Oil Spike, Yields Surge as US-Iran Pact Expires

Brent crude pushed above $91 a barrel on Monday after the 60-day memorandum of understanding between the U.S. and Iran expired without an extension. A senior Iranian official told Reuters Tehran would shift to a "fully offensive" posture if diplomacy fails. Progress on normalizing tanker traffic through the Strait of Hormuz has stalled. The Houthis claimed an attack on vessels near Bab el-Mandeb.

That oil move fed into a broader repricing of risk assets. Global yields rose in a bearish steepening move. The 30-year U.S. Treasury yield hit its highest since 2007, a level that caught the attention of rate markets. The dollar strengthened, and EUR/USD briefly broke below 1.1580 after touching 1.16 earlier in the session.

China's July data added to the macro picture. Retail sales rose just 0.6% year over year, well below the 1.5% consensus. Industrial production came in at 4.5% versus 5.0% expected. New home prices fell 0.18% month over month. Property investment contracted nearly 20% year to date. Exports and high-tech manufacturing remain the only bright spots, and the data reinforces the case for more stimulus from Beijing.

U.S. data was brighter. The New York Fed's Empire State Manufacturing Index rose to 20.6 in August from 15.6, beating the 11 consensus. The NAHB Housing Market Index edged up to 35 from 34, slightly above the 33 forecast. Both prints suggest the economy is holding up better than expected, which in turn gives the Fed room to keep rates higher for longer.

Higher oil prices and higher yields hit equities. The S&P 500 fell 0.5% and the Stoxx 600 lost 0.2%. The move was not a straight risk-off rotation. Technology stocks were mixed. AI buildout names like Applied Materials, Micron, and LAM Research all rose 4-5%. Meta and Microsoft shed 3-4%. Software fell 2% after a strong run. Health care and biotech outperformed, an unusual sign given the sharp rise in risk-free rates, which normally weigh on speculative biotech funding. Consumer staples underperformed, down nearly 2%, as higher rates hurt the bond-proxy sector and higher energy costs squeezed household budgets.

NOK Jumps as Norway CPI Miss Fuels Rate-Peak Bets climbed on the day, benefiting from higher energy prices and reduced expectations for further Fed rate hikes. The move pushed EUR/SEK back toward the 11.00 mark.

Origo inflation expectations in Sweden ticked higher in August. The one-year horizon rose to 1.97% from 1.83%. The two-year horizon edged up to 2.07% from 2.02%. The readings are still below the Riksbank's 2% target but moving in the right direction.

A quick look at proprietary signals: MSFT stock page carries an Alpha Score of 71/100, labeled Moderate. Its price dropped 3.04% to $480.35 on Monday. AMAT stock page has an Alpha Score of 62/100, also Moderate. The divergence between the two underscores the market's preference for capex beneficiaries over mega-cap software in the current rate environment.

U.S. equity futures are negative this morning. The next catalyst for the macro transmission chain will be the next batch of Fed speakers and the weekly jobless claims data on Thursday.