Watching US markets week to week without context is just noise. This week the noise had a single source: the long end of the US Treasury market. The 30-year yield touched its highest level since 2007, and the part of the equity market that broke was not the part most people expected. Memory and storage stocks, the most extended trade in semiconductors, fell hardest, while a biotech readout produced the largest single-day gain in a major index constituent this year. That's why we built Winvesta Crisps, to cut through the noise and tell you what actually moved markets and why. 60,000+ investors from all over India are already in. What about you?
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Three sessions into the week the market had already made its point. Long-dated US government bonds sold off hard enough to drag the S&P 500 down for two straight days, and the stocks that fell most were not the expensive software names everyone worries about but the memory and storage makers that had been the best performers in semiconductors all year. Then on Wednesday the Treasury announced a larger buyback of longer-dated debt, yields eased, and the index closed higher. The week's lesson is that the bond market is currently setting the price of equities, and it is doing so day by day.
📊 Market recap
A note on the window. This recap covers Monday 17 to Wednesday 19 August, the last three completed sessions before it went to press. Thursday's session, which included Walmart's second quarter results, and Friday's trading fall outside it.
Monday. The week opened with the bond market in charge. The 30-year Treasury yield rose nearly six basis points to about 5.31%, passing the previous month's high to reach its loftiest level since 2007, per Bloomberg. The move was not about the Federal Reserve. It reflected a July federal deficit that was the largest monthly total since March 2021, a heavy calendar of long-dated bond sales, and inflation that has now sat above the Fed's 2% target for five years while the Strait of Hormuz standoff keeps oil elevated. The same pattern showed up abroad, with Canadian 30-year yields at their highest since 2010 and German rates back at 2011 levels. Equities drifted lower, with elevated oil prices and global yields the stated drag, per CNBC.
Tuesday. The pressure became a proper risk-off session. The 30-year topped 5.33%, a fresh 19-year high, per CNBC. The S&P 500 fell about 0.6% and the Nasdaq about 1.3%. The selling concentrated in semiconductors, and inside semiconductors it concentrated in memory and storage: Micron fell about 5%, Western Digital about 7%, SanDisk about 6% and Seagate about 6%, per 24/7 Wall St. The uniformity across the group is the tell. No single company reported anything. The entire complex was repriced at once, which is what a discount rate reset looks like rather than a company problem.
Wednesday. The Treasury Department announced an increased buyback operation for longer-term debt, yields fell back, and the S&P 500 ended a three-day losing run, per CNBC. The index rose about 0.21% to around 7,708, the Dow about 0.22% to around 53,463, and the Nasdaq about 0.16% to around 26,331. The gains were modest and the composition was odd: the day belonged to a melanoma trial result and a takeover report rather than to anything macro.
😶🌫️ Sentiment watch
CNN's Fear and Greed Index has been sitting in the low-to-mid 50s, having slipped out of greed and into neutral territory during the week as bond yields climbed, per readings reported by Benzinga. Sources differ by a few points on the exact level, so treat it as a zone rather than a number.
The VIX closed Wednesday at 14.89, down about 6% on the day. That is a striking reading for a week in which the long bond hit a 19-year high and the Nasdaq had a 1.3% down day. Equity volatility is not pricing much stress at all. Either the bond market is wrong about inflation, or the options market has not yet decided that a 5.33% 30-year yield is an equity problem. Both cannot hold.
The stocks moving markets this week are all tradeable from India on the Winvesta app. No US bank account needed!
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