Oil jumps 5.1%, and reported AI borrowing meets yields near a 24-year high

Brent crude was up 5.1% Thursday morning, stocks were lower before the US open, and long-term Treasury yields were still near a 24-year high.

It was at $105.32 a barrel at 7:04 a.m. Eastern. West Texas Intermediate, the US benchmark, was at $92.71, up 5.0%.

In Reuters' first dispatch, at 1:16 a.m. Greenwich time, the gain was only about 1.3%, on attacks against shipping in the Persian Gulf and the Strait of Hormuz. Those attacks have increased in the eighth month of the US-Israeli conflict with Iran, and last week they were the heaviest of any week since the conflict began. Before the conflict, that route carried about a fifth of the world's oil and fuel.

Producers had also stopped about a quarter of current oil output in the Gulf of Mexico, roughly 512,000 barrels a day, as of Wednesday, ahead of Hurricane Isaias. The storm strengthened late Wednesday, the season's first hurricane, and is forecast to reach the northern Gulf Coast late Friday or early Saturday. Shell and Chevron had already cut offshore work.

Jim Burkhard, global head of crude oil market research for S&P Global Energy, said the cuts are large enough to affect prices, though other hurricanes there have caused bigger ones. "I would characterize the oil market risk as moderate, but rising," he said.

Axios reported late Wednesday that the Pentagon had told US Central Command, several days earlier, to finish preparations for a possible resumption of strikes on Iran. The report said the order set no date, and that President Trump has not made a final decision. Brent was still up only about 1.3% after that report was out.

The Wall Street Journal, citing people familiar, said Broadcom is arranging more than $50 billion to finance AI chips it is developing with OpenAI. Reuters, drawing on the Journal and other reports, said SpaceX was looking to issue $30 billion of investment-grade bonds and raise $10 billion in loans to buy chips from Nvidia. Reports of those talks describe them as early, and they could end with no deal.

Bloomberg, citing people familiar, said Tencent is considering an offshore bond sale of up to $5 billion. None of the companies has announced a deal, and none of the debt has been sold.

Reuters reported that the cost of insuring SpaceX's debt against default jumped to a record, and that its bonds lost ground.

Reuters also read the reports as extra competition with governments for the same lenders, and said the climb in borrowing costs had put stocks on the defensive.

On Wednesday the 10-year Treasury yield touched 5.36%, its highest in 24 years, then eased. By Asian trading Thursday it was back near 5.30%. BTLT, the fund that holds long-term US government bonds, was down 0.8% from Wednesday's close before the open. A lower price on that fund is what higher long-term yields look like.

The Treasury sold $39 billion of 10-year notes on Wednesday at 5.300%. That yield was 1.7 basis points below where the notes were trading at the 1 p.m. deadline, so bidders paid a premium. Bids covered the notes 2.77 times, at the top of the range for that ratio.

"The 24-year highs in rates brought out the buyers and resulted in a great auction," Peter Boockvar, market strategist and author of The Boock Report, told CNBC.

Federal Reserve Governor Christopher Waller, speaking at a Central Bank of Turkey forum in Istanbul, pointed to the same two forces. The case for higher rates, he said, had become clear with the economy strengthening, an energy shock from that conflict still unresolved, and an AI buildout he said is adding to inflation through demand for goods and services.

"If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal," he said. "The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time."

The target range is already 3.75% to 4%, after a quarter-point increase in September. Weekly jobless claims, due at 8:30 a.m. Eastern, are the next check on that "if." Forecasters look for 200,000 new filings for unemployment benefits, after 197,000 the week before.

Asia and Europe were lower. South Korea's Kospi fell 2.6%, the steepest drop among the major indexes there. ASPY, the fund that tracks the S&P 500, was down 0.6% from Wednesday's close before the open, after a 0.2% drop in the regular session.

At 1 p.m. Eastern the Treasury sells $22 billion of 30-year bonds. That is the price of the morning: oil up 5.1%, AI borrowing that so far exists as reports, and a central banker who says more rate increases are likely if the numbers keep coming in as expected.