Yields spike, equities sink, dollar jumps. The US 30-year is now 1bp away from new highs since May 2006, this will be next weeks headlines.
2-year yields make new cycle highs, with 30-year just 5bp away (Chart 1: Bloomberg). The OIS now prices 42bp hikes by the FED by year end (33% chance they hike next week). ECB 48bp hikes by y/e, BOE 46bp.
AI Is Back. Bonds Are Breaking. Nobody Seems to Care About the Second One.
Gold breaks higher +1.7 and out of the converging price range while silver jumps +3.8%.
U.S. equities closed lower no Friday with Nasdaq -1.5% & S&P down 1% on continued AI fallout, this time over the rise of new Chinese models (Moonshot) to compete with OpenAI and Anthropic.
The Nasdaq fell 1.6% yesterday with futures pointing to another 1.6% downside today, as semiconductor weakness extends into a second session and raises the risk of a broader tech-led drawdown rather than a one-day air pocket.
CALM ON THE SURFACE, ROTATION UNDERNEATH
U.S. CPI declined 0.4% month-over-month (largest drop in 5 years), with core CPI easing to 3.5% year-over-year.
Energy prices spiked again. More missile strikes overnight between US-Iran, Donald Trump reinstating the blockade of the Straits and demanding a 20% fee on all cargoes shipped through the waterway, plus missile strikes between the Houthis and Saudi Arabia restart after 4 years ‘peace’.
Markets Overnight After another night of U.S. and Iranian bombing, equities rallied on comments from Trump, who claimed "Iran called a little while ago, they want to make a deal" (which Iran denied).
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