Oil Cooled to $100, but 5.3% Yields Are Now the Real Story

Oil is no longer the main problem in this market; the price of money is. Brent has slipped back to roughly $100 while the 10-year Treasury yield sits above 5.3%, and the S&P 500 is making record highs anyway. That combination is stable only as long as earnings keep outrunning the discount rate.

On Tuesday the S&P 500 closed at 7,818.93, up 0.58%, another record, with the Nasdaq also at a high (summary read via search). The reason offered was a "slight moderation in geopolitical risk," visible in softer crude, plus strong earnings expectations: FactSet-cited upward revisions of nearly 30% for the coming quarter, per Yahoo Finance's market wrap.

The oil move had real supply behind it. Kpler data showed Middle East crude exports reaching 12.8 million barrels a day in September, the highest since February. Separately, EU governments discussed a French proposal to release 50 million barrels of diesel, with IEA members releasing a further 50 million barrels of crude. Brent fell about 3% on that news on October 2 and briefly traded below $100.

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