What Caused Yesterday’s Selloff? AI or Yields?
What’s in Today’s Report:
- What Caused Yesterday’s Drop, AI or Yields?
- Three Reasons Yields Are Rising Right Now
Futures are flat as traders digest this week’s pullback in tech stocks amid stubbornly elevated oil prices and subsequently buoyant bond yields.
Economically, U.K. Core CPI held steady at 2.6% vs. (E) 2.5% y/y while the EU’s Core CPI equivalent (Core HICP) was unchanged at 2.5% y/y in July, meeting estimates; neither release suggested inflation is beginning to slow materially which is keeping yields elevated today.
There are no noteworthy economic reports today, however the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET which could move the bond market, and a pullback in yields would be welcomed by equities today, potentially setting up a relief rally in the broader market.
Later in the afternoon, the July FOMC meeting minutes will be released (2:00 p.m. ET) and traders will be looking for any fresh insight as to the Fed’s most likely policy rate path in H2’26; the more dovish/accommodating, the better for equities.
Finally, there are a handful of late-season earnings releases due to be released today including ADI ($3.33), TGT ($2.30), TJX ($1.18), LOW ($4.22), EL ($0.32), and BULL ($0.03). And as has been the case, the stronger the results and guidance, the better for the market.
