Rate Peak or Pause?... Nike Reports Results 10/1/26

CNBC's "Fast Money"

The episode opens with a debate over whether Treasury yields have peaked after benchmark rates hit multi-decade highs before reversing lower. The

Key takeaways

• The 10-year yield maxed out at 5.34% early in the day before falling more than 10 basis points, while the 30-year approached 5.7% before retreating.
• Nike beat EPS by five cents but missed revenue at $11.21 billion, with China weakness and a weak 2027 outlook driving shares lower to levels last seen around 2012-2013.

Main topics

• Interest-rate peak vs pause debate
• Nike earnings and turnaround concerns

Notable quotes

I think higher is the least resistance.

Conclusion

The episode offers a practical read on how rates, AI product cycles, and macro

Transcript preview

Speaker 8 (0:00) AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts. Speaker 1 (0:30) Live from the Nasdaq MarketSide in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. The great rate reversal benchmark yields hitting new 24-year highs before turning sharply lower. Is this a sign of relief in the credit markets? We'll debate that. And Nike swooshing lower after a revenue miss and disappointing guidance. Is there anything Elliott Hill can do to get the turnaround back on track? A top analyst will weigh in. Plus, Wall Street says bullish on meta. What Airbnb CEO had to say about the reach of AI. And mortgage rate ripple affects how rising cost to homebuyers is affecting consumers and credit card companies. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Courtney Garcia, and Guy Adami. We start off with that sharp pullback in interest rates after yields hit multi-decade highs early in the session. 30-year closing in on 5.7 % before retreating. The 10-year maxing out at 5.34 % early in the day, but then falling more than 10 basis points. The move coming after the latest reading on manufacturing activity showed a surge in September. The PMI index hitting its highest since May 2022. Still, rates are up substantially in the last month. The 10-year gaining some 60 basis points just since the end of August. So, does today's Pullback suggests yields have peaked. Or is this a brief pause in the rally ahead of what could be a very important jobs report tomorrow, Guy? Well, Speaker 3 (1:47) Mel, I hear you, but I don't see you. Because I'm Speaker 1 (1:49) camouflaged. Speaker 3 (1:51) I like that. You've been Speaker 1 (1:52) waiting. I could not wait to do that. It's fine. I'm making fun of my clothing. We love you all the time. Speaker 2 (1:58) By the way, I mean, if not at a close family, can you actually say these things at the dinner table? This is what we're doing. Speaker 1 (2:05) Anyway. Trading is about being Speaker 3 (2:06) tactical, right, and understanding when things are happening. You can have a structural view about something. which I do. I think rates are going higher. But within a move, sometimes you get these counter trend moves. And when the TLT makes an all time low today and then reverses on what was decent volume, you have to take that in consideration. Now, look, everything can change in this job numbers are a lot of moving parts. But if you're trying to play a little stock market here for the first time in a while, the TLT looks like something that might bounce off these lows, which means. you could see interest rates not markedly lower, but somewhat low over the next couple of weeks. Speaker 1 (2:40) Yeah. And we saw, you know, in terms of some moves sector wise intraday, we saw some of that sort of, you know, follow through. Industrials finished higher by a percent. We saw financials perk up a little bit. Speaker 2 (2:51) Yeah. I mean, as I've said, I think there are a lot of charts that look very similar here that that interest rate sensitivity. So that reverse is true. And by the way, we saw it when Europe went home. And sometimes you see these kinds of trades where the European markets and I think. And I've said that I have concerns that Southern Europe or government bonds in Europe and some of the things that we had 14, 15 years ago are starting to rear their heads. I mean, French yields to German bonds. So that spread on their tenure really has widened out. People have been very worried about. The pigs. And so if you look at European banks, they seem to be telling a story. We're going to talk more about banks here, but our markets got a lot better when Europe went home. And I would just get back to what Guy said is it doesn't mean that necessarily I think the pressure is off here. In fact, if you look at the 10 year bond yield in the US, it's hard to believe. But it looks a lot like the chart of the Kospi did at the beginning of the summer. So you just can't have a one direction move. There are Fed officials out there also saying enough today to make it seem as if an October hike may not be a certainty, despite the fact that we had a pretty hot ISM prices paid number. Speaker 6 (3:54) So I think that whatever is. causing higher rates. All of that still exists, right? The deficits are still there. We have to fund them at more expense. The economy is humming along. That's growth as well. And then there's Speaker 1 (4:07) a Speaker 6 (4:07) big question mark about oil. Could it go lower? Yes. Could it go higher as well? That may be the case. And I think, you know, we've talked a lot about the sort of counterintuitive situation of the Fed hikes, the bond market strengthens. Right? Yields go lower because of the idea that, okay, someone's watching inflation and we are going to fight inflation. So I sort of am in the camp that who knows where they go in the short term, who knows? But I think higher is the least resistance. Speaker 8 (4:34) Yeah, I mean, I agree with that in the short term. I don't think we're at the end of this hiking cycle, but I would actually argue we're probably more towards the end of it than the beginning. And I think if you're the idea that a majority of this has been priced in, anything that's interest rate sensitive has been hit so hard here, right? You look at housing, you look at banks, you look at small caps, anything that is affected by the short end of that curve. Yes, you'll probably still have some more to come here, but you want to start to nibble in there while the data is still bad. You don't want to wait until you've hit the end of this peak before you start taking advantage of those opportunities. So I would actually look at this more as I think there's opportunities to be had here. And I think you want to start to look at that sooner rather than later. So, Speaker 1 (5:10) I mean, I think the question for me, though, would be what happens to the overall market? Because what we've seen here in terms of, you know, this bond sell-off is we have seen a defensive move into technology and specifically into the MAG-7. part of technology. And so if you are starting to want to invest as if bond yields have peaked and we get sort of this broadening, is it at the expense of the index level of the market? Speaker 2 (5:33) It might be. And that's pretty good because all we seem to do are talk about the stats that say that, you know. About 13 percent of the S &P are 40 percent or more off their 52 week highs. About 15 percent more, at least 15 percent, about 50 percent of them seem to be somewhere 10 to 15 percent or more. So it's not as if the breadth and the index has been impressive. In fact, it probably would be at the cost of the index itself. And that would probably be seen as a positive. I kind of feel that there is asymmetric opportunity in owning the next trade lower in yields. I think it's going to be much better for markets. I think markets are going higher. I do think what we're wrestling with here. some credit dynamics that banks haven't had to deal with. You can't tell me a year ago, the JGB 10-year was at 165. It's at 315 now. You can't have these kinds of moves without something breaking. And I think the European banks, again, trade a little bit worse than the ones here, and they've also outperformed over the last. So I think there are opportunities with industrials, within staples, within parts of interest rate sensitivity. Even energy, frankly, I think is offering an opportunity. Speaker 6 (6:34) So the MAG-7, I'm not in it because I want to hide. I'm in it because I think those are compelling stories. Unlike Melissa today. The other thing is, though, for banks, for some of the banks, higher rates is not a bad thing, right? They are, you know, we've seen how quickly they reprice your costs higher and what you get slowly. So we can see spreads widen to the extent that it moves enough to create some credit issues for the underlying borrower. That's a different thing. But I don't think this is necessary. I think I like the setup in banks. I always say I wish I traded before down before the earnings actually start. OK, maybe I wish a little too hard there. This is a really good setup. I want to be long banks going into this earnings. Speaker 2 (7:18) Does this this doesn't feel like your standard sell off into earnings for banks, does it? Or does it for you? Because it doesn't to me. It feels to me that there's always Speaker 6 (7:26) something, though, going into the earnings for banks. Speaker 2 (7:28) There's always something. But but the story in money center banks has been so good for so long. And if you think about what's going on with the higher for longer, Treasury yield squeezes all the way down the economy, including borrowing in terms of net interest margins in it. And then you have credit that we don't really know. I don't think we have credit here. But that's interesting. So you're you're this is as good of a time to go in and buy banks. I Speaker 6 (7:47) think so. If I own no banks, I own a lot, a lot of exposure banks, J.P. Morgan and Citi. And because J.P. Morgan's done worse, I own more Citi now dollar for dollar. But I would absolutely be buying banks here. I think a lot of things that were good are still good. I think there's still activity in capital markets. Is it as good? Maybe not. But I think credit, I think, is still good credit quality. And I think, you know, trading that part is good. So there's a lot to like here. Speaker 1 (8:15) And this is what we heard from the CEOs during conference season. One Speaker 6 (8:18) of Speaker 1 (8:18) them. Yeah, that's true. One of them. One of them. A big one. Yeah, a big one. Yeah. So if Speaker 3 (8:23) you go to sector, so if you start to connect dots, I mean, the headwinds at higher rates have created for the gold market, or we talk about all the time. That will abate, I think. So there's a really good chance that material stocks, under the scenario that we just painted out, do well. And I'll throw this in. Although the stock market is open on Columbus Day, I don't know if it's still called Columbus Day. Please don't at me. The bond market is not. So you could see something going into that weekend that could be very bond friendly, especially with now David Zervos signing on and all these different people. that have tangential sort of, I guess, inputs into Treasury and potentially the Speaker 2 (8:58) Fed. Speaker 3 (8:59) Clearly, Speaker 2 (8:59) it's Speaker 3 (8:59) still Speaker 2 (8:59) Columbus Day in your house. Speaker 3 (9:00) No, well, I'm not looking to offend anybody. I have no idea. It's the holiday in October that lands on a Monday. You Speaker 1 (9:06) know Speaker 3 (9:07) who might know what that is called? Who? A guy Speaker 1 (9:10) like Steve Leisman. You think he's an expert on holidays as well? Yeah. You know Speaker 2 (9:13) what? Speaker 1 (9:14) He's going to have Speaker 2 (9:14) a Speaker 1 (9:14) very Speaker 2 (9:15) diplomatic thing to say about it. We're Speaker 1 (9:16) not going to talk Speaker 2 (9:17) about that. Speaker 1 (9:17) We're going to talk about rates in tomorrow's jobs report. Steve Leisman, our senior economics reporter, is here. I'm sad. Good to Speaker 5 (9:23) see you. Speaker 1 (9:23) I have no Speaker 5 (9:23) idea what it's called. Right. I don't consider myself with those things. Speaker 1 (9:27) But that's a Speaker 5 (9:27) bad, yeah. I've got enough to worry about. I Speaker 1 (9:29) know. Speaker 5 (9:29) There's plenty of Speaker 1 (9:29) things to worry about. Are you kidding me? The setup is interesting. I'm not even talking about jobs. Speaker 5 (9:34) I want to talk about what Timmy's talking about. French CDS. I love this. Yeah, yeah, yeah. What we're talking about, for those who aren't hip to what I'm talking about, is the cost of insuring French sovereign bonds against default. What happened today is they blew out again. They've been blowing out, leading to, I think, the one chart we have is the French tenure. Do we have that chart? It's up there. Right up there. Unbelievable. That's Sandy and company. Unbelievable. So what do we got? Okay, so that blew out today along with the sovereign bond. That ricochet came over our shores and caused this reversal in the tenure. So Timmy's got the story right. Is Speaker 2 (10:15) it Speaker 5 (10:15) okay, Timmy? Timmy's great, by the way. Timmy, I could be TJ. It's diminutive, I know, so it's not necessarily the best thing. But here's the thing. So that then causes this. We were up 533, 534. We were taking out the 07 highs, going back to 02, and everybody was writing that. And then all of a sudden it reversed. I'm not saying there wasn't some folks who said, you know what, 530