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Morning Bid U.S.

A Reuters Open Interest newsletter

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance & Markets

Some calm has returned to world markets over the past 24 hours as oil prices steadied and the angry bond market cooled down a bit.

There were no breakthroughs in the Gulf standoff between the U.S. and Iran, but President Donald Trump indicated an intention to limit the duration of the latest round of attacks, and top aides are seeking "quiet" in the conflict ahead of November's midterm elections.

I'll get into that and more below.

But first, check out my latest column on whether U.S. hyperscalers are crowding European borrowers out of their own bond market.

And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance.

Finally, check out today's Reuters NEXT Newsmaker interview with Federal Reserve Governor Christopher Waller at 8:30 a.m. EDT. Register here to listen to a candid discussion on inflation, policy and the critical decisions that lie ahead.

Data refreshes every time you open this email. For more U.S. market news, click here. Please send any feedback to morningbid@thomsonreuters.com.

Today's Market Minute

Top aides to President Donald Trump are pushing to keep the Iran war from escalating before November's midterm elections to staunch Republican electoral losses, four people familiar with the discussions said.
The yen extended gains on Thursday after a sudden burst higher in the previous session, though traders stopped short of attributing the move to intervention by Japanese ‌authorities and instead pointed to rising bets on Bank of Japan rate hikes.
Broadcom on Wednesday forecast strong AI chip sales for the next two years, offering fresh evidence that Big Tech's appetite for AI infrastructure remains undiminished as investors scrutinize returns on massive spending.
Energy trade routes that optimize distance and costs may no longer be suitable for the fractured and fractious modern world, writes ROI Global Energy Transition Columnist Gavin Maguire.
China has escaped the global bond rout, but its low yields are not a sign of fiscal or economic health, argues ROI Markets Columnist Jamie McGeever.

Labor days

U.S. Treasury yields eased from multi-year highs overnight, while European equivalents remained on edge due to an exceptional surge in natural gas prices to three-year highs ahead of the winter season.

In equities, Asian shares were choppy on Thursday, while Wall Street futures were up before the bell after major indexes stateside closed higher on Wednesday.

Elsewhere, there was a flurry of activity in Japan's yen on Wednesday, with suspicions of a fresh round of intervention to support the currency seeing it pop about 1% higher.

More likely, though, the move is due to traders' rising bets for at least a quarter-point Bank of Japan rate hike this month as speculation swirled that the BOJ may hike by more than the typical amount, lifting the yen further early on Thursday.

Meantime, market attention is turning to the week's U.S. labor market updates, with the rise in ADP's private sector payrolls for August coming in slightly below forecast ahead of the nationwide jobs report tomorrow.

In earnings news, Broadcom's update on Wednesday beat expectations but its fourth-quarter outlook underwhelmed, with its stock falling out of hours. Still, the chipmaker forecast strong AI chip sales for the next two years.

With that, onto today's column.

US hyperscalers' euro thirst - lifeblood or vampire?

Europe's lagging tech sector and restless governments face a double threat: U.S. digital giants are not only pulling further ahead in the AI race but may also crowd European borrowers out of their own bond market.

"Crowding out" seems to be the phrase of the moment in world bond markets once again - though not necessarily the traditional sense, where over-indebted governments crowd out their private sector by soaking up scarce investment with a torrent of sovereign bonds that ‌pushes borrowing rates higher for everyone.