Market Report.
🕰️ We are still awaiting data from the US employment report that will give us a clue as to whether the Fed will ease interest rates on debt or not.
⚖️ In order to reverse a federal appeals court finding that said the majority of his tariffs were unlawful, Trump announced on Tuesday that he will ask the Supreme Court for a “expedited ruling.” The president of the White House attributed Tuesday’s stock market decline on that decision. He claimed that the reason the stock market is down is because it requires the tariffs. “They desire the tariffs.”
📈 Meanwhile, US Treasury yields spiked on the prospect of the U.S. having to refund tariff revenue. The benchmark 10-year Treasury yield rose 5 basis points to 4.281%, while the 30-year bond yield climbed more than 5 basis points to 4.977%. The 2-year Treasury yield moved 3 basis points higher to 3.658%.
🌍 Yields overseas also increased, with 30-year yields in Germany hitting their highest since 2011 and French long-bond yields reaching their highest since 2009. While the tariffs had initially raised inflation concerns, the last few months bond investors were seduced by the revenue they generated. Now, the prospect of refunds could cause a surge in Treasury issuance and yields.
💰 Donald Trump told the world that they would generate a 800 billion income with tariffs, and it is that figure that is now at stake. That’s how the market works; expectations can be double-edged swords.
⚠️ However, to be fair, it is not only US bonds that have experienced this overheating. Bonds from countries such as Germany, France and the UK also suffered yesterday.
🇬🇧 In the UK, the moves have been interpreted as a response to the Labour government’s reshuffle of several senior advisory roles, seen as preparation for the upcoming budget and an attempt to drive a reset amid political pressures and tepid economic growth.
📉 At 5.709%, the yield on 30-year gilts, or U.K. government bonds, increased by 7 basis points. At the same time, the value of the British pound fell 1.5% vs the US dollar.
🔍 The rising borrowing costs further complicate the Finance Minister’s efforts to meet self-imposed “fiscal rules” aimed at reducing U.K. debt as a proportion of GDP, likely leading to further tax rises.
🔄 It seems that the days of rising bond yields are returning, as governments attempt to convince the markets of their solvency through fiscal adjustments. I would like to remind you that back in 2012, rises in bond yields were accompanied by falls in the respective stock markets.
🇯🇵 Well, even the 30-year Japanese government bond (JGB) yield hit an unprecedented 3.255%. Japan’s Nikkei fell 0.69% as worries about the nation’s financial health returned after a close aide to the Prime Minister said he intended to resign.
🇫🇷 The head of the French central bank, Francois Villeroy de Galhau, warned that the longer France puts off tackling its excessive budget deficit and debt, the more painful it will be to find a solution. French bonds and stocks sold off last week after centrist Prime Minister Francois Bayrou called a September 8th confidence vote on his debt-cutting plan. Opposition lawmakers have rejected the budget plan and said they will vote against the government, French government facing a possible collapse in a vote of confidence.
⚠️ This could cause the collapse of the government in a Europe that must convince its citizens with one hand that cuts must be made, and with the other, give billions to the American military industry and its war against Russia.
🔍 A U.S. federal judge ruled that Google does not have to sell its Chrome web browser, but it will have to share some of its search data with competitors. The court decision allows Google to avoid a severe remedy request from the U.S. government and may offer a blueprint for other judges weighing similar cases against other tech giants.
📈 Alphabet, Google’s parent company, saw its shares rally in late trading following the court’s decision.
🏭 TSMC’s manufacturing capacity may be limited as a result of the US rescinding its permission to freely move necessary equipment to its primary chipmaking facility in China.
🌐 Images of Xi Jinping alongside the leaders of Russia and India at the Shanghai Cooperation Organisation (SCO) summit have gone viral. The leaders also walked alongside Kim Jong-un, leader of North Korea, during China’s largest military parade.
😠 The US administration appears to have been angered by these images. Government adviser Peter Navarro said: ‘It was a shame to see Modi in bed with Xi Jinping and Putin. I don’t know what he’s thinking. We hope he realises he needs to be with us and not with Russia.’
📢 President Trump posted on his social media: ‘Please give my warmest regards to Vladimir Putin and Kim Jong Un as you conspire against the United States of America.’
🚢 The U.S. military conducted a strike on a vessel from Venezuela allegedly carrying illegal narcotics, killing 11 people on board. This was the first known operation since the recent deployment of U.S. warships to the southern Caribbean.
💬 President Trump stated that the U.S. “shot out a boat, a drug-carrying boat, a lot of drugs in that boat” and claimed the crew were members of the Venezuelan gang Tren de Aragua, which the U.S. has designated as a terrorist group.
🇻🇪 Venezuela’s government has disputed Trump’s claims, with the Communications Minister suggesting the video footage shared by Trump was created using artificial intelligence.
📉 Market View:
🔄 The markets are attempting to recover after the significant setback they experienced yesterday. We had previously warned in our daily reports that the European stock market was at risk and that declines could occur in the upcoming sessions.
📉 However, yesterday’s declines extended to other markets, including the United States. The Mini S&P 500 futures lost 6,400 points yesterday, from which they rebounded to the current 6,435 points. The situation was worse for the Nasdaq 100 futures, which nearly dropped below 23,000 points, from where they have rebounded to the current 23,360 points.
📊 In Europe, the DAX 40 futures contract retreated almost to 23,500 points from over 24,100 points on Monday, with a total accumulated decline of more than 2.5%, currently trading at 23,658 points. The Eurostoxx 50 lost 5,300 points, and after its rebound, it is now at 5,330 points.
📈 The yield on the German 10-year bond is once again approaching the 3% mark, having traded at 2.79% yesterday – figures not seen since March when it reached and exceeded 2.9%.
💱 The dollar index continued to fluctuate within the range of the past few weeks, between 97.50 and 98.70, currently standing at 98.35. This lateral movement is causing the EUR/USD to advance and retreat around 1.17, presently at 1.1640.
🛢️ Oil appears to be consolidating above $68 per barrel for Brent, reaching and exceeding $69.50 in recent hours.
💰 Gold continues to advance, surpassing $3,600 per ounce, while the risk premiums in the United States and Europe are heating up.
💻 Bitcoin nearly reached $112,000 during its rebound in the last few hours, but is currently retreating to $110,740.
