The 30-year Treasury yield has spent 55 days above 5% this year, the most in any year since 2006, according to Charles Schwab. It finished Friday at 5.22%, per Federal Reserve H.15 data.
Long-end yields pushed higher again Monday. The bond market is setting the terms this morning, not the stock market.
WTI crude settled up 2.83% at $85.76 on Monday and Brent added 2.71% to $90.49, per CNBC. The move came after U.S. Central Command confirmed strikes on two Iranian rocket launchers on Larak Island. Iranian state media reported a supertanker caught fire after hitting two naval mines in the southern Strait of Hormuz, and the U.S. strategic reserve has been drawn close to minimum operating levels.
Crude at this level feeds the same inflation expectations holding the long bond above 5%.
Equities took the smaller share of the damage. The S&P 500 fell 0.33% to 7,686.14 and the Nasdaq slipped 0.12% to 26,370.89, per CNBC. The Dow gave up 374.09 points, or 0.7%, to 53,185.90, dragged by Goldman Sachs and Alphabet.
The VIX rose just 3.4% to 14.92, so equity volatility is not pricing what oil and Treasuries are.
The two-year yield jumped to 4.34% on Friday from 4.20% a day earlier, a 14 basis point move, per Federal Reserve H.15 data. That followed Fed Chair Kevin Warsh's Jackson Hole warning on sticky inflation. CME FedWatch puts the odds of a 25 basis point hike to 3.75% to 4% this month at 57.5%.
Effective fed funds sat at 3.63% through Friday, and every number this week gets read against that gap.
August still closed green. The S&P 500 gained 2.6% for the month and the Nasdaq 3.9%, the first monthly advance for either since May, and the Dow rose more than 1% for a fifth straight monthly win, its 15th in 16 months. September is the S&P 500's weakest month, down 0.6% on average and positive only 45% of the time, per Carson Group's Ryan Detrick.
It starts with the long end above 5% and crude near $86.
S&P Global's manufacturing PMI is expected at 53.2, matching the prior reading. ISM manufacturing lands at 10:00 a.m. ET, alongside July JOLTS at the same hour. Consensus for job openings is 7.33 million against 7.359 million previously.
A soft openings print is the first credible argument against the hike now priced for September. A hot ISM prices-paid line argues the other way, and Dell reports after the close.
One flag before you publish: this issue is built on Monday, August 31 closes, because the September 1 session has not settled yet as I write. Your header says September 2, so if you are sending Wednesday morning, you will want a rerun once Tuesday's closes are final.
