After three months of significant acceleration in prices, The Fed's favorite inflation indicator - Core PCE (a measure of price changes in consumer goods and services that excludes volatile food and energy costs) - was expected to slow in June data released today.
And it did - more than expected - Core PCE rose 0.1% MoM (below the 0.2% MoM expected) pulling the YoY rise down from +3.4% to +3.3%...
The headline PCE saw 0.1% MoM drop in June - its first 'deflationary' print since April 2020 (COVID)
Services once again dominated the MoM rise in PCE prices...
And of course, while this is June data, we have seen oil prices rise since then (as Iran reignited), but it's not enough to trigger a rebound in the PCE Energy sub-index...
Seems like Warsh was warranted in his hawkish hold?
Tyler Durden Thu, 07/30/2026 - 08:40In the wake of the overnight fresh round of US airstrikes on Iran, which resulted in destruction and casualties especially along coastal areas, Iran's military has retaliated once again especially on Jordan.
US Central Command (CENTCOM) announced that it completed a "heavy" wave of strikes on the Islamic Republic, in response to "attempted missile attacks" on American bases in the region earlier this week. This US wave lasted two hours, the Pentagon said, striking "military command centers, missile and drone facilities, coastal surveillance and defense sites, and maritime capabilities".
via Iran state mediaIt accused Iran of a "surprise attack" the prior night, Tuesday, but said that "all Iranian missiles were successfully intercepted."
As a result of the US bombing, the Islamic Revolutionary Guard Corps (IRTC) said three of its troops were killed in a missile attack, according to semi-official Tasnim. The three IRGC members died while "defending Iran’s borders and people" in what it described as a "brutal attack by the criminal terrorist regime of the United States."
Iranian officials are also saying that US bombardment of Qeshm island has killed a family. In Qeshm island, the Director General of Crisis Management of the Hormozgan Governorate said search and rescue efforts are underway amid mounting casualties there.
"So far, two children have been pulled out from under the rubble and transferred to medical centers, and efforts are ongoing to rescue three other members of this family," Mehrdad Hassanzadeh said.
Iran launched ballistic missiles at Jordan's Muwaffaq Salti Air Base in response to US strikes, but Jordan says it intercepted all five missiles. pic.twitter.com/25MxHgn1LR
— Clash Report (@clashreport) July 30, 2026In response Iran says it has again targeted a US airbase in Jordan, and claims to have taken out three F-35 stealth fighters, though there's been no indication of this from the Pentagon side. According to details via Al Jazeera:
In a statement directed to Jordan, the IRGC says in response to a US attack on Qeshm island that killed two parents and their child, aerospace fighters targeted a ramp and maintenance shed at the al-Azraq airbase, which hosts US F-35 fighter jets, with several ballistic missiles, state news agency Fars reports.
The IRGC said that it had completely destroyed three F-35 aircraft and caused “heavy damage” to three others.
The IRGC stated that "A number of enemy officers and technical and maintenance personnel were also killed in this attack. Our region is no place for the infanticidal army that cruelly slaughters innocent families in the middle of the night while they sleep."
They added that the war will continue until "the last American occupier is expelled from the Islamic lands" and that Muslims in Jordan and the region want this too.
Aftermath of US attack on a residential area of Iran's Qeshm Island:
Footage shows aftermath of a US missile strike on civilian residences in Qeshm.
As a result of the US attack on homes in Qeshm's Chah-Tangu, three members of the family were killed, while two of their children sustained injuries and were taken to a hospital for ongoing care. pic.twitter.com/43vjC6qjw5
Despite the new fighting, shipping data surprisingly suggests an uptick in transit in the Strait of Hormuz. "Shipping across the crucial Strait of Hormuz has picked up in recent days despite a continuation of hostilities in the Middle East, with the US claiming its navy escorted some tankers across the waterway," Bloomberg writes.
But this still constitutes a tiny trickle compared to pre-war normal times:
The Al Areesh openly exited the Persian Gulf early Thursday carrying a liquefied natural gas cargo from Qatar, the country's first shipment in three weeks, while the liquefied petroleum gas carrier CYH Yongchun appeared to transit the strait with its transponder off, according to ship-tracking data.
Fourteen commodity vessels crossed Hormuz in both directions on Wednesday, data from market intelligence firm Kpler shows, up from single digits last week. The figures may still be revised with new information. A crude supertanker has also been provisionally booked at nearly $500,000 per day to collect a cargo at an unnamed Persian Gulf port next week for delivery to China.
Simultaneously the Bab El Mandeb strait is getting choked off to Saudi shipping and is being squeezed by Yemen's Houthis. Per a Bloomberg note, the British marine insurance market has widened the area in the Red Sea it deems as high risk in the wake of new Houthi targeting of foreign vessels.
Iran may be responsibility for Wednesday's unprecedented alleged (and still subject to contradictory reporting) drone attack on a tanker docked at Egyptian port:
Two Iranian sources said the drone strike on the U.S.-owned LNG vessel in Egypt was intended to demonstrate that Iran could disrupt global shipping and energy supplies more broadly if it chose to escalate.
Source: NYT pic.twitter.com/UWWyK6oCkH
However...
NYT didn't even say they are Iranian "source". Just two Iranian "individuals", whom NYT thinks their statements are important to manufacure a narrative. pic.twitter.com/F1kqJ15yzl
— Monjed Al-Tarifi منجد الطريفي (Uncivilized) (@MonjedTarifi) July 30, 2026The Lloyd's Market Association expanded the areas where underwriters can charge war risk premiums after a meeting earlier this week. Per Bloomberg:
Listed area in the Red Sea increased to 25.5 degrees north, but doesn’t include Egyptian territorial waters. That would, however, include Saudi Arabia’s port of Yanbu, which has been a vital lifeline for the kingdom’s oil exports
“The decision today to amend those Listed Areas reflects the recent escalation by the Houthis and their attacks on Saudi vessels in the Red Sea,” said Neil Roberts, Head of Marine and Aviation at the Lloyd’s Market Association
President Trump is said to be 'exasperated' by the situation and frustrated at his advisors' inability to agree on war strategy, meanwhile.
BREAKING: Trump exploded and lost his temper during a security meeting, shouting and cursing out of frustration over the military options presented to him and the lack of progress toward a deal with Iran, per NBC News.
A US official adds "after all this time, there is no unity"…
NBC on Thursday cites that "The president is exasperated" citing a Trump ally. "I don’t think he believed it was going to be this difficult to get the Iranians to agree to a deal.” The source added "there was not a real strategy for how long or what they should do to get to the endpoint."
Reported new Iran strikes on Kuwait as well on Thursday...
Video shows the aftermath of missile strikes from US forces in Kuwait on targets in Abadan, Iran, with fires burning following the attacks tonight. pic.twitter.com/eFAu0iqamV
— Faytuks Network (@FaytuksNetwork) July 30, 2026As a reminder, University of Chicago political scientist and foreign policy realist author Robert Pape that the war will stumble along and likely expand even through the midterms: "The victory rhetoric [from Trump] doesn't match escalation reality," he said. "It is out of sync." Then he emphasized: "I think it will actually be after the midterms," he said. "Between now and January, this is not going to be over."
Tyler Durden Thu, 07/30/2026 - 08:35Submitted by QTR's Fringe Finance
Today I sat down with my friend Andy Schectman, CEO of Miles Franklin Precious Metals and one of the most recognizable voices in the precious metals industry. I’ve known Andy for years, long before I ever became a customer of his. He’s someone I trust, someone I enjoy talking markets with, and someone who has spent decades watching the intersection of monetary policy, sovereign debt, central banks and the physical gold market.
Whether you agree with every one of Andy’s conclusions or not, he consistently forces people to think beyond the daily headlines. While most investors spend their time obsessing over the next Fed meeting or the next earnings report, Andy spends his time watching sovereign capital flows, physical metal deliveries, Treasury markets and the plumbing of the global financial system. That perspective makes him worth listening to.
Here are my five biggest takeaways from our conversation:
Andy believes markets have become dangerously leveraged and that private credit is one of the biggest underappreciated risks.
He argues the bond market has effectively taken control from the Federal Reserve, leaving policymakers trapped by America’s debt burden.
He sees mounting evidence that governments, central banks and sophisticated investors continue accumulating physical gold while retail investors remain distracted by speculation.
He believes China and the BRICS nations are quietly building the infrastructure necessary to challenge Western financial dominance over the coming decade.
His long term thesis remains unchanged: he doesn’t buy gold because he expects to get rich. He buys it because he believes it is wealth.
We started with the obvious question. Is the recent weakness in technology and AI stocks simply another dip to buy, or has the bubble finally started to crack? Andy wasn’t interested in making a dramatic market call, but he laid out a series of warning signs that are becoming increasingly difficult to ignore. He pointed to record retail participation, record margin debt, elevated options speculation, redemption pressure in private credit funds and the resignations of senior credit executives at firms like BlackRock and Blackstone. None of those developments, he argued, happen in isolation.
That discussion naturally evolved into private credit, which both of us see as one of the least appreciated risks in markets today. Commercial real estate, subprime lending and private credit have largely escaped the scrutiny that publicly traded assets receive every day. Andy’s view was simple. When liquidity disappears, investors don’t get to sell what they want. They sell what they can. That’s often how problems spread from one corner of the financial system into another.
From there we shifted to what I thought was probably the most important discussion of the interview: the bond market. Andy argued that investors spend far too much time focusing on the Federal Reserve while ignoring the Treasury market itself. His contention is that the Fed no longer dictates interest rates nearly as much as investors assume. Instead, the market is beginning to demand higher compensation for lending to an increasingly indebted government. As he put it, “the bond market sets the price, not the Fed.”
That naturally led us into America’s debt problem. Andy believes Washington has wandered into what economists often call a debt trap. The country must continuously issue enormous amounts of new Treasury debt simply to refinance existing obligations while simultaneously funding growing deficits. Higher interest rates only accelerate that cycle. At some point, policymakers are forced into choosing between politically painful austerity or allowing inflation to erode the real value of the debt.
His conclusion is one that many readers will find controversial, but it is internally consistent. Andy believes the least painful option available to Washington is some version of a soft default through inflation and a structurally weaker dollar. In his view, a weaker currency would not only reduce the real burden of the national debt but would also help make American manufacturing more competitive again. Whether you agree with that thesis or not, it’s difficult to argue that policymakers have many attractive alternatives left.
One of the more fascinating parts of our discussion involved Tether, stablecoins and the possibility that they may ultimately become much larger participants in Treasury markets than investors currently appreciate. Andy openly acknowledged that portions of this theory are speculative, but his broader point was that enormous structural changes are taking place beneath the surface of the financial system that most market participants aren’t paying attention to yet.
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Where Andy is unquestionably on firmer ground is discussing the physical metals market itself. After spending thirty five years in the business, he says the behavior he’s witnessing today simply doesn’t resemble anything he has seen before. Historically, COMEX futures contracts were primarily financial instruments used by miners, refiners and dealers to hedge price risk. Physical delivery represented only a tiny fraction of contracts. That has changed dramatically.
Andy repeatedly returned to one observation that I found particularly interesting. Large buyers increasingly appear to want the actual metal instead of simply rolling futures contracts forward. Whether that ultimately proves to be central banks, sovereign wealth funds, governments or another class of institutional buyers remains unclear. But as he put it, “the people standing for delivery know where the puck is going.” The implication is obvious. Smart money appears to be prioritizing ownership over exposure.
That conversation expanded beyond COMEX into China and the broader BRICS bloc. Andy believes the real story isn’t de dollarization in the sensationalized way it is often portrayed online. Instead, it’s the slow construction of alternative payment systems, settlement networks and commodity exchanges that gradually reduce dependence on Western financial infrastructure. These changes don’t happen overnight, which is precisely why many investors ignore them. Yet they continue to accumulate year after year.
One point Andy made that resonated with me was that we live in a culture of instant gratification. Investors expect revolutions to happen in a quarter or two. Monetary systems don’t work that way. New payment rails, new settlement systems and new reserve practices develop over years or even decades before suddenly appearing obvious in hindsight.
We also discussed what might happen if equity markets finally experience a meaningful deleveraging event. Conventional wisdom says investors sell everything, including gold and silver, during the initial panic. Andy acknowledged that’s certainly possible, but he argued that previous episodes often reflected forced liquidations and market structure more than fundamental changes in demand. He pointed to heavy central bank buying and strong physical accumulation during periods when paper prices were under pressure as evidence that price and underlying demand can diverge substantially.
Toward the end of our discussion we shifted to mining stocks. Andy continues to favor the larger producers and royalty companies over speculative juniors, although he acknowledged the latter can provide extraordinary upside for investors willing to do extensive research. His broader philosophy mirrors something I’ve increasingly come to believe myself. Build a strong foundation first, then take calculated risks around the edges.
Perhaps the best line of the entire interview came near the end when Andy summarized his investment philosophy in a single sentence.
“I don’t buy gold to become wealthy. I buy it because it is wealth.”
That doesn’t mean everyone should rush out and convert their brokerage account into bullion. It does mean investors should pay attention to what the largest and most sophisticated pools of capital are actually doing instead of what they’re saying on television. Whether Andy ultimately proves right about the debt trap, COMEX deliveries, BRICS, or the future of the dollar, he’s asking questions most investors aren’t even thinking about yet. In a market increasingly dominated by passive flows, AI hype and momentum chasing, that’s precisely why I wanted to have him back on the podcast.
Watch the full one-hour long interview here.
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Tyler Durden Thu, 07/30/2026 - 08:15Futures rebound (for now) following yesterday’s Fed-induced meltdown as the market is clearly questioning Warsh’s credibility and potential usage of non-standard tools to fight inflation, pushing the yield curve to twist steeper and sending 30Y yields to 2 decade highs (last at 5.22%). Pre-mkt, the yield curve is seeing further twist-steepening with 10s and 30s up 1 and 3bp with 2s down 1bp. USD deterioration continues following its worst day in 4 weeks. Commodities are so confused, they are not even responding to the latest MidEast escalation with Energy and Metals lower while Ags remain bid. As of 8:00am ET, S&P futures are 0.6% higher and Nasdaq futs gain 1.3% led by a 9% jump in Microsoft whose cloud unit grew at the fastest clip in four years and the company held the line on spending; while Meta slumps after disappointing revenue guidance failed to offset another capex projection increase. Semis are higher, Memory are lower, and Mag7 is mixed but net higher (MSFT +8.4%, META -8.3%). Cyclicals are leading Defensives with AI boosting both Industrials and Utilities. While the Global MegaCap earnings releases may not have revived their names, price action suggests a bottom is forming, a view espoused (daily) by JPM which sees the deleveraging as completed (narrator: it is far from completed). Bulls will want to see this pre-mkt behavior extend into the weekend to build confidence while Bears will bank on further bond vol and Semis de-risking to maintain the status quo. US economic data calendar includes June personal income/spending and PCE price index, weekly jobless claims and 2Q advance GDP (8:30am); no Fed speakers are scheduled.
In premarket trading, Mag 7 stocks are mostly higher with the exception of Meta Platforms which slides 8% after the Facebook parent gave a revenue outlook that is seen as disappointing. The company also raised the low end of its full-year forecasts for both capital expenditures and total expenses, adding to concerns about when spending on AI will translate into better growth. On the other end, Microsoft jumps 9% after the software company’s cloud unit grew at the fastest clip in four years and the pace is accelerating, suggesting the company’s AI and computing services are making inroads with customers. Others are mostly higher (Amazon +3%, Nvidia +1.7%, Tesla +1.6%, Alphabet +0.2, Apple -0.6%)
In other corporate news The Pentagon awarded General Dynamics and Huntington Ingalls contracts worth as much as $76.6 billion to expand construction of the US’s top nuclear submarines and make shipyard infrastructure improvements. Johnson & Johnson has entered a binding agreement with Sail Biomedicines, granting J&J an exclusive option to acquire Sail for $2.58 billion, alongside an initial $785 million payment package. OpenAI’s ChatGPT and video game company Roblox will be subject to stricter scrutiny and monitoring requirements under the European Union’s content moderation rules after surpassing a threshold of 45 million monthly users in the bloc.
Another day of heavy global earnings and key economic data will test traders already navigating market gyrations and diverging performances in Big Tech, following another puzzling Fed announcement. In early trading, hyperscalers are seeing contrasting fortunes, with Microsoft rallying after earnings suggested that its AI investments are starting to generate returns. Azure cloud revenue grew a better-than-expected 43% year-on-year, while its capital expenditures were lower than expected. On the flip side, Meta Platforms fell as it gave a disappointing quarterly revenue forecast and reported the lowest free cash flow in years — a sign of ballooning expenses for AI bets.
While Microsoft’s results were well received, Meta Platforms Inc. dropped 9.8% after a disappointing revenue forecast. Markets will get another look at the health of Big Tech when Amazon.com Inc. and Apple Inc. report after the close.
“We’ve seen the hyperscalers that have been wanting to spend more, without backing up with profits, getting penalized,” said Rory McPherson at Magnus Financial Discretionary Management. “But then you have Microsoft, which isn’t spending any more than it forecast and is growing its cloud business. That’ll remain key, particularly for Amazon.”
The SOX ETF tracking the Philadelphia Stock Exchange Semiconductor Index rose 3.2%, signaling a selloff totaling 16% over five days may have found a floor. “The earnings season is broadly good for US tech, but there’s clearly a rotation ongoing from chips to hyperscalers,” said Claudia Panseri, chief investment officer at UBS Wealth Management in France. “Semiconductor stocks, even if they beat expectations, rarely manage to rise.”
After split outcomes by MSFT and META, investors will remain focused on the tech sector as two more heavyweights — Apple and Amazon — report after the close. For Apple, the key question is whether the anti-capex AI trade has further to run. For Amazon, investors will be watching both capital spending and AWS, which is expected to report 31% revenue growth. Elsewhere in tech, Qualcomm and Arm Holdings cautioned on the smartphone market. Qualcomm, the largest maker of smartphone processors, gave a weak profit forecast for the current quarter, signaling that component shortages and rising costs are taking a toll on its main market. Arm shares are lower in premarket after the company pointed to sluggishness in the smartphone industry.
Apollo’s Torsten Slok said the Fed’s abandonment of forward guidance is fueling historic bond market volatility, sending Treasury yields swinging “up and down like a yo-yo.” Bloomberg’s John Authers describes the set-up into the Fed meeting as a non-event, “yet a non-event it was not.” Markets rewarded him with the sharpest steepening of the yield curve in a year, and a late selloff for stocks that brought the Nasdaq 100 more than 10% below its peak. “Explaining quite what happened and why is tricky, ” observes Authers, failing to explain it.
Money markets are fully pricing in a Fed rate hike only by December. Katharine Neiss, chief European economist at PGIM, warned officials may be left with little choice but to begin raising rates earlier.
“That hawkish tilt is going to come in September, with three sequential hikes,” Neiss told Bloomberg TV. “Clearly there is a big risk here, because its got a whiff of discretionary monetary policy which we know doesn’t work. The markets could bully him into perhaps even a 50 basis-point hike.”
In the UK, the Bank of England held its key rate at 3.75%, with three out of nine policymakers voting for a quarter-point hike. While the decision was widely expected, markets dialed down their expectations for a raise in September. Two-year gilt yields fell eight basis points as short-dated bonds rallied.
European stocks also advance, with lower oil prices and stronger-than-expected euro-area GDP both providing tailwinds.The Stoxx 600 rises 0.4% to 647.62 as investors parse a mixed bag of corporate earnings, with Schneider Electric rising on a better outlook while Adidas sinks after disappointing profit. Construction and chemicals are the best performing sectors while health care and financial services fall the most. Here are some of the biggest movers on Thursday:
Asian stocks fell amid an extremely volatile session on Thursday as investors parsed a mixed set of Big Tech results, monetary policy signals and geopolitical tensions. The MSCI Asia Pacific Index declined 0.3%, heading for a third day of declines. South Korea’s SK Hynix was once again among the biggest drags as its shares slumped more than 5%. Peer Samsung Electronics also finished lower, giving up gains seen earlier after the chipmaker reported a more than 250-fold jump in profit. The Kospi closed lower for a third day though losses eased from the previous two days (there was no third consecutive market wide halt) as investors digested new government measures to stabilize the market. Chinese tech stocks slumped, led by high-flying semiconductor names, as concerns over stretched valuations and crowded positioning intensified a rotation out of some of this year’s best-performing sectors. China’s market showed little response to the readout from the Communist Party’s decision-making Politburo meeting, which was released just about 30 minutes before the close of trading. The nation’s top officials struck a more supportive tone on the economy but stopped short of announcing fresh stimulus at the key meeting.
In FX, The Bloomberg Dollar Spot Index falls 0.1%. The kiwi is the strongest of the G-10 currencies, rising 0.5% against the greenback. The pound adds a couple of pips ahead of the BOE decision. Precious metals are little changed. Bitcoin rises 1.5%.
In rates, treasuries extend the curve-steepening shift sparked by Wednesday’s Fed decision in early US session, pushing 2s10s and 5s30s spreads back toward weekly highs as investors continue to digest the central bank’s strategy to rein in inflation. Treasury yields are richer by around 2bp across front-end of the curve and cheaper by 2bp in the long-end, with 2s10s and 5s30s spreads steeper by 2.7bp and 3.3bp on the day. 10-year is little changed vs. Wednesday’s close near 4.69% while the 30Y rises as high as 5.24% before reversing; gilts outperform by around 3bp in the sector after the BOE kept rates on hold in a 6-3 decision. Thursday’s session brings June personal income and spending data with PCE price indexes, the Fed’s preferred inflation gauge, as a next step to evaluate the outlook for inflation. Gilts outperform after Bank of England left policy unchanged in a 6-3 split vote. IG dollar issuance slate empty so far, follows a light issuance calendar on Wednesday due to the Fed rate decision. European bond curves follow suit with UK and German 2-year borrowing costs falling 5 bps and 2 bps, respectively.
In commodities, WTI crude oil futures are slightly lower on the day, unwinding an early bid after the US conducted a fresh wave of strikes on Iranian military targets. Brent crude futures for October fall 0.4% to around $87.70.
US economic data calendar includes June personal income/spending and PCE price index, weekly jobless claims and 2Q advance GDP (8:30am); no Fed speakers are scheduled.
Market Snapshot
Top Overnight News
A more detailed look at global markets courtesy of Newsquawk
APAC stocks were mostly lower in somewhat mixed trade as participants reflected on the FOMC and mega-cap earnings, while geopolitics was also in focus after the US conducted retaliatory strikes on Iran. ASX 200 traded lower with gold miners and the consumer sectors leading the declines, although downside was stemmed by resilience in tech, Nikkei 225 was positive with tech stocks front-running the advances in the index, while participants also look ahead to the BoJ, which began its two-day conclave and is expected to pause after hiking rates at the last meeting. KOSPI swung between gains and losses despite early momentum driven by Samsung Electronics earnings. Hang Seng and Shanghai Comp were subdued with Hong Kong range-bound after the HKMA kept rates unchanged in lockstep with the Fed, while the mainland was pressured amid ongoing US-China frictions, with MOFCOM criticising the US robot ban and threatening to retaliate if the US insists on acting unilaterally.
Top Asian news
European bourses trade entirely in the green following a busy morning of earnings (see more below) and constructive rhetoric by the Pakistani Foreign Ministry. Al Jazeera reported comments by the spokesperson stating that discussions between Tehran and Washington are ongoing regarding the situation in the Strait of Hormuz and de-escalation; however, Al Arabiya added that there have been no tangible results. On the data front, flash GDP figures across the EZ came in broadly stronger than expected (outside of France); however, Spanish inflation came in hotter than expected, with German state CPIs also rising Y/Y. Sectors highlight the positive bias. Construction tops the pile, with Chemicals and Basic Resources rounding out the sector outperformers. Health Care, Financial Services and Telecoms are the only sectors in the red. A typical busy Thursday of earnings, with L'Oreal, Adidas and Stellantis in focus. L'Oreal LFL sales beat estimates, and it announced a 50-year exclusive deal with Kering. Adidas Q2 operating profit missed estimates while its H1 gross margin ticked lower. The Co. highlighted higher US tariffs and unfavourable currency developments as key reasons for the softer figures. In other news, Adidas' Board appointed a new CFO. Finally, for Stellantis, its H1 adj. operating profit missed estimates while analysts at Bernstein also highlighted that margins for both Europe and North America missed.
Top European news
NOTABLE EUROPEAN HEADLINES
NOTABLE EUROPEAN DATA RECAP
CENTRAL BANKS
Geopolitics: Middle East
Geopolitics: Ukraine
US Event calendar
DB's Jim Ried concludes the overnight wrap
Last night’s on-hold Fed decision combined with a relative lack of detail from Chair Warsh triggered a sharp steepening in the Treasury curve, with the 30yr yield (+11.2bps) reaching a post-2007 high of 5.20% while a late sell-off left the S&P 500 (-1.52%) posting its worst day in seven weeks. Market sentiment also wasn’t helped by a new rise in oil, with Brent crude spiking +7.91% yesterday amid renewed escalation between the US and Iran, as well as a -5.33% fall in the Philly semiconductor index. Strong results from Microsoft have improved the mood a bit with NASDAQ 100 futures +0.57% higher overnight after the index fell into correction territory yesterday, but Asian markets are mixed this morning.
Starting with the Fed decision, as largely expected the FOMC kept fed funds steady at 3.50%-3.75%, though there were three hawkish dissents in favour of a 25bps hike from regional Fed presidents Hammack, Kashkari and Logan. There were no substantive changes to the policy statement and, consistent with his recent stance, Fed Chair Warsh once again avoided forward guidance. Warsh reiterated a commitment to get inflation under control but offered little colour on the details of the FOMC discussion. This might make the Fed minutes release on August 19 more of a market-moving event. The Chair also insisted that the discussion “was the furthest thing from inertia imaginable” despite the on-hold decision. And there were a few hints that rate hikes were still on the horizon, with Warsh noting that despite the 9-3 vote, there was “a lot of agreement on the hard questions” and mentioning "all of the action we're going to have between September and December”.
With a hike having been more than 30% priced for yesterday’s meeting, the on-hold decision triggered dovish Fed repricing, which solidified during Warsh’s press conference. By the close, fed funds futures priced 16bps of tightening by the September meeting, down from 25bps the day before. And 33bps of hikes were priced by year-end (-8.4bps on the day). The Treasury curve steepened sharply in response. The rates-sensitive 2yr yield fell -1.4bps, but the 10yr yield rose by +7.2bps and the 30yr yield (+11.2bps) reached a post-2007 high of 5.20%. This marked the sharpest steepening in the 2s30s slope in almost a year. And the Treasury sell-off has extended overnight, with 10yr yields up +2.6bps to 4.70% as I type.
Our US economists’ baseline remains that the Fed raises rates by 50bps this year (25bps hikes in September and December). But they think the FOMC is unlikely to take much comfort in yesterday’s market reaction (see their reaction note here), with the rise in long-end rates coupled with the decline in forward real yields suggesting doubts about an imminent return of price stability. I would also add that while aggregate US credit conditions are far from restrictive, aggressive curve steepening could exacerbate existing pockets of vulnerability, such as the lacklustre housing market, as highlighted in my money and credit update earlier this week (see here).
This rise in yields ended up weighing on equities after some big intra-day swings. The S&P 500 went from trading more than half a percent down pre-FOMC to higher on the day during Warsh’s press conference but then saw a sharp drop in the final hour of trading to close -1.52% lower. Equities were also weighed down by another rout in chip stocks, with the Philly semiconductor index slumping by -5.33%. The tech declines also brought the NASDAQ 100 (-2.06%) into technical correction territory with the index now down -11.3% from its early June peak.
The market mood also wasn’t helped by yesterday’s rise in oil prices, with Brent crude settling +7.91% higher at $90.74/bbl. While a good chunk of that increase had come during Asian hours yesterday, prices jumped further after Trump’s comments that “we’ll be hitting them hard” in response to Iranian strikes against a US base in Jordan. The situation remains tense and overnight the US launched a new wave of strikes against Iran. These were apparently limited to IRGC targets (rather than escalating to targeting civilian infrastructure), and Brent crude (-1.16%) has pulled back a bit of yesterday’s spike this morning.
Yesterday evening we also got earnings from Microsoft and Meta. Microsoft delivered stronger-than-expected +43% yoy growth in cloud revenue (vs +39.6% est.), the fastest growth since early 2022, and expects this to accelerate to +45% in the current quarter as cloud demand outstrips supply. Microsoft’s shares rose by almost +9% in extended trading. By contrast, Meta’s shares fell by more than -7% after-hours as the company offered underwhelming revenue guidance for Q3 ($61-64bn vs $63.17bn est.). At the same time, Meta’s 2026 capex forecast was revised marginally higher. With investors questioning the company’s competitiveness in the AI race, its stock was already down -11% so far this year. Next in focus will be results from Apple and Amazon this evening.
Microsoft’s results have supported a recovery in the tech mood overnight, with NASDAQ futures up +0.57% as I type. However, the equity mood is mixed across Asia this morning. The Nikkei (+0.75%) is recovering after declines over the previous two sessions, but the KOSPI (-1.30%) is moving lower following on yesterday’s steep -5.98% decline. Korea’s index had climbed as much as +5.50% early in today’s session before giving up the gains, with index heavyweight Samsung down about -2% after its Q2 earnings, which included a more than 250-fold year-on-year rise in semiconductor profits. The KOSPI remains on course for a weekly decline of around -15% amid mounting concerns around the AI trade, prompting Finance Minister Koo Yun-cheol to apologise for the rollout of single-stock leveraged ETFs. Elsewhere in Asia, market performance is subdued, with the CSI 300 (-2.18%) and Shanghai Composite (-1.15%) declining, while the Hang Seng (-0.03%) is little changed.
Looking ahead to today, we will see the latest Bank of England decision, which is widely expected to keep rates on hold at 3.75%. Our UK economists expect a 7-2 vote split with Chief Economist Huw Pill and external MPC member Megan Greene opting for a 25bps hike. Markets will focus on the chances of a rate hike at the upcoming meetings, with a hike by September currently 60% priced. Our economists currently expect the BoE to stay on hold this year, though they do see risks of a hike in the event of a more persistent energy price shock or a pickup in wage growth.
On the data front, today’s attention in the US will be on the June PCE report and Q2 GDP data. Our US economists expect a +0.19% monthly reading on June core PCE and a +1.9% annualized rise in Q2 real GDP. We will also see the Q2 GDP release for the euro area, with our economists seeing upside risks to the +0.2% qoq consensus expectation (see here), as well as July CPI releases in Germany and Spain. You can see our European economists’ inflation preview here.
Ahead of these releases, European bonds slumped yesterday as the rise in oil pushed up inflation expectations, with 10yr bund yields up +5.7bps to 3.16%, while OATs (+7.8bps), BTPs (+8.9bps) and gilts (+9.2bps) posted even larger rises. European equities were mostly weaker, with the Stoxx 600 (-0.29%), CAC (-0.60%) and FTSEMIB (-0.49%) all lower, though the UK’s FTSE 100 advanced (+0.34%).
Across other asset classes, the dollar index (-0.52%) was the main underperformer in the FX space yesterday following the Fed decision, while in credit US HY spreads widened by +7bps to their highest level since early April.
To the day ahead now, the macro focus will be on the Bank of England policy decision as well as a heavy slate of data releases. These include Q2 GDP from the US, Eurozone, and Germany, as well as the US June PCE report, personal income and spending figures, and the latest weekly jobless claims data. We also get July Eurozone confidence and flash CPI releases for Germany and Spain. On the earnings front, highlights are results from Apple and Amazon after the US close, while other notable releases include Mastercard, Shell, Schneider Electric, Rolls-Royce, and BAE.
Tyler Durden Thu, 07/30/2026 - 08:13South Korean market authorities are weighing a more aggressive plan to stabilize the Kospi after July's record selloff sent the main equity index slicing through its 50-, 100- and 200-day moving averages like butter.
At the center of the meltdown is retail participation in leveraged ETFs tied to Samsung Electronics and SK Hynix, which amplified the selloff and inflicted crushing losses on Korean households.
Korean trader had a $5 million stock portfolio ALL IN Samsung and Hynix.
It ended very badly.
Take a look. pic.twitter.com/dkqBZ9lMf8
Overnight trading in Asian equities struggled to find a proper floor as South Korean stocks kept volatility high and mom-and-pop retail traders horrified that their leveraged bets have been all but wiped out. The Kospi erased gains as much as 5.5%, closing down about 1% despite Samsung's confirmation of massive profits.
Bloomberg reports that as retail losses mount and public anger builds, there is political pressure on the government that encouraged households to participate in the AI stock mania of Samsung Electronics and SK Hynix.
"This is a headwind for a government that actively encouraged retail participation," said James Fletcher, CIO of Ethos Investment Management.
Fletcher noted, "When you nudge households into the market, and then they take losses of this size in 48 hours, the political pressure to do something becomes intense."
According to Bloomberg, South Korean authorities have five potential levers to arrest the market rout:
National Funds
The government has earmarked about 10 trillion won ($6.9 billion) to stabilize the stock market in times of turmoil. The rarely used tool resurfaced in analysts' minds after retail investor backlash grew over hefty losses. Its possible use was floated in late 2024, following a botched martial law declaration and during the Covid pandemic, but the last actual deployment dates back to 2008.
But tapping it may risk moral hazard, said Francis Tan, Asia chief strategist at Indosuez Wealth Management in Singapore. "Retail investors' call for the government to step in is a tricky situation," Tan said. "While the Korean government can always come in with a stock stabilization fund to provide targeted liquidity and help restore confidence, it risks distorting market signals."
The National Pension Service, one of the world's largest pension funds, often works with the government. But Choi HyunJae, head of equity research at Yuanta Securities Korea, doubts NPS will be actively involved in the current situation as "it's already well above its strategic domestic equity allocation target."
Short-Selling Ban
A short-selling ban, a controversial measure that was lifted in Korea last year after global investor outcry, may be considered again, said Jung In Yun, chief executive officer at Fibonacci Asset Management.
"But I would view that as a last resort because it may damage foreign investor confidence without addressing the underlying concerns," Yun said. "Their priority should be preventing a market correction from turning into a liquidity event."
Limiting Leveraged ETFs
Some investors and lawmakers are urging the delisting of leveraged exchange-traded funds tied to Samsung Electronics Co. and SK Hynix Inc., products introduced in May to magnify the underlying stock's gains and losses. One investor group even laid wreaths at the National Assembly gates, while an opposition lawmaker backed the call.
Retail investors buying leveraged ETFs drive volatility higher, while forcing foreign funds to respond with heavy selling, Young Jae Lee, senior investment manager at Pictet Asset Management in London, said. "It's a lose‑lose game" for retail investors, Lee said.
Korea's top market regulator has expressed "regret" over the rollout, but delisting existing ETFs appears unlikely for now. Instead, authorities have temporarily banned new listings, capped investor exposure and raised trading costs.
Brokerage Margin Requirements
Retail investors' heavy borrowing to buy stocks — and forced selling when prices fall — has worsened volatility. The government may consider stricter margin requirements, Tan said, also noting Singapore's push for stronger investor education.
While any tighter rules can curb margin growth, also important is to ease the mechanical selling pressure as accounts face forced liquidation. One way to counter that would be brokers easing collateral demands or give short grace periods before forcing liquidation, Choi said. Yet any relief would expose brokerages to greater risk and potentially cut their margin-related income, he added.
Share Buyback Rules
The government could also adjust share-buyback rules to spur purchases, especially from firms that already announced repurchase plans and see their stocks as undervalued.
Companies now face caps on buybacks at any given time and must spread purchases across a pre-disclosed schedule.
It is increasingly likely that the government will have to pull one or more of these levers to stabilize the market or risk a political backlash, particularly after encouraging retail participation in the AI and memory-chip bubble while mom-and-pop traders piled into leveraged ETFs.
The Financial Times reported Thursday morning on the scale of the losses suffered by households:
The brokerage Korea Investment & Securities said on Wednesday that nearly half of its 880,000 clients who bought Samsung shares were now sitting on losses, while nearly 70 per cent of its 408,000 investors in SK Hynix were also in the red.t will have to pull one or more of these levers to stabilize the market or risk a political backlash, particularly after actively encouraging retail participation in the AI and memory-chip boom while mom-and-pop traders piled into leveraged ETFs.
South Korea's Kospi collapsed nearly -40% in 40 days erasing -$2 trillion in market cap: (BBG)
The catastrophic effects of the massive retail leverage chase used to get here will only now start emerging. https://t.co/UpiauC8KMt
JPMorgan's chart below shows the leverage unwind has already been severe. Assets in leveraged ETFs surged from less than $10 billion at the start of 2026 to more than $50 billion in June, before collapsing to roughly $16 billion by late July, a decline of nearly 70% from the peak.
Latest coverage:
The good news is that inflows have also stalled or reversed, particularly in broad-market products, as the selloff and tighter regulation curb retail demand.
This suggests market stability may be returning and the risk of further leverage-amplified drawdowns has possibly diminished, though traders should remain on guard for renewed volatility.
Tyler Durden Thu, 07/30/2026 - 07:45* * *
New US Strikes on Iran Begin in Night HoursThe United States has begun a new round of airstrikes in Iran in the night time and early morning hours (local), according to a senior US official to Axios. The extent of the bombings, or whether they will be sustained, remains unclear:
Trump “is in an escalatory mood” but is still contemplating “the depth of that response.”, A senior administration official says - WSJ
Trump is apparently making good on his earlier Wednesday threat:
President Trump has told Fox News that he is "going to beat the fucking shit" out of Iran in response to their attack on US forces in Jordan overnight. Speaking to Trey Yingst, he added "we'll be hitting them hard, they're going to get a beating."
There was heavy US refueler activity in regional skies just ahead of the strikes' commencement - as well as unconfirmed reports of explosions at Riyadh's international airport, but the cause has remained subject to speculation.
But with each attack on Iran, its forces tend to respond in kind against Gulf countries hosting US assets and bases. It is going to be a long night for the region, especially while bracing for the IRGC's inevitable response.
>Before NOTAMs
>After NOTAMs
Large areas have been cleared in northeast, northwest and possibly southern Saudi, opening up corridors at all altitudes. While commercial traffic is filtered through a single narrow corridor. pic.twitter.com/9ZjYkjmars
US is quite clearly stuck, in search of a strategy...
I think there's going to be a ground attack soon. What lunacy.
— Brandon Weichert (@WeTheBrandon) July 29, 2026 Details of Trump-Netanyahu Meeting at Oval Finally EmergingAfter on Tuesday President Trump hosted both Zelensky and Netanyahu in the Oval Office there were no big press conferences or readouts given. But on Wednesday some key statements have begun to emerge concerning what was discussed, but at this point only offered via the Israeli side...
To be expected, Iran and the nuclear question dominated the discussions, according to i24's Ariel Oseran, with Israeli officials describing a White House focused on three possible paths forward. "Trump is weighing three options: a nuclear deal, maintaining and intensifying the economic blockade, or renewed military strikes," one official said, adding, "We didn't tell Trump Israel's preference is a strike. Our preference is the outcome. The decision is ultimately his."
...talk about stating the obvious. But Israeli still maintains that the situation is at tipping point inside Iran, which according to more independent 'realist' analysts seems highly dubious.
Israeli officials argued that Tehran is under mounting internal strain. "Iran is under severe economic pressure" due to fuel and diesel shortages, roughly 90% inflation, and "the beginning of public protests." They added, "We discussed increasing pressure on Iran, both economically and kinetically."
On Iran's leadership, officials said, "We know for certain Mujtaba is alive, but since Operation Rising Lion no one has seen him." Regarding Iran's military capabilities, they claimed, "Iran now has only 1,500–1,600 missiles left after we destroyed much of its production capability."
Expletives fly and Trump talks 'tough' - but this whole gambit has been a bombing campaign in search of a strategy...
"We're going to beat the fuc*ing sh*t out of them," President Trump told Fox News after Iran launched a surprise attack against U.S. forces. "We'll be hitting them hard."
The President says U.S. strikes overnight against Iran-backed militias in Iraq were coordinated with the… pic.twitter.com/AeLbEGFCFi
Addressing the nuclear program, Israeli officials (somewhat surprisingly) assessed, "We currently do not assess that uranium enrichment is taking place at Pickaxe Mountain, and we have good intelligence on Iran's nuclear material." They also asserted, "Eliminating 29 nuclear scientists was our insistence. It removed a critical mass of knowledge from Iran's nuclear program." This comes just after Trump vowed to wipeout the highly fortified facility, which would be a tall order given that it's essentially under a mountain.
Looking ahead, they warned, "If Iran tries to rebuild its nuclear program, we will strike the 'metastases' as well." Israeli officials also said they remain skeptical of diplomacy, telling reporters, "We told President Trump we have serious doubts about reaching a nuclear deal with Iran."
As of yet, the White House has not offered a detailed readout of the Netanyahu discussion from the US point of view, however. Regional reports say some IRGC advisors were killed in the fresh US-Saudi operation in Iraq.
Iran Again Denies Trump Claims it is Urging US TalksThe few days of calm that persisted over last weekend since Friday are already a thing of the past, as tit-for-tat serious attacks between the US and Iran return, and now involving the Saudis and proxy militants in Iraq.
The fresh flare-up started as we reported when in the overnight and early hours of Wednesday (local) Iran launched several missiles on a US base in Jordan, with the Jordanian armed forces saying they intercepted five projectiles. Iran is framing this as new action due to US military activities enforcing the blockade of Iranian ports in the Strait of Hormuz.
For many hours prior to that new Iranian assault, which was accompanied by launches out of Iraq on Saudi energy sites, international headlines claimed that mediators were getting close to restoring the defunct Memorandum of Understanding (MoU).
As if to confirm that those headlines were nowhere close to reality, Iran's Deputy Foreign Minister Kazem Gharibabadi has recalled President Trump's words claiming that Tehran was "dying for a negotiation"; but, said Gharibabadi, "We have sent no request for negotiation with the US during the past 16–17 days."
Aftermath of strikes on the Saudi Aramco refinery in Jizan from days ago, via AFPThe Iranians have continued to insist that its own terms for strait management will be the end result of this war. "If the Strait of Hormuz returns to its previous state, our success in this war is not complete," the Iranian diplomat said. He said this will include Iran's right to charge fees to allow ships safe passage.
Trump: "We'll Be Hitting Iran Hard" (Fox)As for the renewed battle, President Trump has newly warned in a statement to Fox News that "we'll be hitting Iran hard" in response to the new attacks on American targets in Jordan.
The new expanded nature and scope of the war has seen Saudi Arabia jump directly in against Iran-backed Shia paramilitary groups in Iraq, as well as the Shia Houthis of Yemen.
Oil continues to climb on the escalation headlines...
Rare Major Saudi-US Joint Strikes on Iraqi MilitiasRare and major joint US-Saudi strikes on Iraq have killed at least 20 militants, and wounded 32 more, according to Iraq's Popular Mobilization Forces (PMF), as cited in Al Jazeera:
In an earlier statement, the PMF – which is an umbrella group for Iraqi militias backed, trained and loyal to Iran, said the attacks represent a “highly dangerous escalation” and a violation of Iraq’s sovereignty and official security institutions.
The Islamic Resistance in Iraq, a self-proclaimed resistance armed group backed by Iran, denied any role in the attacks on Saudi Arabia. It said Saudi claims were “fabrications” and that “any foolish Saudi action will be met with a harsh response”.
CENTCOM acknowledged that operation as a response to this weeks attacks on Saudi infrastructure, marking the first major US military action in the Middle East since last Friday when Trump first declared a pause after the 13 prior straight days of fighting. Trump had noted in the Fox comments that the Saudi and US attacks were coordinated with Iraq.
Ironically this comes at a time the Iraqi government has sought to appease Washington by overseeing a voluntary disarming program of its Shia factions. It has remained an open question to what degree this will actually be carried out.
Saudi Arabia's Defense Ministry issued a statement saying the offensive was "in response to recent drone attacks" on the kingdom. During those attacks, the Saudi military "intercepted and destroyed several drones that attempted to target petroleum facilities in the Eastern Province and Riyadh regions…. launched from Iraqi territory and carried out by Iran-aligned terrorist militias." It added that "The Kingdom emphasizes that it does not seek escalation but will respond to any aggression it faces."
Meanwhile Trump continues to talk about taking out Iran's highly fortified Pickaxe Mountain nuclear facility:
⭕️ Trump Says Netanyahu Wants Him to “Stay Involved” in Iran Campaign
During an interview on Fox & Friends on July 28, Trump expressed frustration that the media had leaked Netanyahu's plans to brief him on intelligence regarding an underground Iranian nuclear facility at… pic.twitter.com/bL2uGfFjbI
Tehran has has responded by condemning the "clear aggression against the national sovereignty and territorial integrity of Iraq." Iran said the new US-Saudi joint action was "in line with the aspirations of the United States and the Zionist regime to expand the scope of war," according to the Foreign Ministry.
Iran has pledged its support to its allies in Iraq: "While expressing condolences for the martyrdom of a group of honorable Iraqi people during these aggressive attacks, the Ministry of Foreign Affairs emphasizes the full support and solidarity of the Islamic Republic of Iran with the government and people of Iraq, and holds the warmongering US regime and its accomplices in the region responsible for the dangerous consequences of these criminal, inhumane, and provocative actions," it added.
War Persists Through November Midterms?Below, University of Chicago political scientist and foreign policy realist author Robert Pape that the war will stumble along and likely expand even through the midterms...
"The victory rhetoric [from Trump] doesn't match escalation reality," he said. "It is out of sync."
While Pape stopped short of predicting a yearslong conflict, he said meaningful policy changes are unlikely before the political landscape shifts after the midterm elections.
"I think it will actually be after the midterms," he said. "Between now and January, this is not going to be over."
Overnight developmentsvia Newsquawk...