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Coffee With Greta: Rate Worries Continue


DJIA Futures: -92 (-0.3%)

SPX Futures: -13 (-0.3%)

NASDAQ Futures: -59 (-0.4%)

Good morning friends!

Futures are slipping after the 10-year Treasury yield crossed a key threshold for the first time in 16 years.

Let’s get right to it!

10-Year Yields Tops 5%

Treasury yields are down this morning after the 10-year crossed a key threshold late on Thursday. 

The 2-year yield is down 3 basis points at 5.14% while the 10-year yield is down 5 basis points at 4.94%. 

The 10-year hit 5.001% around 5:00 p.m. ET on Thursday, the first time it’s crossed 5% since July 20, 2007. 

The late jump in yields on Thursday came after a speech by Fed Chair Jerome Powell. 

Yields initially pulled back after the speech before turning higher later in the afternoon.

Powell Recap

Fed Chair Jerome Powell spoke at the Economic Club of New York on Thursday. 

Powell said, “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.”

He added, “my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.”

Powell did not commit to any future policy path for the bank but other Fed officials have said in recent days that they can be patient amid the rise in Treasury yields. 

CME Group’s FedWatch Tool shows no expectations for another rate hike in November or December. 

Oil Extends Gains

Oil prices are up this morning and on track for the second straight week of gains amid the war between Israel and Hamas. 

West Texas Intermediate crude futures are up 1.4% at $90.60 bbl while Brent crude futures are up 1.2% at $93.50 bbl. 

The U.S. Department of Energy said Thursday it is seeking to buy 6 million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January. 

The SPR was drained in response to high oil prices last year. 

But high prices are expected to persist through the fourth quarter after Saudi Arabia and Russia extended their supply cuts to the end of the year.

Solar Stocks Plunge

Solar stocks are dropping this morning after SolarEdge Technologies (SEDG) cut its quarterly outlook. 

SEDG shares are plunging 28.1% ahead of the open. 

After the close on Thursday, the company cut its Q3 outlook and said it expects “significantly lower” Q4 revenue due to a slowdown in solar-power installations in Europe.

SolarEdge expects Q3 revenue to range between $720 million and $730 million vs $880 million to $920 million previously. 

Q3 adjusted gross margins are expected to be between 20.1% and 21.1% vs 28% to 31% previously. 

And adjusted operating income is now expected to be in a range of $12 million to $31 million vs $115 million to $135 million. 

SolarEdge reports earnings after the close on November 1. 

The guidance cut is dragging down other solar stocks as well, with Enphase Energy (ENPH) dropping 15.1% and SunPower (SPWR) down 9.7%.

In Case You Missed It

  • Existing home sales fell less than expected in September. The National Association of Realtors reported existing sales dropped 2% last month to a seasonally adjusted annual rate of 3.96 million units vs 3.9 million expected. Sales were down 15.4% year over year, the slowest pace since October 2010. Supply continued to be an issue with 1.13 million homes for sale at the end of September, representing a 3.4-month supply at the current sales pace. The median price of a home sold last month rose 2.8% year over year to $394,300. But high rates are squeezing buyers with the average 30-year rate currently hovering near 8%.

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