Futures are firmer with the Nasdaq leading, up 1.3%.

Microsoft (MSFT) is doing most of the heavy lifting after last night's report. But the bond market did something strange yesterday.

Short rates fell. Long rates jumped The curve steepened, and it steepened from the wrong end. Long money got more expensive while the policy rate never moved.

The dollar is weak and gold is bid. Oil is lower despite the US retaliation against Iran for its surprise attack on Tuesday.

Market Implication

A steeper curve built at the long end is a charge on anything that pays off later. That is harder than a hike, because a hike can be undone. If the long end holds, the Nasdaq 100 correction has a rate cause. Not an earnings cause.

The vote said hike. The curve said no.

Three officials wanted a quarter point yesterday. The Committee held. Short rates should have risen. They fell.

Warsh has thrown out forward guidance. He said market participants are learning to play the ball, not the referee. Traders took him at his word.

So they stopped trading the next meeting. They started trading the inflation nobody is stopping. That lands in the long end. It is a term premium move, not a policy move.

The Fed named the source out loud.

The statement said inflation is still too high. Then it pointed at supply shocks in energy. The Fed does not usually write that down.

It also explains the shape of the move. A rate hike does not reopen a strait. It does not rebuild a refinery. The Fed can cool demand. It cannot fix supply in a war.

So the front end has less work to do. The long end has more risk to hold.

Structural Setup

Duration got more expensive with no policy change behind it. That bill lands on firms building long-lived assets with other people's money. The AI buildout is the largest version of that trade.

Energy and staples led. Industrials were the worst group on the board.

Read the mix. Not a growth scare. A cost-of-money scare with a war premium on top.

The sharpest move was Caterpillar (CAT). Baird cut it to neutral and took a big bite out of the target. The reason was not machines or margins. It was the politics of data centers.

The travel matters more than the move. Doubt about the buildout used to live in chips. It has reached the firms that build for it.

Corning (GLW) is the sharpest case. It beat this week. Then it said it could sell more fiber if it could make more. The stock was cut down anyway, and the whole optical group went with it.

Sector Read

The market has stopped paying for spending. It pays for the revenue attached to it. A supplier that cannot make enough should be the safest name in a boom. This one was not. That is what the buildout losing the benefit of the doubt looks like.

Baird's call was not really about one company.

It was about permits.

New York paused state permits this month for the biggest data centers. New Jersey now makes large sites promise to pay for most of the power they ask for. That promise runs a decade. Hundreds of similar bills are filed across dozens of states. Twelve floated outright pauses.

The Baird analyst named the part that matters. This is not a red or blue state fight. Hurdles are showing up everywhere.

It bites later, not now. Permits set order books years out. The turbines and switchgear penciled in for 2027 need sites that have not cleared yet.

Watch Signal

The tell is not the next state bill. Quanta Services (PWR) reports before the open, and half the utility complex reports with it. Listen for backlog that grows while hookup dates slip. That gap is the buildout getting slower without getting smaller.

Meta (META) just moved a Texas data center off its own books.

BlackRock funds took most of the equity. Meta kept a fifth.

Then read the rest. Meta leases the whole site. It also guarantees most of what the asset is worth. Ownership moved. The risk did not.

Microsoft did its own version. It cut its reported spending plan. Its actual investment plans did not change. What changed was how some data center leases get counted.

Now look at what that hides. Microsoft has signed leases on data centers that have not started yet. That book ballooned in one quarter, and some of it runs two decades.

Owned kit can be delayed, repurposed or sold. A signed lease cannot.

So the shift is not that the buildout runs on borrowed money. It is that the promise to pay keeps moving to the lines the market reads last.

The Read

Free cash flow is the scoreboard now, and it fell at both of them. The question has stopped being who is spending. It is where each one parked the obligation. Amazon (AMZN) reports tonight, and its lease footnote says more than its cloud growth rate.

Economic Data: PCE Price Index, Core PCE Price Index, GDP Growth Rate, Personal Income and Spending, Initial Jobless Claims

Earnings: Mastercard (MA), Quanta Services (PWR), Southern (SO), American Electric Power (AEP), Sempra Energy (SRE), Valero Energy (VLO), Cigna (CI), EMCOR (EME) before open | Apple (AAPL), Amazon (AMZN), Monolithic Power Systems (MPWR), Coinbase Global (COIN) after close

Overnight: Overnight: Nikkei +0.71% | Shanghai -0.62% | FTSE +0.40% | DAX +0.24%

Today hands the reader two answers, eight hours apart.

At 8:30 the inflation data lands inside the growth report. The quarterly price gauge is running hot. The monthly print is supposed to cool. The long end gets to pick which one it trades.

After the bell, Apple (AAPL) and Amazon report on the same night. One spends almost nothing to grow. The other runs the largest building program in corporate history.

So the fork is simple. Either the cooler number lands and buys the buildout cheaper money. Or the hot one wins, and Amazon raises its spending plan into a long end that just repriced against it.

One of those is a market that keeps paying for growth. The other starts asking who pays the interest.