The Front End Took the Relief. The 10-Year Hit a 24-Year High Anyway.

The S&P 500 gave back an afternoon gain of about 0.3%, closing down 0.25%. The Dow fell 0.86%. The Nasdaq held on to a 0.24% gain.

The 10-year yield touched 5.304%, just above its 2007 peak and the highest since May 2002. It closed at 5.29%, and the 30-year at 5.64%.

The short end eased. The one-year yield fell 4 basis points. Futures cut the odds of an October hike to about 35% after the inflation data, from about 51% on Tuesday. Kalshi traders had it at 39%.

Second-quarter GDP was revised up to 2.2% from 1.5%, and ADP counted 90,000 private jobs in September, up from 36,000 in August. "I think it's really the growth number," said Rob Haworth of U.S. Bank Asset Management.

The 10-year rose more than 80 basis points in the quarter, its biggest quarterly climb since early 1994.

TQ Trade Implication

The curve priced a slower Fed at the front and a stronger economy at the back. The 30-year's premium over the two-year widened to about 75 basis points. Friday's payrolls are forecast at 84,000. A strong number backs the growth read. A weak one that leaves the 10-year above 5.2% points to supply and term premium instead.

Core PCE Didn't Cool. The Government Rewrote July.

Core PCE rose 3.0% from a year earlier, against a 3.3% forecast. Headline PCE rose 3.4%, against 3.7%.

Both forecasts matched July rates that no longer exist. The report carried the bureau's annual revisions, reaching back to 2021. July core is now 3.0%, not 3.3%. July headline is now 3.4%, not 3.7%.

The miss and the revision are the same 0.3 point. Core has read 3.0% in June, July and August. August's 0.2% monthly gain was about 0.25% unrounded, roughly a 3% annual pace.

Goldman Sachs took the lower level anyway, two weeks after adding an October hike. "Coupled with comments from New York Fed President John Williams yesterday, we now think that an October hike is unlikely," chief economist Jan Hatzius wrote. Goldman now expects December, with "a strong chance" the Fed decides further hikes are unnecessary.

Cooper Howard of the Schwab Center for Financial Research read it differently. "I don't think that it changes the story with the Fed," he said. Futures still price a December hike.

TQ Edge Setup

The revision cut the starting point. It did not bend the line. If Friday's payrolls come in well above 84,000, the hawks get flat 3% core, stronger growth and firmer hiring in one week. If they land near or below it, Goldman's stop-after-December path gains ground before September CPI.

Gulf Crude Is Back to 2025 Levels. Diesel Is at Half.

Goldman Sachs puts Gulf oil exports at about 23.3 million barrels a day last week, in line with the 2025 average. The count includes tankers crossing Hormuz with transponders off. Saudi exports more than doubled in September.

Fuel has not followed. Gulf exports of diesel, gasoline and jet fuel are at about half their 2025 average, Goldman says.

Crude rose anyway. December Brent gained about 2.3% to near $98.40, even as U.S. crude stockpiles grew. Heating oil futures, the U.S. diesel benchmark, rose about 4.5%, roughly twice crude's gain. The same day, Russia extended its diesel export ban through Oct. 31.

Brent for October delivery traded near $120, about 22% above December. Prompt barrels are scarce even with exports back.

Goldman still sees Brent at $85 by year-end, citing the market's "remarkable adaptation."

TQ Edge Setup

Crude is recovering faster than fuel. If the October-December spread narrows while Gulf fuel exports stay near half, relief reaches crude buyers first and diesel and jet fuel users last. Truckers, airlines and food shippers stay squeezed. A U.S. decision on diesel exports is the next forcing event.

Conagra Is Passing Freight Costs to Frozen Shoppers. It Expects Them to Buy Less.

Conagra Brands (CAG) beat profit forecasts by 10 cents a share, and the shares fell about 3%.

Management blamed fuel, logistics and a truck-driver shortage for moving full-year cost inflation to the top of its 5% to 6% range. Refrigerated and frozen foods get price increases mid-quarter. Canned goods were repriced earlier to cover steel tariffs.

The earlier round shows the trade. In grocery and snacks, price and mix rose 3.4% and volume fell 5.4%. Finance chief Dave Marberger expects "greater-than-historical volume elasticities, particularly within our frozen business."

McDonald's (MCD) is going the other way. U.S. sales were "slightly negative" in July and August, finance chief Ian Borden said, and the chain is testing a cheaper entry-level offer.

TQ Execution Bias

Conagra is raising prices where it expects above-normal pushback, and its guidance already assumes mid-single-digit volume declines. If frozen volume falls the way grocery did, the plan holds. If it falls faster, packaged-food pricing power is running out with consumer confidence at a 12-year low.

• Micron beat and barely moved. Micron (MU) reported $54.23 billion in revenue against a $51.49 billion estimate and guided to $61.5 billion. Options had priced an 11% move. The stock moved less than 1% after hours. A 5% revenue beat that produces no move means the beat was already in the price.
• Burry says markets "should tank hard." "For the benefit of humanity, the markets should tank hard and prevent the OpenAI and Anthropic IPOs," Michael Burry wrote on X. Anthropic is likely to list after the midterms, according to a prospectus seen by Reuters.
• Cal-Maine's egg price fell 59%. Cal-Maine Foods (CALM) swung to a $58.6 million loss from a $199.3 million profit a year earlier. Its average conventional egg price per dozen fell 59.3% on roughly flat volume. Management said flock growth appears to be cooling.

The Level Moved. The Trend Didn't.

Wednesday's inflation relief came from rewritten history. Core PCE is 3.0% because July is now 3.0%, and it hasn't moved in three months.

Short rates took the lower number, and Goldman stepped back from October. The long end took the growth revision and finished the quarter near its highest since 2002.

Oil ran the same split. Crude came back. Fuel stayed short.

Friday's payrolls decide which end of the curve read the quarter right.