US Stock Market: Retail “Surprises to the Downside” + Oil Prices “Soar,” and the Market’s Playing “Tug of War”
Brothers, last night the three major US stock indexes closed slightly lower, but there were hidden undercurrents beneath the surface.
On one side, weak retail data “surprised to the downside,” reinforcing expectations that the Fed is done with rate hikes. On the other, oil prices surged sharply after geopolitical tensions around the Strait of Hormuz flared up, sending energy stocks into a frenzy while tech stocks faced pressure. The market keeps bouncing back and forth between “inflation cooling” and “inflation reigniting.”
On the macro front: A Song of Ice and Fire
Retail sales “collapsed”: US retail sales fell 0.6% month-over-month in July, the largest drop in more than a year and far below expectations. Combined with this week’s mild CPI and PPI, market expectations for a Fed rate hike in September have collapsed to around 25%, and the US Dollar Index has slipped to a relative low.
Oil prices “exploded”: Near-stoppage in Strait of Hormuz passage. WTI crude rose about 5.4% on the week, and Brent is nearing $90. Trump threatened that he “will soon announce” the Strait of Hormuz as US territory, and the geopolitical risk premium was instantly priced to the max. The energy sector became the strongest performer of the day.
Impact across asset classes: Everybody goes their own way
Stocks: S&P 500 fell 0.17%, Nasdaq dropped 0.28%, and the Dow fell 0.20%, but market breadth was still decent. Russell 2000, the small-cap index, gained 1.12% on the week.
Semiconductors saw major internal divergence. Memory and optical communications surged (SanDisk up 35% WoW, AAOI up 15%), but equipment names like Applied Materials and Broadcom were hit hard due to overly high expectations.
Bonds: The yield on the 10-year US Treasury ended at 4.68%. The 30-year yield rose to 5.25%, the highest level in 19 years. The yield spread between short and long ends widened to 108 basis points. A steeper curve suggests the market believes the cycle of rate hikes is ending, but it does not yet believe inflation is dead.
Commodities and FX: Gold bounced back to $4,376, while the US Dollar Index slid to 99.67. The yen against the dollar is once again nearing the key 160 level.
Right now, the market is trading a complicated script: “inflation cooling” but “geopolitical risks heating up.” Retail data provides a case for “no more hikes,” but persistent oil price strength could push inflation expectations higher again, potentially putting the Fed into a dilemma.
In the short term, memory and energy are two clear main lines, but positioning needs to stay flexible—keep a close eye on the trend of oil prices and US Treasury yields $DRAM $CL $XAU #美国30年期国债拍卖收益率创2001年新高 #全球股市逼近历史高位 #油价小幅走高
Brothers, last night the three major US stock indexes closed slightly lower, but there were hidden undercurrents beneath the surface.
On one side, weak retail data “surprised to the downside,” reinforcing expectations that the Fed is done with rate hikes. On the other, oil prices surged sharply after geopolitical tensions around the Strait of Hormuz flared up, sending energy stocks into a frenzy while tech stocks faced pressure. The market keeps bouncing back and forth between “inflation cooling” and “inflation reigniting.”
On the macro front: A Song of Ice and Fire
Retail sales “collapsed”: US retail sales fell 0.6% month-over-month in July, the largest drop in more than a year and far below expectations. Combined with this week’s mild CPI and PPI, market expectations for a Fed rate hike in September have collapsed to around 25%, and the US Dollar Index has slipped to a relative low.
Oil prices “exploded”: Near-stoppage in Strait of Hormuz passage. WTI crude rose about 5.4% on the week, and Brent is nearing $90. Trump threatened that he “will soon announce” the Strait of Hormuz as US territory, and the geopolitical risk premium was instantly priced to the max. The energy sector became the strongest performer of the day.
Impact across asset classes: Everybody goes their own way
Stocks: S&P 500 fell 0.17%, Nasdaq dropped 0.28%, and the Dow fell 0.20%, but market breadth was still decent. Russell 2000, the small-cap index, gained 1.12% on the week.
Semiconductors saw major internal divergence. Memory and optical communications surged (SanDisk up 35% WoW, AAOI up 15%), but equipment names like Applied Materials and Broadcom were hit hard due to overly high expectations.
Bonds: The yield on the 10-year US Treasury ended at 4.68%. The 30-year yield rose to 5.25%, the highest level in 19 years. The yield spread between short and long ends widened to 108 basis points. A steeper curve suggests the market believes the cycle of rate hikes is ending, but it does not yet believe inflation is dead.
Commodities and FX: Gold bounced back to $4,376, while the US Dollar Index slid to 99.67. The yen against the dollar is once again nearing the key 160 level.
Right now, the market is trading a complicated script: “inflation cooling” but “geopolitical risks heating up.” Retail data provides a case for “no more hikes,” but persistent oil price strength could push inflation expectations higher again, potentially putting the Fed into a dilemma.
In the short term, memory and energy are two clear main lines, but positioning needs to stay flexible—keep a close eye on the trend of oil prices and US Treasury yields $DRAM $CL $XAU #美国30年期国债拍卖收益率创2001年新高 #全球股市逼近历史高位 #油价小幅走高