Mind the Yields
The S&P 500 hit a fresh record high as softer US jobs and inflation data pushed Fed rate hike expectations lower and gave investors another reason to celebrate. Yet inflation remains elevated, Julyâs improvement was partly driven by falling oil prices, and renewed Middle East tensions could quickly revive energy-driven price pressures.
Meanwhile, the bond market is sending a less reassuring signal. Long-term US borrowing costs remain high (and rising) as investors grapple with rising debt, geopolitical uncertainty and shifting global capital flows. Higher Japanese yields add another layer of risk.
Still, strong corporate earnings, booming AI investment and robust...