We got the week right, and the bond market wrong.

There is a version of this section that emphasises what we got right, and it would be fair: four of five calls in the bear scenario landed, including the CPI overshoot that most forecasters missed. We are not going to write that version, because the leg we got wrong is the one that matters most to a portfolio and we got it wrong by more than thirty basis points in the opposite direction. The useful question is why. Every scenario we have published for two months has modelled the 10-year as a function of inflation and Fed pricing. That relationship held until Wednesday. From Thursday it did not: producer prices posted their largest annual rise in four years and the long end rallied, because investors were selling technology shares and buying government bonds on a question about whether AI capital spending earns a return. Rates were being set by an equity-risk story, not a price story. Our framework had no way to represent that, so it produced a confident call in precisely the wrong direction. The scenarios further down are built differently as a result.

1. 01

   September consumer prices rose 3.7% from a year earlier against a 3.6% consensus, with core at 2.6% against 2.5% expected and gasoline up 9.1% on the month accounting for more than half the increase.

2. 02

   Producer prices then rose 6.3% year on year, the biggest increase since December 2022, with core producer prices up 0.7% on the month against an expected 0.3%.

3. 03

   Retail sales rose 0.8% against a 0.3% estimate, but gasoline-station sales accounted for a 6.4% jump while the control group that feeds GDP rose a single tenth of a percent.

4. 04

   Despite all of that the 10-year Treasury yield fell about fourteen basis points over the week to near 5.097%, as investors sold AI-linked technology shares and bought bonds, with chipmakers falling for an eighth consecutive session, the longest run since 2008.

5. 05

   Brent crude touched $110 a barrel on Friday for the first time since May and gained 4.9% over the week, with US crude up 10.4%, as October became the busiest month on record for reported attacks on ships in the Strait of Hormuz.

Tap Week or Friday on each card. Week = 12–16 Oct. Every figure is one a named source states directly, with the date of that reporting. Nothing on this page is calculated by us. Where outlets differ we show the difference. Index moves are percentages, not levels. Times GST.

The three scenarios below are quoted from our own edition of 11 October. They are the only claims in this briefing sourced to a previous Daily Shot, and they are here because grading our published calls requires quoting them. Every outcome they are measured against comes from the reporting cited elsewhere on this page.

October is now the busiest month for reported attacks on ships in the Strait of Hormuz, with UK Maritime Trade Operations recording twelve conflict-related maritime incidents in a single week. On 17 October a ship was struck by what was described as an unknown projectile off the Saudi coast; all crew were reported safe and evacuated, with no reported environmental impact. On land the Saudi-led coalition said the Houthis had attacked Riyadh’s airport twenty times during October, and the reporting puts the death toll from Houthi attacks on Saudi Arabia at about twenty people in recent weeks, including the thirteen killed at King Khalid International Airport. Australia has urged its citizens to avoid that airport.

Against that, two statements worth separating carefully. Iran’s foreign ministry spokesman rejected any claim that Iran played a role in Houthi operations — that is Tehran’s stated position and we report it as such. And Saudi Foreign Minister Faisal bin Farhan and Iranian Foreign Minister Abbas Araghchi spoke about the fighting and about efforts to reduce confrontation. We would ask readers to treat that exactly as what it is: a call that took place. It is not a ceasefire, not an agreement, and not yet evidence of de-escalation. This briefing has spent three weeks distinguishing announcements from facts on the ground — an energy ceasefire that one party said it had not been told about, a diesel deal whose cargoes we still cannot point to — and the same discipline applies to a conversation between foreign ministers, however welcome it would be if it led somewhere.

Vault Wealth’s read

This section sets out how we are interpreting the week’s reporting. It is commentary, not guidance, and nothing here is a recommendation to buy, sell or hold anything.

1. 01The regional risk is at its most intense of the war, by the count. A record month for reported attacks and twelve incidents in a week is the measured version of what the oil price did on Friday.
2. 02The first direct contact is still only contact. A call between the Saudi and Iranian foreign ministers is the most constructive thing to happen in weeks and changes nothing yet.
3. 03Our own worst call last week was the American one. We read this region accurately and misread the Treasury market, which is a reasonable argument for being more careful with the leg of these scenarios furthest from our own expertise.
4. 04The FOMC is now a week away. Dollar-pegged economies here import that decision, and it arrives into an inflation picture driven substantially by a supply shock originating a few hundred kilometres away.

How any of this bears on an individual portfolio depends on circumstances we cannot see from here — time horizon, currency exposure, liquidity needs and existing holdings among them. That conversation belongs with a licensed advisor, and we would encourage clients with questions about the themes above to have it.