Tuesday morning market commentators are twisting themselves into pretzels in an effort to explain the rise in treasury yields to new highs for the year.
Tuesday morning market commentators are twisting themselves into pretzels in an effort to explain the rise in treasury yields to new highs for the year. We simply don’t want it to be true that Treasury stepped out of its lane with its recent effort to intervene on the long end of the curve and that the gambit is failing. While there may be a longstanding personal relationship between Secretary Bessent and Chairman Walsh (probably no different than the familiarity between any Treasury secretary and Fed chair), in this time and place the vested interests of their respective agencies are in fact (and by design) adversarial. The Administration wants yields down. The Fed, in the interest of containing inflation, must raise them up. As we speak, the bond market is making its verdict known.
Pressure in the bond market is putting pressure on stocks, particularly tech, in the premarket. CRWV and INTC are down more than 2% on no news of particular note. As long as so many market participants remain AWOL pre-Labor Day, experienced investors will be taking their cue from the 10-year yield and will likely expect continued pressure until yields resolve a new range.
Meanwhile, oil continues higher, up nearly another $2 and approaching $88/barrel. The integrated oil names we’ve highlighted for weeks (XOM, COP) continue to perform well in the midst of monetary and geopolitical uncertainty. We will add names to the Kapnotes trading board as situations develop throughout the day.
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