Thursday, September 24, 2026
Treasury Yields Hit Fresh 2007 Highs as Oracle and MGM Tumble on Company-Specific News
Key Indicators
S&P 500
7,707.36
+0.02% (unchanged)Nasdaq Composite
26,929.84
-0.02% (unchanged)Dow Jones Industrial Average
51,352.08
-0.31% (down)10-Year Treasury Yield
5.11%
+1 bp (up)VIX
15.41
+1.52% (up)WTI Crude Oil
$94.29
+2.31% (up)Gold
~$4,308.80/oz
-0.22% (down)Bitcoin (BTC/USD)
~$84,369
+0.07% (unchanged)Market Recap
Treasury Yields Push to Fresh 2007 Highs as Fed's Paulson Turns More Hawkish
Major indexes finished mixed and little-changed: the S&P 500 edged up 0.02% to 7,707.36, the Nasdaq Composite slipped 0.02% to 26,929.84, and the Dow Jones Industrial Average fell 0.31% to 51,352.08. Underneath those quiet headline numbers, the bond market kept selling off. The 10-year Treasury yield touched roughly 5.15% intraday, its highest level since 2007, before settling near 5.11%. The move was broad across the curve: the 2-year yield climbed to 4.897%, its highest since 2023, and the 30-year yield hit 5.438%, its highest since 2004, pushing the average 30-year mortgage rate above 7.3% for the first time in more than two years. Philadelphia Fed President Anna Paulson added to the hawkish tone, saying "some modest further tightening may be warranted" because underlying inflation is still running 2.5%-3%, well above the Fed's 2% target. Traders are now pricing in roughly a 70% chance of another rate hike at the Fed's late-October meeting, up from closer to a coin flip earlier in the week. The VIX rose 1.52% to 15.41.
Oracle Falls About 4.5% After Force Majeure Notice on $165 Billion AI Data Center
Oracle shares fell roughly 4.5%, to around $138, after the company sent a force majeure notice to a unit of Blue Owl Capital developing its Project Jupiter data center in New Mexico, the $165 billion facility anchoring the Stargate AI buildout alongside OpenAI and SoftBank. The notice would let Oracle delay payments on the site if it doesn't come online as planned in 2028, a protective move after an Energy Transfer natural-gas pipeline meant to supply the campus was pushed back nearly six months, to February 2027, following repeated permit denials from the New Mexico State Land Office. Oracle said it isn't walking away as the project's anchor tenant, telling investors "Project Jupiter remains on our planned schedule" and that it's "fully committed to New Mexico," but the notice underscores how exposed the AI infrastructure buildout is to permitting and construction delays. The stock's decline was compounded by separate reports of new double-digit-percentage layoffs on some Oracle teams.
MGM Resorts Sinks 10% as Barry Diller's People Inc. Withdraws $18 Billion Buyout Bid
MGM Resorts shares fell about 10% to $33.90 after Barry Diller's People Inc. (formerly IAC) withdrew its proposal to buy the roughly 73% of MGM it doesn't already own for $48.30 a share in cash, a deal that had been on the table since June and would have valued the buyout at around $18 billion. Diller said "we didn't feel the mix was coming together in the way we had hoped" and decided not to pursue taking the company private for now, though he left the door open to a future strategic transaction and said People Inc. will keep its 27% stake. MGM's board said it remains committed to executing the company's strategy as a standalone business. The stock had been trading below the $48.30 offer price for weeks as investors priced in deal-completion risk; the withdrawal erased that takeover premium in a single session. Rival casino operator Caesars Entertainment barely moved on the news, underscoring that the selloff was specific to MGM rather than a read on the sector.
Oil Jumps Over 2% as US and Iran Explore Phased Deal to Reopen the Strait of Hormuz
WTI crude rose 2.31% to $94.29 a barrel, extending its recent climb, after Reuters reported that U.S. and Iranian negotiators meeting on the sidelines of the UN General Assembly in New York are exploring a phased path out of the nearly seven-month conflict between the two countries. Under the framework being discussed, Iran would reopen the Strait of Hormuz, the narrow waterway that a large share of the world's seaborne oil supply passes through, and the U.S. would lift the economic blockade it has imposed on Iran. Iran has proposed a regionwide ceasefire of up to 60 days alongside the phased reopening, with talks mediated by Qatar, Pakistan, and Egypt. Neither side wants to give up its leverage first, and President Trump has ruled out lifting the blockade before Iran shows more goodwill, so oil traders are treating a near-term resolution as uncertain rather than settled, which is keeping a risk premium in crude prices even as the diplomatic option stays on the table.
Xi Jinping Arrives in Washington as US and China Extend Trade Truce Through January
Chinese President Xi Jinping arrived in Washington for a three-day state visit, his second summit with President Trump in less than six months, and Treasury Secretary Scott Bessent announced the two countries had agreed to extend their trade truce by two months, through January 10, ahead of a deal that had been set to expire in November. Xi was greeted at Joint Base Andrews, the first time in 11 years a sitting U.S. president has personally welcomed a foreign leader there. The formal summit, covering trade, tariffs, Taiwan, AI competition, and Iran, is set to continue Thursday, with Bessent suggesting further announcements are possible in coming days, including Chinese purchases of U.S. agricultural products and potential financial-services agreements. The extension removes a near-term tariff-escalation risk that had been on investors' radar for November, giving markets one less catalyst to worry about even as the bond-market selloff dominated the day's price action.
Concept of the Day
Merger Arbitrage
Merger arbitrage, also called risk arbitrage, is a strategy built around buying the stock of a company that has agreed to be acquired, in order to capture the spread between its current market price and the price the acquirer has agreed to pay. When a deal is announced, the target's stock typically jumps toward the offer price but rarely reaches it exactly, because there's always some chance the deal falls apart before it closes: financing could collapse, regulators could block it, shareholders could vote it down, or, as with MGM today, the acquirer could simply walk away. That remaining gap between the market price and the offer price is the "spread," and it exists precisely because the market is pricing in the probability the deal doesn't happen, discounted for however long the deal is expected to take to close. Arbitrageurs make money by buying the target's stock at the discounted price and collecting the spread if and when the deal closes at the agreed price. It sounds like free money, but the risk is concentrated and binary: if the deal falls through, the stock doesn't just give back the spread, it can fall well below where it traded before the deal was ever announced, because the market has to reprice the company on its own fundamentals again, with no buyout premium and often with a credibility hit for having lost a deal. That's exactly the mechanism that played out with MGM today. Professional merger-arb funds manage this risk by running a diversified book across many pending deals, so no single deal collapse sinks the whole portfolio, and by handicapping deal-specific risks like antitrust exposure, financing conditions, and the acquirer's track record before putting on a position. It's a strategy that looks steady in normal markets, since spreads usually behave like predictable, low-volatility income, but that steadiness can disappear all at once when a deal breaks, which is the central risk every merger-arb investor is being paid to take on.
Why it matters
MGM's 10% one-day plunge today is a live example of merger arb risk playing out in real time: the market had been pricing MGM as a deal in progress, with a discount to the $48.30 offer that reflected real, if modest, completion risk, and Diller's withdrawal instantly proved that risk was worth paying attention to. Anyone who owned MGM purely to capture that spread took a sharp, fast loss, exactly the scenario merger-arb investors are compensated for underwriting. For a finance student, the lesson generalizes well beyond MGM: any time a stock is trading at a persistent discount to a publicly announced acquisition price, that gap is not free money sitting on the table, it's the market's real-time estimate of deal risk, and it can evaporate or blow out in a single headline.
What to Watch
Fri, Sep 25
Durable Goods Orders (August 2026)
A gauge of business investment, watched for whether elevated borrowing costs are starting to dent capital spending as yields keep climbing.
Fri, Sep 25
University of Michigan Consumer Sentiment (Final, September 2026)
The final read on consumer confidence for September, watched for whether surging Treasury yields and mortgage rates are starting to weigh on household sentiment.
Wed, Sep 30
PCE Price Index (August 2026)
The Fed's preferred inflation gauge, a critical input for whether the committee delivers the further rate hike Paulson flagged today at its late-October meeting.
Thu, Oct 1
ISM Manufacturing PMI (September 2026)
A timely read on factory activity and prices paid, watched for confirmation of the inflation pressure that's been driving yields higher this week.
Fri, Oct 2
Employment Situation (Non-Farm Payrolls) - September 2026
The month's jobs report, a major input into whether the Fed follows through on another rate hike this year.
Wed, Oct 28
FOMC Rate Decision (October Meeting)
The Fed's next rate decision, where traders now see roughly a 70% chance of another hike after today's hawkish commentary and yield surge.