Global Bond Selloff
Bond yields jumped to multi-month and multi-year highs. The 10-year Treasury yield climbed toward 4.8%. The 30-year yield went above 5.3%. Japan's 10-year government bond yield hit 3%, its highest since 1996, which shows this is a worldwide bond selloff. Investors are rethinking where interest rates go next after Kevin Warsh gave a hawkish message at Jackson Hole.
Oil and Geopolitical Risk
New tension between the US and Iran added to inflation worries and pushed oil higher. Brent crude traded above $95 a barrel, its highest since at least July. WTI rose to about $90 a barrel, up almost 6% on the day. A lasting rise in energy prices could slow progress on inflation and make it harder for the central bank to ease policy. Investors are watching the Strait of Hormuz closely, since any disruption to energy shipments there could push crude even higher.
Higher Treasury yields also raise the discount rate used on future company earnings, which hits richly valued growth and technology stocks the hardest. The mix of higher oil, higher yields, and fresh geopolitical risk makes a tougher setting for stocks at the start of a month that is often turbulent.
Robotaxi Race
Waymo is expanding into new markets and now runs in 14 cities after adding San Diego, Denver, and Tampa, with more than 4,000 vehicles in its commercial fleet. Zoox, backed by Amazon (AMZN), is growing its testing in Houston and San Diego and will be in 12 US markets once those two cities open. These moves come just before Tesla's (TSLA) Cybercab launch later this week.
Manufacturing Data
Manufacturing stayed a bright spot. The headline ISM eased slightly last month but held comfortably above 50, the line between growth and shrinking. The survey showed new orders, production, and jobs all growing. Supplier deliveries slowed and prices rose, which keeps up sticky inflation pressure. A respondent in the chemicals business said economic pressure, especially from tariffs and the war in Iran, is making it harder to compete, could cut consumer spending, and points to another hard year for them.
Japan and the Yen
Dollar-yen was back at 160, raising expectations of intervention again, since that is the level where authorities have stepped in before to defend the currency. Japanese media reports say Treasury Secretary Bessent has been pushing Japan harder to raise rates. He told CNBC he has information the market does not and thinks Japan and the BOJ will act to strengthen the yen. The BOJ meets September 17 and markets are currently pricing in a hike.
What to Watch Next
Broadcom (AVGO) reports earnings tomorrow after the close and has the size to move the broader market. Wall Street expects EPS of $3.22 on revenue of $29.47 billion, slightly ahead of management's guidance and equal to roughly 90% growth year-over-year for both. AI semiconductor revenue may matter even more, as investors want to see continued acceleration from the 143% growth reported last quarter.
On the macro side, ADP data comes next and adds to this week's labor market picture. JOLTS today eased but stayed roughly stable. Mortgage applications are also due. High yields have been pressuring housing, keeping buyers on the sidelines, so the data will show more about August and July.
