Key Highlights

● September export prices rose more than double the consensus estimate, according to Friday's data.

● Brent touched $110 intraday for the first time since May.

● Energy producers led the market while the dollar index softened near 101.7.

● The 10-year Treasury yield ended near 5.1, down for the week.

A big beat

US export prices jumped in September, far outpacing forecasts, according to data released Friday. The monthly increase was more than double the consensus estimate, and prices were up steeply from a year earlier.

Export prices track what foreign buyers pay for American goods, including farm products, fuel, chemicals, aircraft and industrial equipment. A strong rise can lift the revenue of US exporters, but it also signals broad price pressure in the goods economy, which the Federal Reserve watches closely.

The commodity backdrop

Energy is a large part of US exports, and oil has been climbing. Brent crude rose $3.94 on Friday to $109.86, its highest since May 19, touching $110 intraday for the first time since May. West Texas Intermediate traded above $101 intraday, though closing quotes differed by contract and source. The gains came as Iran escalated attacks on tankers in the Strait of Hormuz and threats to Russian refining mounted.

ING commodities strategists said oil is "pricing in a significant risk premium." The International Energy Agency pledged to release the remaining 100 million barrels under its March agreement, a Saxo Bank analyst noted.

Metals have also firmed. Nucor (NYSE:NUE) rose on higher steel prices, and Alcoa (NYSE:AA) jumped after its third-quarter adjusted earnings beat estimates, though reports differed on the size of its gain.

Exporters on the rise

Energy producers led Friday's market. Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) rose, and a published report noted that higher refining margins added about $4.5 billion to Exxon's earnings. Diamondback Energy (NASDAQ:FANG) jumped to $203.91 and Targa Resources (NYSE:TRGP) climbed to $294.22. ConocoPhillips (NYSE:COP) set an intraday record.

The dollar was softer. The dollar index traded around 101.69 to 101.75 and was lower on the day. A weaker dollar can make US goods cheaper for foreign buyers, though it also raises the dollar value of goods priced abroad.

Inflation implications

The export data rounded out a hot week. Import prices also rose more than expected Friday, and a published headline noted that AI-related import costs rose the most since 1987. Earlier, September CPI showed annual inflation accelerating and beating forecasts, according to a weekly market summary, and producer prices posted their largest monthly gain since March 2022.

Yet bond markets eased. The 10-year Treasury yield ended near 5.1, down for the week. The odds of an October Fed hike fell to about one in six in futures pricing, though markets still price a hike by December. Fed Chair Kevin Warsh said in Bangkok, "I don't prejudge meetings."

Stocks fell overall. The S&P 500 dropped 84.62 points to 7,659.44, the Nasdaq Composite sank 572.99 points to 26,140.03, and the Dow Jones Industrial Average slipped 175.28 points to 52,002.41, as technology stocks slumped on AI-financing worries.

Energy Reports Follow Export Data

The Federal Reserve decides on Oct 28, and PCE inflation and the first estimate of third-quarter GDP follow Oct 29. Energy earnings are also on deck: Kinder Morgan (NYSE:KMI) reports Oct 21, Valero (NYSE:VLO) Oct 22 and SLB (NYSE:SLB) Oct 23.