugging Face hack as an early warning. Microsoft reportedly plans to more than triple data-center capacity to 38 gigawatts by 2032 at a cost possibly above $1 trillion.

Scotland offered an energy curiosity. Curtailment payments for switching off surplus wind were put at roughly 2 billion pounds last year, possibly rising toward 8 billion by decade's end. Placing data centers where the power is generated could absorb the surplus, though critics note the wind does not always blow and the sites still need the grid.

Politics closed the show with the Republicans' Dallas midterm convention. The President's floated $5,000-per-person dividend went unmentioned by party speakers and by Vice President Vance. BNP Paribas chief economist Isabel Mateos expected a 25-point hike, with only a clearly soft core reading below 0.2% monthly stopping it. The brief ended on the 25th anniversary of September 11 and the day's data schedule.