Good morning,

Last week was a dynamic headline driven week. Geopolitics were at the forefront with the UNGA in NYC, President Xi visiting the White House and Iran negotiations. The other focal point was the rise of AI agents which helped keep a bid in chips and other AI hardware/infrastructure stocks but also brought with it a new twist on the AI disruption trade weighing on financials and online travel companies. The S&P 500 ended the week up just over 1% though breadth was poor with the equal-weight and small and midcap indices ending the week modestly lower. This has been a consistent dynamic since rates started moving higher at the end of August following Chair Warsh’s Jackson Hole speech. Over that time 2yr yields are up ~65bps while 10yr yields are up ~50bps. The S&P 500 is essentially unchanged while other indices are down ~5%.

US futures have been under pressure overnight as rates and oil prices continue to move higher. Over the weekend, President Trump rejected Iran’s most recent proposal though this morning there are reports that mediators are expected to meet with US/Iran officials again early this week. Those headlines along with reports that Saudi Arabia’s East West pipeline has resumed oil exports have helped oil prices pullback modestly from the overnight high, currently up ~2%. This is pushing Treasury yields up ~5bps across the curved reversing much of Friday’s pullback. Tech stocks are under pressure in the pre-market as security concerns are back in focus with Open AI reportedly pausing training of its latest model related to rogue agents. The company has its Open AI Dev Day tomorrow with speculation that it will unveil its own personal Agent to compete with Muse. Speaking of rogue agents, this morning Nvidia (+2%) announced it is launching the Nvidia Open Agent Safety Platform which Jensen Huang said will keep those agents in their sandbox and from misbehaving. The stock moved higher after the company announced that it is increasing its buyback by $150B to $235B and there are also reports that it is considering increasing its investment in Anthropic. These headlines and the pullback in oil prices have helped futures bounce off the lows.