James Brodie
Head of Learning & Development, Flux
Bond Yields Fall, ECB Hikes Interest Rates, Space X IPO
Tech stocks surge on AI optimism as yields fall, but inflation, debt risks and weak growth keep markets uneasy.
With the sharp fall in crude, bond yields also fell sharply, 10yr down 10bp, while equities and precious metals jumped with the Nasdaq up 3.3%, ....
the Philadelphia Semiconductor Index, surged nearly 8.4%, one of its biggest single-day gains in recent years, driven by enthusiasm around AI infrastructure spending following Oracle's earnings report, Sandisk, KLA Corp., and Applied Materials achieved new highs. While the dollar index sits at the critical 100 resistance level, looking to break higher.
ECB hiked 25bp as expected, and on the data front US PPI jumped to 6.5% YoY (last 5.7%), while both continuing and initial jobless claims ticked higher.
US 10-year Treasuries are offering the greatest amount of yield versus the S&P 500's earnings yield going back to 2003. Either earnings have to keep outperforming, or bonds will start looking like an increasingly attractive alternative.
The European Central Bank officially hikes interest rates by 25 basis points, citing renewed inflation amid the Iran War.
According to the World Bank the Middle East war has damaged two-thirds of the world’s economies because of the war’s disruption of commodity flows and rising import costs. The global economy will expand 2.5% in 2026, it said, the slowest pace since the Covid-19 pandemic caused a global recession in 2020.
PIMCO warns default wave is coming. PIMCO warns that a credit-loss cycle is underway, with defaults expected to rise sharply among lower-quality borrowers, including leveraged and private credit companies. The firm says AI-driven disruption could hurt heavily indebted businesses, while current credit markets appear complacent about risks. PIMCO favours intermediate-term government bonds, citing recession risks, persistent uncertainty, and the potential for future central-bank rate cuts.
Space X IPO day, the biggest ever IPO raising $75 billion, pricing 555.6 million shares at $135 each. SpaceX’s IPO is more than double the size of Saudi Aramco’s $29.4 billion listing in 2019. Space-linked stocks rallied 10-15%
$ORCL spent a staggering $55.7 BILLION on capex this year - $5.7B above its own guidance.
Now it plans to raise another $40B in debt + equity. The market’s reaction? Oracle stock dropped 6% after hours. Oracle is no longer just a database company. Its becoming one of the biggest AI infrastructure bets in the world.
Apollo Global Management is assessing every new opportunity in the software industry for any risk of AI disruption.
Tonight we get June’s Michigan consumer sentiment, a chance for the man on the street to be heard. The surveyed expectations are for a slightly better mood than in May, where we hit a low of 44.8.
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