/ August 24 / Weekly Preview
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Monday:
N/A
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Tuesday:
N/A
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Wednesday:
Core PCE Price Index MoM (0.2% exp.)
Personal Income MoM (0.3% exp.)
Personal Spending MoM (0.2% exp.)
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Thursday:
Initial Jobless Claims (208K exp.)
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Friday:
Non Farm Payrolls Annual Revision
Jackson Hole Symposium
Fed Chair Warsh Speech
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Monday:
N/A
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Tuesday:
Bank Of Montreal
Intuit Inc.
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Wednesday:
NVIDIA Corporation
CrowdStrike Holdings, Inc.
Salesforce, Inc.
Agilent Technologies, Inc.
Veeva Systems Inc.
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Thursday:
Royal Bank Of Canada
Marvell Technology, Inc.
Toronto Dominion Bank (The)
Autodesk, Inc.
Workday, Inc.
Dollar General Corporation
Affirm Holdings, Inc.
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Friday:
N/A
Bond Market Blues
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The most relevant development of the past week belonged to the bond market. Long-term Treasury yields surged to multi-decade highs: the 30-year climbed above 5.30% midweek to a 19-year peak, while the 10-year finished Friday at 4.738%, close to a 20-month high. Those numbers appear alarmingly high at first glance, but in truth the past 15 years featured unusually low interest rates to begin with. As such, we’re now just experiencing a return to normal, albeit a faster than expected one.
In our models, especially Enterprise, the rate of change of interest rates is what actually matters, not their absolute level. This matches the experience of real life, as yields appear “high”. But they’re only high relative to a recent low baseline, not the entirety of history.
Regardless, sensing the squeeze, the Treasury was forced to act. On Wednesday, Secretary Bessent doubled the government's long‑bond buybacks to ease the selling pressure. It worked for about a day.
Money rotated to hard assets, not cash. Gold (GLD) and commodities (DBC) surged +5.4% and +4.1% on the week. Bitcoin surged +15% in its best 5-day performance since 2023. Oil gained more than +6%.
On this backdrop, equities slipped. SPY lost -1.3%, the Nasdaq (QQQ) finished -2.4% lower and small caps (IWM) also pulled back -1.7%. The Equally Weighted S&P 500 (RSP) fared better, declining only -0.5%, far less than the cap-weighted index. As such, the damage was concentrated in the momentum trade (MTUM, -3.75%), and not the average stock. This reaction makes sense, since a higher discount rate will hit the valuations of longer duration assets first — that would be tech stocks (XLK, -3.5% on the week).
In contrast, Healthcare (XLV) was a leader, up +4.3%, with energy (XLE +2.7%) and materials (XLB, +1.8%) also getting bid.
The focal point of this week will be the long end of the treasury curve. At the moment, we’re looking at a very steep structure, especially between the 2-year and 10-year points. While the 30-year remains near multi-decade highs, downward pressure on mega-cap equity multiples and upward support for gold and bitcoin will persist.
Maybe the only positive takeaway here is the very low level of yield curve inversions, which signals a positive backdrop for growth in the economy.
Although the market declined only modestly last week, momentum-based strategies continued to face pressure. Despite the week’s alarming headlines (which headlines are NOT alarming these days?), the S&P 500 is down roughly -1.6% from its record close of 7,796 on August 13. It remains about +1.9% above a rising 50-day moving average and approximately +8.3% above the 200-day moving average, so the underlying trend remains intact.
We’re noticing a seasonally aligned deterioration in momentum, as the MACD rolled over and produced a negative crossover. Furthermore, we’re getting the first negative histogram reading since early spring, a condition that tends to last 3-4 weeks. This coincides with a technical rejection from the R1 level ($785) and points to a potential re-test of the 50-DMA ($750). This level is notable because it has held on every pullback since April and a decisive close beneath it would signal a change in the market’s bullish complexion.
The stochastic reading has cooled from overbought (78/100), but the VIX has eased on the week, rather than producing a spike. This suggests a certain degree of selling was anticipated by the market, as an orderly rotation took place beneath the surface. Seasonally speaking, we’re at the lower end of previous positive outcomes, when looking at the last decade’s Q3 performance.
After a week dominated by bond market headlines, we’ll get the Fed’s preferred inflation gauge in the form of the July PCE report on Wednesday. The PCE report measures changes in prices of the goods and services that U.S. consumers buy and is broader than the CPI, better reflecting overall consumption trends.
After the close that same day, Nvidia reports earnings. As such, next Wednesday will tell us whether inflation is accelerating again and whether AI-driven capital spending remains strong.
After this week’s sharp rise in yields, a hotter-than-expected PCE reading would intensify the selloff and confirm the bond market’s concern that the Fed remains constrained, while a softer print would give bulls some breathing room and ease pressure on the long end. Judging by the 30-year’s performance this past week, inflation risk skews clearly to the upside (unfortunately).
Nvidia represents the other side of the barbell. Consensus expects roughly $2.07 in earnings on about $92 billion in revenue—a 67% year-over-year increase. With the entire AI trade hinging on this single report, guidance will matter more than the headline numbers. A strong result could revive the mega-cap leadership that has just been battered, whereas a cautious outlook combined with a hot PCE would create a genuine problem.
After last Friday’s OPEX event, the options tape reflects higher hedging for the near term, but also slightly higher long term upside and more moderate risk in the medium term.
On Thursday, newly appointed Chair Kevin Warsh delivers his first Jackson Hole keynote since assuming the role in May. Coming just days after the Treasury’s intervention in the bond market, every word on the balance sheet, the Fed’s backstop role, and the path for rates will be analyzed intensely. This is the highest-stakes Jackson Hole in years.
Our analysis of bond market risks are below:
In the end, the Fed will eventually step in, if yields spike too far too fast. The Fed put on the bond market has not disappeared—it simply carries a higher strike and a slower trigger than it did under Powell.
As a result, the overshoot before any rate reversal arrives is likely to be larger, not smaller.
Investors have responded by maintaining low expectations for the future overall. 2026 has been a year when sentiment only hit “euphoria” once — in January. Since then, sentiment has fluctuated either side of neutral values, but mostly to the bearish side, like we’re seeing today.
Our Trading Strategy (Sigma Portfolio)
At the moment, our positioning in the Sigma Portfolio is fine. We did increase equity exposure last week on a dip and it is enough for now. We’ll let the market guide our next move and pay attention to tomorrow’s rebalancing event in Enterprise.
As usual, if we do any trading, we will let you know via email alert.
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