Dear Traders,

The market has two big stories right now.

One is the rout in bonds. The other is the AI trade.

I'll start with AI.

On Thursday, Bloomberg reported that Anthropic could start the formal marketing for its IPO as soon as the week of Nov. 9th, which would put it on track to start trading before Thanksgiving. The election's November 3rd and Thanksgiving's the 26th. Nobody wants to price a deal during election week or Thanksgiving week, and you rarely see a big debut on a Monday or a Friday. If the roadshow starts the week of the 9th, my guess is the stock trades the week of the 16th.

Ahead of that IPO, I have a hard time seeing AI sell off. This deal is enormous. Investors Bloomberg spoke with put Anthropic's fair value at $1.8 trillion to $2 trillion, and the company expects the share sale to match or top SpaceX's IPO. Anthropic also plans an investor day in October. That much excitement doesn't leave room for AI names to pull back hard between now and the deal. If we see any selling in the space, I think it happens between now and early next week.

Every huge IPO pulls up the sectors that feed it, and the companies that feed Anthropic are mostly mega caps. Amazon's a heavy backer, and Anthropic expects to spend at least $518 billion over the next decade to run its workloads. Broadcom just agreed to lend it $42 billion for infrastructure. That money lands with the biggest names in the market. No mega cap selling, no sell off.

I've already started trading these names in my HALO Project. There's still time to join before I fully kick off this week.

Bonds are the other story.

Up until Thursday, the selling in the 10-year looked borderline unstoppable. The 10-year yield jumped more than half a percentage point in September, its sharpest climb since September 2022.

Then Thursday, with the 10-year blowing through 5.30% and the 30-year closing in on 5.7%, bonds suddenly caught a bid. The 10-year touched 5.342% and the 30-year hit 5.683%, both 24-year highs, and then buyers showed up. The 10-year finished the day at 5.243% and the 30-year at 5.613%.

When you look at how parabolic that move got, it has me wondering if bonds finally found a level where big investors are willing to step in. Jonathan Krinsky at BTIG pointed out that the 30-year yield ran from 5.25% to 5.69% in only seven sessions, which drove the daily sentiment index for bonds down to 10%. That kind of washed-out reading usually sets up a snap-back.

It makes some sense. Oil looks done exploding, with WTI down more than 3% for a third straight week. Iran's still unsettled, but Iran said Wednesday it had received a U.S. response to its proposal for reviving the ceasefire. Inflation came in light on Wednesday. August PCE rose 3.4% from a year ago against the 3.7% economists expected, and core came in at 3% against the 3.3% expected. And on Tuesday, New York Fed President John Williams said the Fed has "no need for urgency," which dropped the odds of an October hike from 70% to below 50%. Fed Vice Chair Philip Jefferson repeated the same message on Thursday.

The bond market probably isn't done. But it's due for a breather after yields ran for over a month, which might lead to my one to like.

Buying What Everyone's Dumping

On September 22nd, TLT closed at 81.75. On Thursday it traded down to 76.76, a five-year low, before closing at 77.71. Its 14-day RSI sits at 26.75, deep in oversold territory.

The MOVE index, the bond market's version of the VIX, jumped 35% in September, so bond options got more expensive this month. You can still get the November 78 calls, with 50 days to expiration, for less than 1.90. That puts breakeven near 79.90, which is still below where TLT closed on September 22nd.

I think we could see some resolution in Iran between now and then, and TLT could take off. The latest leg of this selloff sped up early in the week when President Trump rejected Iran's ceasefire conditions and kept the Strait of Hormuz closed. A deal would take that pressure off. Do I think the 10-year could still go parabolic? Yes. But we may be at a spot where a strategic bond long makes some sense.

Time to Leave the Hiding Spot

Apple's flip phone run is over. The stock closed at 316.22 on September 8th, the day before Apple unveiled the iPhone Duo, its first foldable. From there it ran to a record 345.34 on September 22nd. On the 29th it fell 2.66% to 329.40 and lost support at 333. That drop came on a Bloomberg report that Ternus is weighing management changes and on a Bank of America note flagging AI risks to Apple's ecosystem.

Apple's been a money safe haven in place of cash and bonds. It's up 21.5% this year, and it trades at 37.8 times trailing earnings, against a five-year median of 31. If money starts rotating back into TLT, some of it could come out of AAPL near term. Is it going to 200? No. But a trip back to 320, where it traded before the foldable launch, is probably in the cards.

While I won’t be in this Monday, I’ve asked Andrew and the crew to look over everyone’s one to love, one to leave picks this week and come up with the single best play of the week.

Plus: We’re beginning on a special guest who’ll have two more picks to review.

You don’t want to miss it. Get the next weekly play when you join the Ticker Highlight Show. Tap this link to get in before 10:30 AM ET on Monday.

Your only option,

Mark Sebastian