Oil past $115 and PMIs screaming inflationary boom but sure the hard part is semis · Daily Briefing

In 30 seconds: Brent crude oil prices surged above $115-$117/bbl driven by geopolitical risk around Iran, including a US naval blockade exceeding 100 days, falling Iranian production to near 40-year lows, and rising call skew signaling renewed options-market risk premium. October US PMI readings showed strong manufacturing and services activity with elevated selling prices and robust employment, pointing to continued firm GDP growth alongside persistent inflationary pressures. East and Southeast Asia's goods trade surplus is approaching $2 trillion, with analysts warning that global forums are failing to address rising imbalances driven by China's export surge, gold imports, and persistently undervalued currencies across the region. The semiconductor sector experienced a steep decline, with the SOXX ETF testing its 200-day moving average and the 3x leveraged SOXL ETF falling 50% since early October, raising questions about whether the drop represents a bottom or forced liquidation.

The US naval blockade on Iran has now exceeded 100 days. Brent closed at $111.80 on 2026-10-23, slipping -1.2106% on the day but still elevated enough to make the broader trend unmistakable. Earlier in the week, prompt futures traded at $116 per barrel, a level higher than all but two daily closing prices in March and April, and both of those were nearer expiry than today. By week's end, some prints touched $117. WTI, for its part, sat at $101. The supply picture — Iranian production at multi-decade lows, crude imports re-reaching 2025 levels, and an SPR exchange to address a Louisiana refinery disruption — sits alongside a Brent price above $115. Iranian crude production fell to 1.96 million barrels per day in September, the lowest since the early days of the Iran-Iraq war in the early 1980s. That is below 2 million barrels per day, a threshold not breached since 2020. When you physically remove that much oil from the market for that long, the barrel you need tomorrow gets expensive. This is not complicated. On the demand side, crude imports on a 10dma re-reached 2025 levels over the past week. The options market is noticing, sort of. Brent call skew, the premium on calls over puts, is beginning to rise again but basically nothing compared to March and well below levels realized during the July rally. If you believe it ends next week, prompt Brent is worth 1,500 Melania coins, which, to be clear, is a joke, but the directionality is right.

The preliminary S&P Global US Composite PMI for October printed at 56, topping the consensus estimate of 55.5 while slipping from a prior reading of 55.9. The number continues to suggest firm GDP growth. Under the hood, the S&P Manufacturing PMI came in at 56.0 against expectations of 55.5, while the S&P Services PMI landed at 57.9, essentially in line with its 58.0 estimate. Both readings were released today at 9:45 AM ET. The manufacturing side is where things get uncomfortable: US Manufacturing PMI output prices advanced to another high in October, and Renaissance Macro Research summarized the situation bluntly, calling it an inflationary boom. You do not typically want the word "boom" modified by "inflationary" in a sentence about your economy, but here we are. Regional data told a similar story. The Kansas City Fed Services Index surged to 10 in October, obliterating an estimate of 1 and a prior of 0. The revenue component jumped to 16 from 6. Employment, curiously, moved the other direction, falling to 2 from 10. The Kansas City Fed Manufacturing Index (ISM-adjusted) registered 55.4, though the Kansas City Fed Manufacturing Index prices received component eased sharply, offering at least one data point that does not scream "re-acceleration." Michigan Sentiment: 48.0.

That is a lot of surplus. If you are wondering whether the global trading system has a structural problem, the answer is sitting right there in a round number with twelve zeros. The current account version of the same story is no less striking. The region's current account surplus has hit $2 trillion, which qualifies as a record for that metric. Part of what makes the number so large, and so hard to explain away, is that China's investment income balance is pointing the wrong way because there should be a surplus; even the IMF concedes this. Gold: $4,009.80. Looking at only 2021-2024 will understate the size of China shock 2.0. China's stock market has gone nowhere.

The semiconductor trade is now looking like it needs a doctor. $SOXX semis ETF is sitting just above its 200-DMA after yesterday's steep drop, a level it hasn't been below since early 2025. That is the kind of technical threshold that makes chart-watchers either buy the dip or run for the exits. The damage is more vivid in the leveraged corner of the market. Semis made a short-term higher high on October 5th, and the broader tape is not offering much comfort. Yesterday's session was a positive-breadth, negative-price day. Choppiness continues. Underneath all of this, semis and hardware remain stuck at 20-day lows, and credit stress is creeping up the quality ladder. One macro research firm argues that a Fed likely on hold in October still points to a December hike, which would add another headwind to a sector already dealing with plenty of them.