Good morning,

The 10-year is back below 4% as the data blackout stretches into week three, casting a sweeping smoke screen over the economy.

Overseas, Japan’s markets are on fire as Sanae Takaichi prepares to become the country’s first woman prime minister, pledging to keep the money taps open. 

Back home, Tesla’s stock is stealing the pre-earnings spotlight after clawing its way back into Mag 7 territory. Wedbush calls it the “AI transformation story” to watch. 

Netflix, Apple, and Amazon will round out a packed Big Tech week that could decide whether this rally has legs or just tired knees. 

And in the latest twist of the Trump-era trade saga, rare earth deals with Australia are giving miners a shot in the arm and investors fresh hope that tariffs might finally cool off...

.. at least until next week’s Trump-Xi summit.

Let’s dig in. 

Quote of the day 

Five things to know before opening bell

💸 10-year yields slip back under 4%

The 10-year Treasury dipped below 4% to start the week, reversing last week’s jump. The data blackout has Wall Street and the Fed flying blind, and this uncertainty is inevitably bleeding into lower yields. BMO’s Ian Lyngen said the move reflects “signs of stress beginning to emerge in specific sectors of the economy.” 

🏛️ The shutdown gets real this week

The stalemate in Washington is starting to sting. Thousands of federal workers are set to miss paychecks by Friday. White House economist Kevin Hassett expects the standoff to end “sometime this week,” but warned of major fallout if it doesn’t. 

🇯🇵 Japan rallies on historic shift

Japan’s stocks hit fresh record highs as Sanae Takaichi prepares to become the country’s first woman prime minister. Investors are betting she’ll keep fiscal policy loose and interest rates pinned near zero, extending the easy-money streak that’s fueled Japan’s comeback story.

🪙 Precious metals sparkle again

Gold and silver came roaring back Monday after last week’s sell-off. Everbright Securities’ Zhan Dapeng blamed the correction on profit-taking, saying investors were “rapidly taking profits” after Trump eased up on Beijing.

🛢️ Crude’s freefall drags on energy stocks

Cheap oil may sound good at the pump, but it’s bruising producers fast. WTI crude has cratered about 22% year to date, leaving energy stocks in the dust. Some rigs are already operating at a loss, which is a tough look for Trump’s "Drill Baby Drill" revival

🔄 Friday’s CPI could be a real plot twist for Powell

With official data still on pause, Wall Street’s inflation expectations are filling the gap ahead of Friday’s long-awaited CPI report...

👀 What the Street’s watching

Economists surveyed by Bloomberg expect prices to rise 3.1% year over year in September, up from 2.9% in August, the fastest pace in nearly 18 months. 

If those numbers held, it would mark the fifth straight month of rising inflation and a clear reversal of last year’s deceleration.

Meanwhile, “core” inflation, which strips out food and energy, is expected to steady at 3.1%, largely thanks to falling oil prices.

🔥 Where pessimism is coming from

Wells Fargo economists Sarah House and Nicole Cervi say “continued tariff pass-through” remains a key driver of good inflation.

Other analysts tend to agree: 

• S&P estimates U.S. households will absorb $592 billion in tariff costs by the end of 2025

• Goldman Sachs says consumers already bear more than half the burden, likely rising to 70% next year

• The St. Louis Fed calculates tariffs have boosted core inflation by roughly 0.4 percentage points

A slight pullback in rent growth could help offset some of those price hikes, but most economists think this week’s CPI will confirm one thing: tariffs are rekindling inflation.

With the Fed widely expected to cut rates again later this month, all eyes are on Friday’s CPI data.

The report will be one of the few pieces of official data to make it through the shutdown, giving the Fed a final read before its next policy meeting.

🪖 Tesla's "AI transformation"?

It’s been a rough year for Tesla, but the EV giant is heading into midweek earnings on a high note. 

After lagging its Mag 7 peers for most of 2025, TSLA has clawed back roughly 10% year to date thanks to a strong Q3 that made it the group’s surprise front-runner.

⚡ What’s driving the comeback?

Through the first half of the year, Tesla was down more than 20% while the S&P 500 and Nasdaq hit record highs.

But its revival has less to do with car sales and more with investor faith in Musk’s tech moonshots, from autonomous driving to humanoid robots.

“The Tesla story going forward is around the AI transformation being led by the autonomous and robotics initiatives,” wrote Wedbush analysts.

That enthusiasm cuts both ways, though. 

The stock now trades well above the average Wall Street target of $365, leaving little room for error ahead of tomorrow’s earnings. 

Analysts expect $26.6 billion in revenue and $1.5 billion in net income, which translates to 28% quarterly growth only to justify the hype, let alone impress

💻 More Big Tech movers

Tesla’s not flying solo. Netflix reports earnings today, with investors bracing for a 7% swing in either direction, more than double its usual post-earnings volatility. 

Meanwhile, Amazon and Apple will both report earnings next week.

Amazon had to smooth over an AWS outage that briefly disrupted companies across several sectors, but AMZN still finished higher.

And Apple hit a new all-time high as iPhone 17 sales surged 14% over the previous model, with early demand strong in both the U.S. and China.

📈 More than tech earnings

Big Tech earnings season is officially underway, and the next few days could set the tone for the rest of the quarter. 

With valuations already stretched, Wall Streey will parse every syllable from CEO guidance, not just headline numbers.

“If the Mag Seven can deliver on elevated profit expectations,” said Ameriprise strategist Anthony Saglimbene, “markets could see another leg higher.” 

Then again, he added, “given elevated expectations and valuations, results from this group could influence broader market direction into year-end.”

🦘 Australian sideshow in Trump’s war with China

Stocks are roaring back this week as investors bet on progress in the U.S.–China trade standoff.

The spark came from fresh signs of diplomacy and new supply agreements for critical minerals that power everything from EVs to defense systems.

⚖️ Where things stand this week

After weeks of tariff threats and tit-for-tat rhetoric, traders finally caught a breath. President Trump rolled out a new list of demands for Beijing. 

If talks stall, Trump warns that 100% tariffs on Chinese goods could kick in as soon as next month.

Meanwhile, Trump and Australian Prime Minister Anthony Albanese inked a rare-earth supply deal aimed at cutting America’s dependence on Chinese minerals. 

The move doesn’t end the trade fight, but it underscores a shift in strategy, using alliances and supply-chain diversification to weaken China’s grip on the sector.

Investors saw the agreement as a sign that both sides are edging back toward diplomacy rather than escalation.

Next up, Trump and Xi Jinping are set to meet at next week’s APEC summit in South Korea, a sit-down that could either cement the truce or blow the whole thing back open.

⛏️ Cleveland-Cliffs cashes in

Rare-earth miners rallied on the headlines, led by Cleveland-Cliffs, which surged more than 21% after announcing plans to expand into rare-earth mining in Michigan and Minnesota.

MP Materials and Trilogy Metals, already among this year’s top performers, also climbed as analysts at William Blair initiated coverage with bullish calls.

China still dominates global rare-earth production, but for now, Washington’s push to rebuild a domestic supply chain is enough to keep investors digging the story.