MARKET WRAPS

STOCKS: Stocks finished mixed as oil spiked due to renewed attacks on shipping in the Middle East.

TREASURYS: Treasury yields fell after another well-subscribed auction.

FOREX: The U.S. dollar ticked down against rivals, but hovered near multiyear highs amid global bond volatility.

COMMODITIES: Oil futures rose after an attack on a vessel near Qatar and as oil companies shut in production in the Gulf of Mexico due to an approaching storm.

HEADLINES

Trump Says U.S. Won't Resume Strikes on Iran Before Midterms

The U.S. won't attack Iran before the November midterm elections,

President Trump said Thursday, citing "productive" talks with Tehran.

"We are having productive discussions with the Islamic Republic of

Iran," Trump said in a Truth Social post. "We will not be attacking Iran

at any time prior to the Midterm Elections to be held in the United

States on November 3rd. IRAN WILL NOT HAVE A NUCLEAR WEAPON!"

The U.S. naval blockade of Tehran "will remain in full force and

effect," Trump added. The U.S. currently has about a dozen Navy ships in

the waters of the Middle East to enforce the blockade and carry out other

missions, according to a Navy official.

Oil Majors Cut Production in Gulf of Mexico as Hurricane Isaias

Strengthens

Oil companies operating in the Gulf of Mexico have begun curbing

production and evacuating personnel from offshore facilities as the

region braces for Hurricane Isaias.

The hurricane is intensifying and is expected to pass to the north of

the Yucatan Peninsula later Thursday before making landfall along the

northern Gulf Coast late Friday or early Saturday, the National Hurricane

Center said.

Chevron said Wednesday that it has begun shut-in procedures at four of

its assets in the Gulf, which the U.S. now calls the Gulf of America, and

is evacuating all associated personnel. Production at its five other

facilities in the Gulf remains at normal levels, it said.

Fed's Waller Sees Multiple Rate Increases Ahead to Cool Inflation

Federal Reserve Governor Christopher Waller said Thursday that he

expects the central bank will need to implement multiple rate increases

to cool inflation in a timely fashion.

In prepared remarks at the Istanbul Economic Forum, Waller said that

the economic data didn't shift the narrative much from the Federal Open

Market Committee's September meeting. In fact, he sees the U.S. economy

in "roughly the same place."

Looking at the history of 12-month core inflation as measured by the

latest reading of the personal consumption expenditures price index

released last week, Waller noted it has between roughly 2.5% and 3% since

the spring of 2024.

U.S. Budget Deficit Jumps to Nearly $2 Trillion

WASHINGTON-The U.S. budget deficit climbed to nearly $2 trillion in

the fiscal year that ended Sept. 30, according to the Congressional

Budget Office, deepening the federal government's persistent red-ink

trend.

The $1.993 trillion deficit was 12% above the 2025 level in nominal

dollars, reaching the highest level since 2021. The U.S. spent $7.4

trillion last year, up 6%, and it collected $5.4 trillion in revenue, up

3%.

The deficit also stayed high as a share of gross domestic product, the

metric that economists watch closely. Although the final fiscal 2026 GDP

number hasn't been released yet, budget experts expect the deficit to

surpass 6% of GDP, compared with 5.8% in fiscal 2025.

Mortgages Rates Hit 3-Year High-and Price Cuts Are on the Rise

The 30-year fixed mortgage rate rose to 7.4% this week, the highest

level since November 2023, according to Freddie Mac data. The gain comes

as price cuts are already on the rise.

That's up from 7.28% one week prior. The measure of mortgage rates has

risen for seven straight weeks, with the average 30-year fixed rate up

roughly 0.75 percentage point in that time.

On a $400,000 home loan, that seven-week run-up in mortgage rates

translates to a roughly $200 a month increase in principal and interest

payments.

Vance Says U.S. Will Suspend Microsoft and Other Firms From Green Card

Program

Vice President JD Vance said Thursday that the administration is

suspending several tech firms, including Microsoft, from a program that

allows H-1B visa holders to apply for green cards.

The action by Vance's antifraud task force targets Microsoft, Adobe

and several tech recruiting companies over what officials have alleged

are widespread abuses of the visa system. The announcement came the same

day that President Trump recognized Microsoft's CEO and other tech

leaders at an event in Washington.

Vance said that no other company has abused the system more than

Microsoft, accusing the tech giant of laying off U.S. citizens only to

replace them with foreign workers brought into the country on H-1B visas.

"For every worker that Microsoft laid off, they replaced that worker with

one-and-a-half foreign indentured servants," he said, arguing that the

company is indicative of a "scandalous system that we've allowed in this

country for far too long."

PepsiCo Trims Outlook as North American Unit Underperforms

PepsiCo cut its full-year earnings outlook as it faces inflation,

higher advertising costs and continued weakness in its North American

business, even as the company works to reduce expenses and revive sales.

Ongoing inflation and higher advertising costs are weighing on profit,

overshadowing steps the company has taken to reduce operating expenses,

PepsiCo said. At the same time, its North American business continues to

underperform.

"Our business in North America performed below our expectations and

represents a meaningful opportunity for improvement," Chief Executive

Ramon Laguarta said on a call with analysts Thursday.

Microsoft Forms New Xbox Unit Focused on Film, TV in Turnaround Effort

Microsoft's Xbox is forming a new division focused on extending its

franchises into areas like film and television, as the videogame unit

continues its turnaround efforts.

The new division, dubbed XP, aims to help Xbox's roster of videogames

grow their fan bases, and connect with them more deeply, Microsoft said

Thursday.

The division will be led by Kayleen Walters, who was previously

president of Xbox's Mojang unit. Mojang houses Minecraft, one of Xbox's

most important franchises.

Michigan Files Antitrust Suit Against Blue Cross Blue Shield Over Rising

Costs

Michigan's attorney general filed an antitrust suit against Blue Cross

Blue Shield of Michigan, alleging that the state's largest insurer used

its dominant position to drive up health costs for patients.

The state's suit, filed Thursday morning in U.S. District Court in

Detroit, argues that the insurer illegally cooperated with other Blue

Cross Blue Shield companies to limit competition, leading Michigan's

state government and others to pay inflated prices for health coverage.

"At a time where everybody in Michigan is experiencing an

affordability crisis, Blue Cross of Michigan's unlawful conduct has

resulted in everyone paying more," said Dana Nessel, Michigan's attorney

general.

Devon Energy Sells Eagle Ford Assets to Crescent Energy for $4.2 Billion

Devon Energy is exiting the Eagle Ford with a deal to sell its assets

in Texas for $4.2 billion, cashing in on elevated energy prices.

The company said it signed a definitive agreement to sell to Crescent

Energy its Eagle Ford assets, which includes about 90,000 net acres in

Karnes, DeWitt, and Gonzales Counties, Texas. The operations account for

roughly 4% of Devon's total production.

President and Chief Executive Clay Gaspar said the deal is the outcome

of an ongoing portfolio review and sharpens the company's focus on its

highest-return and longest-duration assets.

TALKING POINT Choosing the Right Bond Strategy for Today's High-Yield World

Are you a bond trader or a yield farmer?

That question has taken on added significance for investors enticed by Treasury yields at multidecade highs, even if a successful 10-year note auction Wednesday momentarily cooled the feverish market. Answering it confronts investors with some very different considerations than what goes into buying stocks.

An important place to start is to ask why an investor is interested in bonds in the first place. One could make the case for Treasurys today because those high yields mean prices are cheap, while stocks remain historically expensive. That is, essentially, a trading decision.

Or it could be that the income generated by a bond is attractive. It is enough to cover a needed expense over the life of the bond or to induce investors to lock up their rainy day money rather than leaving it in a money-market fund or bank account. That is what a yield farmer is thinking about.

Considering the "why" of bonds can help investors decide exactly how to buy them. Because, unlike when it comes to buying stocks, there is a lot more to consider than whether to go with single issues or an index fund.

Yes, individual bonds can be more complicated than exchange-traded bond funds to buy and sell. But that isn't even the most important difference.

That comes down to bonds' essential feature of maturity. At the end of its life, a bond promises to pay back the principal invested, with interest payments doled out along the way. While a corporate bond might not repay if the company goes bust, a U.S. Treasury is a virtual certainty to deliver on that promise.

--Telis Demos, The Wall Street Journal

Expected Major Events for Friday 12:30/CAN: Sep Labour Force Survey

14:00/US: Oct University of Michigan Survey of Consumers - preliminary

16:00/US: World Agricultural Supply & Demand Estimates (WASDE)

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Expected Earnings for Friday MTY Food Group Inc (MTY.T) is expected to report $0.96 for 3Q.

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This article is a text version of a Wall Street Journal newsletter published earlier today.