Producer Prices Jumped the Most Since 2022. Treasuries Rallied, and the AI Credit Scare Stayed Narrow.

1.3%.

That is how much producer prices rose in September, the most since March 2022. Energy drove more than 80% of the jump in goods prices. Yet the five-year Treasury yield fell. By midafternoon, it was near 4.89%, down about 10 basis points. The 10-year was near 5.09%, from 5.19%. Hot data did not lift yields.

• Broad bond funds rose with Treasuries. The high-grade fund LQD gained 0.8% and the high-yield fund HYG 0.4%. CoreWeave (CRWV) closed up 5.9% after a new low.
• U.S. crude rose while Brent held. U.S. crude stocks fell 8.6 million barrels last week, government data show. Late Thursday, U.S. crude was up about 2.7%, near $98. Brent was little changed.
• Retail sales rose 0.8%, more than forecast. Without cars and gas, they rose 0.2%. Jobless claims stayed under 200,000 for a fifth week.
• Schwab (SCHW) drew a record $190 billion from clients but fell 2.7%. U.S. Bancorp and BNY rose. PNC's unrealized losses, mostly on securities, grew about $2.4 billion.

The AI Credit Scare Stayed With AI's Borrowers. Broad Bond Funds Rose.

This morning, PMD set a first test for U.S. trading. Would broad credit gauges follow the swaps wider? They did not. Corporate bond funds rose with Treasuries.

CoreWeave hit a 52-week low of $59.51 in the morning. It then closed at $69.69. Bond buyers still treat CoreWeave as a stressed borrower. Some of its notes yielded more than 16% Thursday morning, reports said. Its CEO told staff its deal backlog more than covers its debt, reports on the memo said.

Parts of the AI supply chain stayed weak. A chip-stock fund fell 1%. Vertiv (VRT), which sells power and cooling gear to data centers, fell 3.6%. Investors moved to stocks that gain when rates fall. Homebuilders rose 4%, and the Russell 2000 rose 1.4%.

The Stress Stayed Narrow, for Now

Thursday drew a line around a few AI builders with heavy debt. The rest of corporate credit traded with Treasuries. If bond funds fall on a day Treasuries rally, the worry would be spreading. Until then, the higher cost of debt may stay with those few names.

SIGNAL 1: Banks Committed Debt to Two Buyouts. Both Prices Sit Below Each Stock's Recent Peak.

CCC (CCC), an insurance software firm, agreed to a buyout by GTCR and Elliott. Holders get $7.75 a share. That values the firm, debt included, at about $6.1 billion. The 44% premium is measured from July. The stock closed above that price on Tuesday. J.P. Morgan leads the financing. The CEO will swap some of his shares for a stake in the buyer.

Penske Automotive (PAG) agreed to a buyout by its controlling owners, Penske Corp. and Mitsui. They will pay $212 a share, $2 above their July offer. The stock closed at $212 or higher for two months after that offer. Three big banks committed to lend up to $1.8 billion. Neither deal has a financing condition.

What resolves this

The proxies will show how each price was reached. Penske's deal also needs most votes cast by holders not tied to the buyers. A CCC close above the offer would point to hopes for a higher bid.

SIGNAL 2: Ramp's $60 Billion Price Is Up to 30 Times Its Reported Revenue. EQT Accepted a Lower Fee Rate for Scale.

Ramp raised $1.85 billion at a $60 billion value, about 36% above its June price. It says its yearly revenue has passed $2 billion and it is cash-flow positive. So the price is at most about 30 times sales. Modal got under 16 times its run rate a day earlier. Both firms gave their own figures, not audited ones.

EQT will pay $375 million for Stockbridge, a U.S. real estate manager. Up to $175 million more depends on Stockbridge raising money for new products. EQT said the deal lowers its real estate fee rate. Stockbridge leans toward core property. Its fees are lower but steadier.

What resolves this

A tender or share sale would test Ramp's price. Stockbridge's fund investors must agree before the deal can close.

SIGNAL 3: The October Hike Bet Touched 37 Cents After PPI, Then Faded. Bitcoin Traded With Bonds.

This morning, PMD set a test for Kalshi's October hike contract. A hot PPI with firm retail sales could lift it back into the mid-30s. Both beat forecasts, and it did, for minutes. It hit 37 cents two minutes after the report. By 9:20 a.m., it was back at 28 cents. It held near 29 into the afternoon.

PMD also said credit news might move bitcoin more than the data if it kept trading with tech. After the report, it traded with bonds. It dipped below $80,000 for the first time in about a month, then rose as yields fell. Just after 4 p.m., it was above $82,000. Circle (CRCL) closed up 9.3% and Coinbase (COIN) 6.3%.

What resolves this

Warsh speaks late tonight. Any shift in tone would show first in this contract. Thursday's fund flows will show if bitcoin buyers came back.

• Store and wholesale margins rose 1.4% in the PPI report. Sellers raised prices by more than their own costs rose. Gas stations were the exception. Their margins fell 30%.
• FMC (FMC) will talk to its banks about further covenant changes. It expects it met them at Sept. 30. It now expects negative adjusted EBITDA for the quarter. The stock fell 31%.
• A Taiwan court restricted access to Kalshi and Coinbase under the island's election law. Operators face up to five years in prison. Local elections are Nov. 28.

Private Market Trends Driving Public Market Moves

AI's credit strain stayed with its most indebted builders. Banks still committed debt to buyouts, and private buyers still paid for steady revenue.

The morning's question was whether AI's funding strain would spread. By the close, it had not. Some CoreWeave notes yielded above 16% Thursday. Banks, though, agreed to lend to two buyouts. Private buyers favored steady income. Ramp's card business drew roughly twice Modal's multiple. If that split holds, credit would keep flowing to steady businesses. AI builders would keep paying more to borrow. A drop in bond funds on a Treasury rally would mark the turn.