Good morning and welcome to today's market chronicle. It's Monday, August 3rd. Wall Street closed July at record highs and the 30-year Treasury closed it at the highest yield since 2007, and somehow both of these are being sold to you as good news.
Recap: Friday the S&P 500 added about 0.7% to 7,489, the Nasdaq tacked on 1% to 25,373, the Dow logged a fourth straight winning month, and le tout-Wall Street toasted itself for surviving a wild July. Amazon ($AMZN) surged, Apple ($AAPL) sank, and the algorithm decided that was a rally. Fine. Who actually won? The people who bought the index and closed their eyes, which is to say the same people who always win until they don't. Because underneath the confetti, the long end of the curve is on fire. The 10-year is loitering around 4.7%, its highest since early last year, and the 30-year touched 5.25%, a number that last showed up when subprime was still a compliment. The bond market does not believe the inflation story, does not believe the Fed under Kevin Warsh has the stomach to fight it, and is charging the government accordingly. Uncle Donald will of course take credit for the record close and blame the yields on someone else by lunch.
And yet everyone is pretending not to notice that equities at all-time highs and thirty-year yields at levels last seen in 2007 cannot both be right forever. One of them is lying. The stock market says the Fed cuts in September and the party continues. The bond market says inflation is sticky, the terminal rate is going up, and the coffee is about to get cold. They cannot both be paid.
Ahead today, ISM manufacturing lands to tell us whether the factory floor is expanding or just filling out paperwork, and nobody will care until Friday, when July nonfarm payrolls arrive as the only number that actually moves the September needle. In between we get Palantir ($PLTR) and AMD ($AMD) earnings, so the AI faithful have something to pray to. Whether any of it survives contact with a hot wage print is the question nobody wants asked before Friday.
The levels, cleanly. Gold is firm near $4,060 an ounce, still the only asset that sleeps well. WTI slid to around $79 after the Hormuz de-escalation drained the war premium, because in the wonderful world of finance peace is bearish. Bitcoin slipped to roughly $63,000 as yields and a firmer dollar did their usual mugging. S&P futures point mildly higher into the open, which tells you precisely nothing.
So we open green on records nobody trusts, waiting on a jobs number four days away. The skunk is already at the party. It just hasn't been introduced yet. Have a good one, and stay sharp.