Hi everyone,
Hope you had a lovely long weekend. Last week seemed quiet boring with the S&P 500 gaining just 0.1%, the Nasdaq 0.4%, while the Dow slipped 0.3%, and the Russell 2000 finished basically flat.
The real story was oil and bond yields. Escalating tensions around the Strait of Hormuz sent WTI crude up roughly 9% to $91/barrel, while the U.S. 10-year yield briefly hit 4.81%, its highest since November 2023.
The theme was simple: oil up, yields up, stocks down.
Then Friday’s jobs report came in much hotter than expected. Stocks sold off, short-term yields hit fresh 52-week highs, and a potential Fed hike jumped back into the conversation. The VIX still closed at just 14.53.
Oil Ran the Show
Every big move this week came from oil. WTI jumped about 9% after Iran tensions around Hormuz flared up, and stocks moved the other way almost tick for tick.That’s a supply shock. It hits yields first, then valuations. Energy held up. Rate-sensitive names and discretionary got hit.When oil is driving, the rest of the market is just reacting.
The Global Bond Squeeze
Japanese, UK, French, and German 10-year yields all hit multi-year or multi-decade highs. That drains liquidity from risk assets everywhere. When global duration is getting marked down at the same time, the bid for equities has to work harder just to stand still.
U.S. yields did the heavy lifting at home:
10-year tagged 4.81% intraday and closed near 4.78%
2-year printed a 52-week high at 4.374%
5-year made a new 52-week high at 4.545%
30-year sits at 5.24%
The front end is doing the repricing. That is the part that matters for the Fed path, financing costs, and growth-stock discount rates.
Payrolls Blew Past Estimates
August nonfarm payrolls added 162,000 versus +55,000 expected. July was revised up to +21K from -23K. The three-month average now sits at +71K.
Unemployment held at 4.1%, though labor force participation fell to 61.4%, a five-year low. That last piece is the one people will argue over. The headline print is not soft. Good news became bad news. A blowout jobs number sent stocks lower because it hands the Fed cover to hike.
FOMC in September
Rate-hike odds for the Sept 15–16 FOMC swung from 65% to 51% to 61% in five days. Governor Chris Waller cooled things Thursday by saying he leans toward holding. We’re also inclining towards that thesis, even though Friday’s jobs print heated them right back up. December still carries the first fully priced hike. That is the setup into next week’s meeting: the market is no longer pricing a clean “hold and wait” path as if growth is rolling over. It is pricing a firm labor market as well.
Breadth Quietly Narrowed
Participation shrank across all three major indices even as the tape went sideways. Mega caps carried the week while the average stock lagged. A flat index with narrowing internals is not “healthy digestion.” It is a handful of names offsetting pressure everywhere else while oil and yields do the damage underneath.
This week’s calendar
Tue (9/8): Consumer Credit. NFIB Small Business Optimism.
Wed (9/9): MBA Mortgage Applications.
Thu (9/10): PPI. Initial claims. Continuing claims. Existing home sales. Wholesale inventories. EIA crude. EIA natural gas.
Fri (9/11): CPI. Treasury Budget. Michigan Sentiment.
Thursday and Friday are the real days. PPI first, then CPI. That’s what yields will trade. Oil inventories sit in the middle of it, so crude can still run the tape if Hormuz stays hot.
SPX Levels
Breakout of the trendline could lead to higher prices. After 7.790, we see next resistance level at 7,840.
Resistance: 7,730 / 7,790
Support: 7,679 / 7,651
