Good morning and Happy Friday,
 
Yesterday the S&P 500 ended the day up 0.3%, rallying off a move below its 50d ma and a 0.6% loss at one point. The equal-weight gained over 1%, as did the Russell 2000 as the bulk of the market held things together. Once again Tech came under pressure though the sector finished off its lows, as did the broader AI ecosystem. Market breadth was solid, with only Tech, Energy and Utilities lower. Healthcare, Materials and Financials led. Yields pulled back sharply at the long end, following up on Wednesday’s decline after initially spiking on the CPI data.  This time it was PPI coming in hot but yields still fell.
 
It’s a quiet morning so far. S&P futures are trading around unchanged, with global markets mostly higher to close out the week. After bouncing yesterday like Tesla’s latest flying car, data centers are again under pressure in the pre-market: CRWV -5%, NBIS -3%. The DRAM memory ETF is down ~2%. JB Hunt is down on light volume after reporting results. Management noted the pricing actions they were taking to counter rising costs from driver and fuel factors.  
 

 
The treasury curve is steepening a bit this morning with 10-30y yields up 3-4bp while 2y is flat. Fed Chair Warsh spoke at the IMF meeting overnight. Unsurprisingly he offered little about the Fed’s upcoming October meeting while re-emphasizing the resilient economy and his view that the AI investment surge is creating near-term inflationary pressures, which will lead to long-term productivity benefits. Import prices rose 1.1% m/m, more than consensus and above last month. The NY Fed Services Activity Index declined sharply from last month.
 

• US 2yr +0bps to 4.76%, 5yr +2bps to 4.91%, 10yr +4bps to 5.10%, 30yr +3bps to 5.44%
• USD index: -$0.33 to $101.53

European indices are mostly higher with Germany leading, UK slightly lower and most looking at ~2% gains this week. Media, Telecom and autos are leading, while healthcare lags. Europe is developing several plans to limit China’s access to markets in response to the country’s over-capacity and production dynamics. Asian markets bounced overnight. KOSPI rose 2%, slightly cutting into a weekly loss of ~15%. The Nikkei gained 1.4%, putting the weekly loss at 5%. Hong Kong and Shanghai were up modestly with discussion of the “National Team” making another appearance in the market. Taiwan will tighten export controls on AI chips to China according to reports, while China drafted a plan for new export bans on 14 technologies, including AI, biotech and solar power. Indonesia tumbled 11% after MSCI said it may reclassify the country from Emerging Market to Standalone, shutting it out of its indexes. Trade negotiations between the US and Mexico have stalled after Commerce Secretary Lutnick objected to reductions in auto, steel and aluminum tariffs.
 
 

 
Commodities are mostly higher this morning but outside of oil most are looking at weekly losses. Dec Brent crude is flat, pulling back from $106 and US nat gas is slipping 4%. President Trump criticized Ukraine’s attacks on Russian oil infrastructure, said Iran requested the US to halt attacks but that the US may need to strike the nuclear-related Pickaxe Mountain. Precious metals are up 1-2% as is copper, near their best levels. Bitcoin is slightly lower, Ether slightly higher. Ag is mostly lower.
 

 
Earnings:

• After-Market: AA, CNS, IBKR, JBHT
• Pre-Market: CFG, MTB, RF, TFC, TRV

 
Economic Data:
US:

• Export Prices m.m: 2.2% vs 1.0% cons, prior 1.2%
• Import Prices m.m:  1.1% vs 0.8% cons, prior 0.5%
• NY Fed Services Activity: -20.7 vs prior -8.7
• 9:15am Industrial Production
• 1:00pm Rig count
• 2:00pm Monthly Budget statement
• 4:00pm TIC Flows

Global:

• EU trade balance: €-16.1B vs prior €10.7B
• Canada Housing Starts: 248K vs 232.5K cons, prior 229K