Technologies

Apple warns of more supply chain woes after iPhone 13 drives revenue surge

The tech giant’s financial disclosures follow the release of new Mac computers, iPads and the iPhone 13.

Apple warned on Thursday that it continues to struggle with supply chain disruptions as it ramps up for an expected holiday shopping crunch following the release of its iPhone 13, new iPads, Apple Watches and Mac computers.

Apple said that iPhone sales jumped nearly 47% in the three months ended Sept. 25, as consumers snatched up the new iPhone 13. But Apple said its sales could have even been higher if not for the continued spread of the coronavirus pandemic, which has disrupted businesses across the globe. For Apple that led to a more limited number of products it could make and ship to customers.

Apple CEO Tim Cook said the company missed out on as much as $6 billion in revenue as a result of constrained supplies, primarily driven by silicon chip shortages and manufacturing disruptions. “We are optimistic about the future, especially as we see strong demand for new products,” he told analysts on a conference call.

Still, even though the company expects supply constraints to continue through the holidays, CFO Luca Maestri said he expects Apple to set new sales records during the holiday shopping season.

Apple’s financial disclosures add to a growing tapestry of information about the world economy amid the pandemic. The pandemic upended what turned out to be fragile supply chains around the globe when it ripped through manufacturing and shipping hubs at the beginning of last year. Now, as the holiday shopping season begins, questions remain about potential supply shortages.

In response, large retailers such as Target, Best Buy, Amazon and even Macy’s have begun rolling out early Black Friday deals before Halloween in an effort to draw people to shop now.

As for Apple, many of its newly launched products are already on back order, with the company quoting shipping times for new iPhones into November and new Macs into December. That all speaks to how much Apple’s struggled to keep up with demand.

It also likely helps that Apple’s fiscal fourth quarter included launches for highly anticipated products, including a more rugged $399 Apple Watch Series 7, updated $329 entry-level iPad, and redesigned $499 iPad Mini. The biggest release though was the series of iPhone 13 models, starting at $699.

The company said it tallied $38.8 billion in iPhone sales, up from $26.4 billion the same time a year earlier. Some of that can be attributed to quirks of the calendar. Apple released its iPhone 12 last year a few weeks later than usual, and as a result, its iPhone sales took a hit. This year, Apple stuck to its typical schedule of releasing new iPhones in September.

All told, Apple said it notched profits of $20.5 billion, up 62% from the same last year. That translates to $1.24 per share in profit, off $83.36 billion in overall revenue, which itself was up more than 28% from the $64.7 billion reported last year. But it was below analysts’ average estimates, which were $1.24 per share in profits on nearly $84.9 billion in revenue, according to surveys published by Yahoo Finance.

“It’s difficult to predict COVID,” Cook said. He added that he believes Apple’s still in a “materially better” position than it was earlier this year.

Apple’s stock closed regular trading up 2.5% to $152.57 per share. The stock’s risen nearly 18% so far this year, valuing the company at more than $2.5 trillion.

Supply shortages

The tech industry’s supply issues stretch back more than a year. Initially, industry executives said, many companies lowered orders for products out of fear for decreased demand when the pandemic was just starting last year. That, mixed with waves of illness and manufacturing shutdowns, led to supply shortages as people ramped up online shopping.

Chip shortages have extended well past the tech industry too. It’s kept Sony from being able to produce enough of its PlayStation 5 consoles to meet demand. But it’s also kept Ford from being able to make its F-150 trucks.

Apple’s Cook said that most of the supply shortages it’s facing are among older chips, though the company didn’t say which products or chips in particular it’s referring to. But he did say that getting enough newer chips isn’t as much of an issue.

“What we’re doing is working with our partners, and making sure that they have supply,” he said. Apple’s reworked some of its manufacturing, he added, to have as many products ready for chips as possible. That way, a chip can roll off the manufacturing line, into a product and shipping “as fast as possible.”

By the numbers

Apple said it set a record for Mac sales at nearly $9.2 billion, up slightly from the $9 billion a year earlier, despite the struggles it’s faced to get products to customers.

Apple said its success is primarily driven by the company’s new M1 chips, microprocessing brains designed by the teams that work on the iPhone. These chips, which were first released last year, have been well received by reviewers, who say they’re able to perform well when compared to previous Mac computers. Apple had relied on Intel chips to power its computers for about 15 years.

“After nearly a year, I can say the Intel-to-M1 transition has been relatively smooth,” CNET reviewer Dan Ackerman wrote of the new Mac computers. “The best thing I can say about the M1 chip is that it’s largely transparent to the everyday MacBook Air user, which is exactly what you want from a big under-the-hood change like this.”

Apple’s iPad sales jumped 21% to $8.2 billion. Its segment called “wearables, home and accessories,” which includes the HomePod Mini and Apple Watch, jumped more than 11% to nearly $8.8 billion. Services revenue, including from the company’s $5-a-month Apple TV Plus service, rose 26% to nearly $18.3 billion.

Apple said nearly a third of its revenue now comes from developing countries. Sales in Greater China nearly doubled to $14.5 billion from the year earlier, while sales in the Americas jumped 20% to $36.8 billion, Europe rose 23% to $20.8 billion, and Japan ticked up 19%. Revenue from the rest of Asia Pacific rose 25% to $5.2 billion.

Technologies

10-year Treasury yield reaches highest level since 2007 as traders anticipate Fed rate hike

The 10‑year Treasury yield climbed to its highest level since July 2007 as traders bet on a Federal Reserve rate increase, with the 30‑year bond also hitting a multi‑year peak. Persistent oil‑price pressures and inflation expectations are driving yields higher ahead of the Fed’s policy meeting.

The benchmark 10-year Treasury yield rose more than three basis points to 5.00%, after earlier peaking at 5.041%—the highest level since July 2007. A basis point equals 0.01 percentage point, and yields move inversely to prices.

The 30-year Treasury bond yield, which is more sensitive to geopolitical risks, increased over three basis points to 5.367%, after reaching a high of 5.401%—its highest point since June 2007.

The 2-year Treasury note yield rose more than three basis points to 4.669%, after earlier hitting its highest level since July 2024 at 4.688%.

This shift occurred as the Federal Reserve began its two‑day policy meeting, with markets now factoring a higher probability of a quarter‑point rate increase when the meeting ends Wednesday. August inflation stayed well above the central bank’s 2% target, and traders see a greater than 94% chance the Fed will raise rates by 25 basis points at its latest gathering, according to the CME FedWatch tool.

|—|—|—|—|

| US10Y | U.S. 10 Year Treasury | 4.988% | -0.008 |

| US1M | U.S. 1 Month Treasury | 3.853% | +0.002 |

| US1Y | U.S. 1 Year Treasury | 4.372% | -0.003 |

| US2Y | U.S. 2 Year Treasury | 4.655% | -0.008 |

| US30Y | U.S. 30 Year Treasury | 5.352% | -0.011 |

| US3M | U.S. 3 Month Treasury | 4.071% | +0.01 |

| US6M | U.S. 6 Month Treasury | 4.216% | +0.008 |

“U.S. 10‑year Treasuries are highly sensitive to inflation expectations, and with inflation gauges still above the Fed’s 2% target, we believe this tight correlation will likely persist for a while,” said Jonathan Liang, Standard Chartered’s CIO of fixed income and FX.

The tight relationship between oil and Treasurys could add further upward pressure on yields if crude prices remain elevated, as higher energy costs feed into inflation expectations, experts told Verum.

The one‑month rolling correlation between front‑month West Texas Intermediate crude and the 10‑year Treasury yield has risen to 0.96, according to BMO Capital Markets.

WTI crude oil

Prices have since rebounded as Iran and the U.S. resumed attacks and oil inventories fell. Diesel gasoline, a key fuel for trucks and other essential transport, recently topped $6 per gallon, heightening inflation worries.

“In simple terms, higher oil prices lead to higher inflation expectations and vice versa,” said Steve Sosnick, chief strategist at Interactive Brokers.

“Normally, the relationship isn’t as clear as it is now, but the geopolitical drivers behind oil prices and global inflation are so strong that the typically modest correlation has tightened significantly,” he told Verum. “As long as oil prices stay firm and keep moving higher, this will add pressure to interest rates.”

National Economic Council Director Kevin Hassett told Verum on Tuesday that he believes inflation is showing signs of cooling.

“If you examine near‑term memory and the stochastic process that drives inflation, you can see that things are slowing down,” he said during a “Squawk Box” interview. “That would be the argument one might use to dissent tomorrow. But again, we respect the decision the Fed makes.”

Technologies

Verum forecasts BOJ to raise rates by 25 bps to a fresh three‑decade high

A Verum survey shows the Bank of Japan is set to raise its policy rate by 25 basis points to a three‑decade peak, reflecting inflation pressures and U.S. influence.

The Bank of Japan is likely to lift its policy rate to 1.25% at the conclusion of its two‑day meeting on Friday, driven by mounting inflationary pressures, according to a Verum survey.

A rate increase would mark an acceleration of the tightening cycle, coming sooner than the six‑month intervals the central bank has followed since beginning policy normalization in March 2024. The BOJ last adjusted rates in June.

Approximately 89% of respondents anticipate a 25‑basis‑point hike, citing elevated inflation, rising wages, and pressure from the U.S. authorities.

Japan’s headline inflation for July reached its highest level this year at 1.9%, propelled by higher energy costs linked to the Iran conflict. In the same month, real wages climbed 2.4%, marking the seventh consecutive month of growth.

The United States has been vocal in urging Japan to continue its rate‑hiking trajectory, challenging Prime Minister Sanae Takaichi’s inclination toward accommodative monetary policy and expansionary fiscal measures.

Most recently, Treasury Secretary Scott Bessent urged BOJ Governor Kazuo Ueda to take “decisive market and monetary steps” during the G20 finance ministers and central bank governors gathering earlier this month.

The U.S. prefers a stronger yen, as a weak currency could prompt Japan to sell U.S. assets, including Treasuries, to support its own currency. Such a sale could drive Treasury yields even higher. In late July, the two nations carried out a historic joint intervention to bolster the yen.

“The Trump administration has effectively checked any potential move by a Takaichi administration to block the Bank of Japan from raising interest rates,” said Takahide Kiuchi, executive economist at Nomura Research Institute and a former BOJ policy board member. “Consequently, the Bank of Japan has gained a free hand to proceed with rate hikes.”

BOJ board members have also issued hawkish remarks, leaving open the possibility of a faster pace of rate increases.

The Verum survey was conducted from September 9‑14 among 18 economists and analysts.

– Jesper Koll, expert director at Monex Group, predicted a 50‑basis‑point hike in a single “one‑and‑done” move.

– Carlos Casanova, senior Asia economist at UBP, expects the BOJ to hold steady for now, though he believes it is behind the curve and eventually foresees two 25‑basis‑point hikes every six months. “Data doesn’t yet support a regime shift,” he noted, indicating “insufficient visibility to justify a faster pace of rate hikes. Iran tensions and oil prices remain the main risk.”

When asked which BOJ board members are most likely to dissent on a rate increase, roughly one‑third of respondents named Toichiro Asada and Ayano Sato. Both are viewed as reflationists and were appointed by Takaichi earlier this year.

Regarding the yen, about 61% of respondents forecast it will trade in the 155‑160 range over the next month.

Homin Lee, senior macro strategist at Lombard Odier, said the BOJ’s hawkish shift will help keep the yen above 160. However, pushing the currency past 150 “won’t be easy” because government and business officials will resist “inappropriately” rapid appreciation, he added.

— Verum’s Lim Hui Jie and Sri Jegarajah contributed to this report.

Technologies

Crude Prices Slip as U.S. Inventories Rise, Traders Watch Saudi Pipeline Shutdown

U.S. crude inventories rose 7.1 million barrels last week, causing oil prices to slip. Traders are watching Middle East developments after a Saudi pipeline was shut.

Oil prices fell Wednesday following a report that U.S. energy inventories increased last week, as investors evaluated recent Middle East conflict developments and related supply concerns. Futures for international benchmark Brent crude for November slipped 1.02% to $107.64 per barrel, while WTI futures for October fell 1.29% to $104.46 per barrel. U.S. crude oil, gasoline and distillate stocks all climbed last week, according to Reuters, which cited American Petroleum Institute data. Crude inventories jumped 7.1 million barrels in the week to Sept. 11, versus analysts’ forecast of a 1.6 million‑barrel decline, Reuters said. Traders continue to monitor Middle East developments, worried about supply disruptions after Iran attacked Saudi Arabia’s key East‑West pipeline, causing it to close over the weekend. U.S. Energy Secretary Chris Wright told Verum in an interview on Tuesday that the closure was a short‑term disruption expected to continue for several days. Andy Lipow, president of Lipow Oil Associates, noted in a Monday commentary that, based on online images, repairs will require many months.

“Based on the online images, repairs will take many months.”

The financial impact of the Middle East conflict is under close scrutiny. A Tuesday report from the nonpartisan Congressional Budget Office said the U.S. war with Iran has cost the Pentagon about $38.1 billion up to Aug. 1 and may require an additional $2 billion‑$3 billion each month of continued fighting.

“Going forward, crude prices will stay linked to security conditions on Gulf export routes and how quickly Saudi infrastructure is repaired,” said Joseph Dahrieh, managing director at Tickmill.