Crude Rises & 10-Year Yield Taps January 2025 Highs, AI Chips Lead Declineac

**SPEAKER_1** (0:00)
Let's bring in Tom White, co-host of FastMarket, to help set up the action today. Tom, August was strong, September shaping up to its notorious reputation. What's your big picture take?

**Tom White** (0:12)
Yeah, a little bit of red here to kick off the month of September, after some solid gains in August, even though we were a little bit volatile the last couple of weeks there. But historically, we've seen that, where September is the worst month out of the year, right? Since 1928, we're down just over 1% on average for the month, even though 44% of the time, we see gains in the month of September. So yeah, if you look at the reasons for the red across the board today, it's going to be yields, it's going to be crude oil at this point. Then you start looking at what's going to outweigh the other, whether it's good earnings, which are great, or whether it's higher yields, whether it's higher energy prices, whether it's higher inflationary pressures at this point, geopolitical tensions continue to heat up across the board, especially in the Middle East. So those are all concerns for the market heading into the month of September here. So you look at the data that's due today, we get some Joltz report, we get some manufacturing data, which has been turning up. We get the ISM and PMI manufacturing numbers also. Joltz might be crossed over here. This is a delayed report from July. So you take that into consideration. But yeah, there's a lot of pressures here on the equity markets. Now, you look at the CME FedWatch tool, the expectations for a September rate hike are now up to about 66%.
Just about a week ago, Diane, this was about 35% chance of a rate hike. We heard the commentary from Fed Chair Warsh last Friday at Jackson Hole. A little bit more hawkish than maybe the street anticipated. But maybe he should be a little bit more hawkish. We've got global yields rising. 30-year highs for the JGB out of Japan. We've got highs in Germany that we haven't seen since 2011
UK at levels that we haven't seen since 2008 So rising global yields, putting pressure on markets, and then rising oil prices also being a culprit here.

**SPEAKER_1** (2:20)
Okay, so I'm glad you mentioned the move on expectations for rates, where rates will land. Even as recent as yesterday, the odds were more of a coin toss, and now it seems like we're going back to that pre-CPI, the last CPI reading that we got. We know we'll get another one before the next Fed's meeting, and we'll see what that does to rate expectations. But let's talk about oil prices. They remain elevated this morning. It feels like we're back to maybe kinetic levels in the war with Iran. But talk us through what you're paying attention to as it relates to oil prices and the geopolitical front.

**Tom White** (3:00)
Yeah, over five-week highs here for crude oil here this morning, up near $88 a barrel.
Yeah, you take a look at the geopolitical tensions, where, you know, the first strikes since the end of July over the weekend on one of the islands off the coast there, threats to go to after Karg Island, where most of the oil gets distributed from Iran at this point. The blockade is still in place. China is still not coming out with any pressure on Iran to get a deal done. Now, Tehran basically came out over the last 24 hours and basically said, if the US goes back to some of the resolves that we had in place in June, then they would reciprocate at this point. But no talks are scheduled, even though Qatar, Pakistan, some of the media areas are trying to get together and get the US and Tehran back together again. And then you throw in the G20 finance meetings that are taking place in North Carolina. Will we get any resolution there? No talks are happening between the US and multiple countries there as far as financing, putting economic pressure on Iran and the Middle East at this point. So yeah, a lot to kind of digest here. But not surprising that you're seeing crude oil rise at this point, even though the deal was announced with Venezuelan oil, where we're going to get maybe that to kind of fill up our reserves, but that may be a year or two away to ramp up production down there. So yeah, this is causing a lot of problems. But as we always know with crude oil and energy prices, if we get some positive commentary on the geopolitical front, that could easily reverse and send crude oil down. That would definitely help the equity market at this point.