Elevated Treasury Yields Could Have Driven Consumer Confidence Lower — Market Talk

1340 ET - Another factor driving consumer confidence lower in September was the surge in long-term interest rates in bond yields, says Gregory Daco, EY-Parthenon's chief economist. A confluence of factors, including inflationary concerns and rising oil prices fueled a sell-off in the bond market. Mortgage rates also hit 7% in September. "Whether you look at inflation developments or interest rate developments, they're both constraining consumer spending power and capacity," Daco tells WSJ.([email protected])1250 ET - While analysts say that a positive sentiment around bitcoin is starting to fade, at least in the short-term, data shows that investors are accumulating long-facing options at over $90,000. Other popular targets include strike prices of $95,000 and $100,000, according to data from Deribit. Fund traders are continuing to return to bitcoin ETFs as well, with days of consecutive inflows now up to 8 days - with an inflow of $31 million seen yesterday, according to data from Coinglass. Bitcoin is currently trading lower, down 0.3% to $83,238. Ethereum is flat at $2,682, XRP is up 1.5% $1.52, and solana is down 0.2% to $118.57. ([email protected])1244 ET - Investors are overly fixated on Netflix's slowing viewing trends in the U.S. and missing other positives for the company, Deutsche Bank analysts write in a note, updating the stock to buy. They note that the biggest domestic declines this year coincided with the Winter Olympics and World Cup, while international viewing data suggest consistent growth with a substantial runway. The company also has room to leverage its position as a platform — optionality the analysts see as not priced in - and should, on net, benefit from AI adoption. Though the U.S. softness is real, the analysts write, "we believe the current valuation largely reflects these domestic risks while insufficiently differentiating Netflix's mature US business from its less- developed, higher growth international opportunity." Shares gain 2%. ([email protected])1237 ET - Xanadu Quantum Technologies offers a high-upside, pure-play investment in photonic quantum computing, says RBC's Paul Treiber, who initiates coverage with a speculative risk rating and a $16 price target. The analyst says that near-term stock upside will be driven by technical milestones, government funding, and strategic partnerships rather than immediate sales until its quantum data center goes online in 2029/2030. The risk exists because "Xanadu and most quantum computing peers have nominal near-term revenue, which makes benchmarking valuation difficult." However, Treiber says that Xanadu offers a "unique exposure to photonics-based quantum computing" as the company and sector ramp up to "quantum monetization" in 2030. Shares are up 2% to C$4.87 but down 55% year-to-date. ([email protected])1223 ET - AutoCanada making moves to reorganize its business, most recently by setting up a committee to consider what to do with its collision repair unit. The Canadian automotive retail group is now mulling a potential sale of one of its core business units as part of a broader strategic review for the segment it says isn't fully reflected in its shares. The company only a day prior said it would focus more on its core dealership and collision operations after saying it would discontinue its digital auto-retailing initiatives, which are its online consumer-to-consumer finance and insurance business and its Kijiji-based instant cash offer business. In the same week, AutoCanada's large minority investor, Rob Steele, expanded his stake in the company and bringing his ownership to 10.4%. ([email protected])1215 ET - Demand for Carnival's cruises is strong and broad-based, CEO Josh Weinstein says on a call with analysts. After experiencing a disruption in bookings earlier this year, trends rebounded meaningfully over the past three months, he says: "With 2026 largely on the books, our attention is turning to 2027 and beyond." For 2027, Carnival is already halfway booked, with both occupancy and pricing at record levels, according to Weinstein. "2028 is also off to an excellent start at higher occupancy and even higher prices year-over-year, and our booking curve is further out than it has ever been at this point in the year," he adds. ([email protected])1213 ET - Carnival CEO Josh Weinstein says strong demand and operational improvements have fully offset higher fuel costs. "Yes, fuel can be a volatile input cost, with a track record of prices going up and down," Weinstein says on a call with analysts. "But amidst that noise, let's not lose sight of our underlying operational improvement." The cruise operator is generating more demand, with strong booking trends and pricing power. At the same time, the company has netted more than $150 million in operational improvements since its last quarterly readout in June, Weinstein says. Taken together, Carnival has fully offset the impact of higher fuel prices that are currently expected, according to Weinstein. Carnival jumps 12%. ([email protected])1210 ET - With no end in sight for the bonds selloff, investors are left searching for relatively safe spots in the yield curve. SanJac Alpha's Andrew Wells says the seven-to-10-year section could be that spot. "For now, we view duration with skepticism," he says. Upcoming data will drive markets, but the yields are biased upwards, as market's sentiment is "Asymmetrically hawkish in only one direction," Wells says in an email. A hot PCE print tomorrow will give "more tightening ammunition," while a soft one will be discounted as "August data that isn't accounting for September oil," he says. The 30-year yield hits 5.612%, a 24-year high. ([email protected]; @ptrevisani)1204 ET - Fair Isaac is dealing with two key negative developments, Deutsche Bank says in a note. Analyst Faiza Alwy says FHFA director Bill Pulte indicated that competitor VantageScore's 20 point discount to FICO has been removed and both scores will now be treated the same by the GSEs. "This would likely in and of itself result in higher number of mortgages that will see favorable pricing with VS4 vs. FICO Classic," Alwy says. Additionally, Rocket Mortgage said it will become the first mortgage lender to use VantageScore 4.0 as its preferred credit scoring model for all eligible loans, and during 4Q will default to VS4 for mortgages delivered to the federal housing agencies, VA home loans and any other eligible mortgages, according to Alwy. Fair Isaac tumbles 27%. ([email protected])1125 ET - Today's disappointing headline figure for consumer-confidence data shouldn't come as a surprise, eToro's Bret Kenwell says in a note. The Federal Reserve is raising interest rates, gas prices are still high and inflation continues to outpace wage growth, squeezing consumers' spending power, Kenwell says. Sentiment is currently sitting at multi-year lows from persistent inflation and higher costs putting pressure on households, he says. The question now is whether these factors will weigh on consumer spending, Kenwell says. ([email protected])1124 ET - Ag Growth shareholders risk having their positions diluted with the company's upcoming debt maturities. CIBC's Hamir Patel downgrades the target price of the stock to C$8.50 from C$19, over the dilution risk as well as from "moderated FCF [free cash flow] projections given higher debt servicing cost assumptions." Shares are currently trading 1.4% lower at C$6.88 and are down 70$ year-to-date. "Despite the recent sell-off (down 47% since September 23), we remain on the sidelines given elevated leverage and continued uncertainty on AFN's refinancing plans for its upcoming debt maturities," he says. However, Patel notes that as a positive, farm sector headwinds are gradually easing, and underlying pressures should subside. ([email protected])1101 ET - Buying a new home is now typically a better value than an existing home nationwide, Zillow says. New homes now sell for a median of $205 per square foot, below the $212 median for existing homes, according to a Zillow study. The relative discount for new homes is usually biggest where construction surged during the pandemic boom, particularly in the Sun Belt. This reverses the trend in recent years, when new homes sold for more per square foot than existing homes in 77 of 84 months from 2018 to 2024. Where construction has boomed and inventory is plentiful, discounts run deeper as increased competition gives builders more reason to offer incentives. Where inventory remains locked up and new construction faces more hurdles, builder offerings lean toward the higher end and carry a premium, Zillow says. ([email protected])