MARKET OPEN
Good morning, it’s {{current_date_full_with_day}}. Wall Street starts Tuesday with a bond problem, not a stock problem.
The 10-year Treasury sits at 5.24%, oil is back near $100, and OpenAI just paused work on its next AI model.
The setup: Futures are flat, but the real action is in rates.
In today's newsletter:
Why 5.25% changes the math on your portfolio
What OpenAI's pause means for AI stocks
The income idea hiding in the selloff
The biggest risk before 10:00 a.m.
In partnership with Golden Portfolio: August 15, 1971. You've been paying for that day ever since. Here’s the new math. Find the fix here.
FUTURES SNAPSHOT
S&P 500 | 7,741.00 | -0.07% |
Nasdaq | 30,592.25 | +0.09% |
Dow Jones | 51,790.00 | -0.08% |
Bitcoin | $84,168 | +0.91% |
Ethereum | $2,715 | +1.52% |
Gold | $4,179.80 | +0.28% |
Oil (Brent) | $104.86 | -0.34% |
VIX | 16.15 | +0.56% |
Markets are treading water after Monday's selloff. Expect volatility at 10:00 a.m. ET.
What's moving the market: Iran. Iran expects a U.S. response "hopefully" by Tuesday, while Trump dismissed reports of potential sanctions relief as a "HOAX." Any headline moves oil first, yields second, stocks third.
TODAY’S CATALYSTS
Before open — Carnival (CCL), CarMax (KMX) earnings
9:00 AM — Case-Shiller home prices
10:00 AM — JOLTS, Consumer Confidence
Afternoon — Fed's Goolsbee, Williams, Barr, Musalem
All day — White House AI executive summit
Most important: JOLTS. Openings are expected at 7.23M vs. 7.271M previously. A hot labor read on top of $100 oil makes an October Fed hike more likely.
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THE BIG STORY
The 10-Year Is Running the Market
The 10-year yield advanced to 5.25% Monday, the highest level since 2007. It sat at 3.94% on February 27, the day before the Iran war started.
That move is showing up everywhere. The average 30-year fixed mortgage jumped to 7.37% last week. Gold fell 3.9% Monday. Money markets boosted bets on an October Fed increase.
For stocks, the math is simple: when a risk-free Treasury pays 5%+, investors demand more from everything else. Goldman notes the S&P 500's forward P/E has already fallen from 22x to 19x, partly because of rising rates.
What this means for investors: Watch oil more closely than earnings. Every leg higher in yields has followed a spike in crude.
BREAKING NEWS
OpenAI Hits the Brakes
This is the second training halt in three months for the world's most prominent AI lab, following incidents involving its agents acting in unexpected ways on federal government websites.
The WSJ also reports OpenAI is scrapping GPT-6.1 Astra, planned for an October debut.
Why it matters: Frontier training drives hundreds of billions in chip, memory, and data-center spending. Arm, SanDisk, Oracle, Snowflake, and Intel each moved lower Monday.
Nvidia bucked the trend. Shares rose after the chipmaker authorized another $150 billion for buybacks, bringing the plan to $235 billion.
The real test comes Wednesday, when Micron reports.
PORTFOLIO INSIGHTS
If yields keep climbing → Pressure on growth stocks, REITs, and homebuilders; better yields for savers and income investors.
If oil holds near $100 → Support for energy producers; pressure on airlines, cruise lines, and consumer spending.
If AI capex expectations cool → Risk for memory and data-center names; relative strength in cybersecurity and cash-rich mega caps.
In partnership with Golden Portfolio
The 1974 Washington–Riyadh Deal Has Ended
For 50 years, this quiet agreement helped support the dollar-based financial system. On June 9 2024, it expired quietly.
The war in Iran brought its consequences roaring to the forefront. Garrett says this is the kind of setup investors wait decades for.
TODAY’S BIG IDEA
Locking In 5% Treasuries
The opportunity: Intermediate-term Treasuries.
Why now: The 10-year yields 5.24% and the 2-year 4.94%. Retirees haven't seen these rates since 2007.
Bull case: If oil cools or growth slows, yields fall and bond prices rise, giving you gains on top of income.
Risk: An October Fed hike could push yields higher first.
Watch: Wednesday's PCE inflation report.
RISK RADAR
Market Breadth
The S&P 500 is up double digits this year. The average stock isn't.
Goldman says breadth has fallen to its lowest level since the dot-com bubble, with the median S&P 500 stock 16% below its 52-week high.
Watch: The equal-weight S&P 500 (RSP). If it keeps lagging, the index is more fragile than it looks.
THE WATCHLIST
CCL — Reports before the open. Carnival is the only major cruise operator that doesn't hedge fuel. Watch the full-year guidance.
MU — Reports Wednesday after close. Micron guided to $50B in revenue. This is the first hard read on AI memory demand since OpenAI's pause.
BA -6.9% — The FAA won't certify the 737 MAX 10 until it assesses a new software glitch.
FOLLOW THE MONEY
Money is rotating from AI builders to AI protectors.
Palo Alto jumped roughly 5% Monday after launching a frontier-AI defense service, and Morgan Stanley lifted its target to $410. Goldman's cybersecurity basket has more than doubled since April 10.
The catch: CrowdStrike trades above 170 times estimated earnings. The flows are real. So is the valuation risk.
CHART OF THE DAY: THE 10-YEAR SINCE THE WAR BEGAN
Category | 10-Year Yield (%) |
|---|---|
Feb 27 | 3.94 |
April 1 | 4.31 |
July 16 | 4.56 |
July 23 | 4.71 |
Sept 15 | 5 |
Sept 24 | 5.18 |
The 10-year has climbed from 3.94% to 5.25% in seven months. Each leg higher lined up with an oil spike. Until crude stabilizes, rates set the market's ceiling.
🔔 OPENING BELL HOT TAKES
OpenAI's safety head said the scrapped Astra model showed more deception than its predecessor. Investing.com
Goldman says AI stocks are masking extreme weakness beneath the S&P 500. X / @DeItaone
The S&P 500 wiped out September's advance Monday as the dollar rose and gold dipped. Bloomberg
Moody's estimates the conflict has cost the average household about $1,760, including $425 from higher rates. CNBC
Australia's central bank raised rates to 4.60%, its fourth hike this year and a 15-year high. NordFX
THE BOTTOM LINE
Stocks aren't the problem this morning; the bond market is. With the 10-year above 5% and oil near $100, today's labor data carries more weight than usual.
We'd stay patient on long-duration growth, lean into income while yields are this high, and let Micron show how much the AI trade has left.
That’s all for the day. Go in crush the markets today!
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