by Gavyn Jensen-Schneider, Research Associate

It was a bumpy week for the market as rising bond yields and an unexpected intervention by the US Treasury Department amped up uncertainty. The S&P 500 finished the week down -1.43%, while the Nasdaq fell -2.05%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.74%, +5 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, closed at 3.92%, up +1 bp from last week.

The 30-year US Treasury yield has been creeping upward in recent weeks, reaching 5.33% on Tuesday, a high not seen since prior to the Great Financial Crisis. Treasury Secretary Scott Bessent announced Wednesday that the Department of the Treasury will be doubling buybacks of long-term Treasury bonds in an effort to lower long-term bond yields. Bessent said in a CNBC interview Thursday that “we believe the yields don’t reflect the underlying fundamentals.” The announcement was unusual in its timing, as the Treasury typically adjusts bond buybacks and issuance at the Quarterly Refunding announcement, the most recent of which was on August 5^th.

An unforeseen intervention such as this could challenge the credibility of the Treasury and have second-order implications for the Fed. The move to buy back additional long-term bonds will be paid for with increased Treasury bill issuance—ranging from 4-week to 1-year maturities—potentially pushing up short-term borrowing rates. Increased buybacks could also make the Fed’s job of controlling inflation more difficult; the Treasury intervention is intended to bring down long-term yields and boost the economy through increased borrowing. The Fed, on the other hand, fights inflation by increasing interest rates, thereby increasing long-term yields and slowing borrowing. The two institutions could be at odds with each other if the Fed votes to raise rates next month.

Facebook and Instagram owner Meta was in court this week in a landmark social media case. California, Colorado, Kentucky, and New Jersey represent 25 other states in prosecuting Meta over “certain addictive design features” on its platforms, harvesting data of users under age 13 without consent, and misleading the public about platform safety. The case is often likened to the Big Tobacco lawsuits of the 1990s and could have similarly radical consequences for the social media landscape. The jury trial will take place over the coming months, with a lengthy appeal process likely to follow regardless of which side prevails.

Inflation data is on the menu for next week with the release of July’s topline and core Personal Consumption Expenditures (PCE) price index. The corporate earnings calendar has a few interesting names, including tax and business software provider Intuit (INTU) and cybersecurity software provider CrowdStrike (CRWD), but most of the week’s attention is focused on chip giant Nvidia (NVDA), which reports Wednesday.

by Jared Plotz, Director of Research

Stocks traded in a narrow range for much of the week, but the S&P 500 (large companies) and Russell 2000 (small companies) indices still reached fresh record closes on Thursday. The S&P 500 finished the week up +0.4%, while the Nasdaq rose +0.1%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.69%, +5 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, closed at 3.91%, down 1 bp from last week.

Inflation data provided some relief, albeit far from settling the interest-rate debate. July core Consumer Price Index (CPI) inflation was in line with expectations, while core Producer Price Index (PPI) inflation came in slightly cooler than forecast. The reports lowered the probability of a September interest-rate hike, but Federal Reserve officials continued to remain cautious. Cleveland Fed President Hammack argued that policymakers need to act now to prevent the economy from overheating, while Richmond Fed President Barkin said it remains an open question whether a hike will be necessary to return inflation to the Fed’s 2% target.

Within the artificial intelligence industry theme, CoreWeave, Nebius, Super Micro Computer and Lumentum delivered results that reinforced robust demand for AI computing capacity, networking equipment and optical components. AI-cloud provider CoreWeave reported that backlog (contracts signed, yet to be fulfilled) had climbed to more than $104 billion, while competitor Nebius highlighted improving project economics and a shorter payback period for new capacity. As the AI buildout remains powerful, it also comes with volatility in the shares of those companies standing to benefit – something we highlighted in our recent quarterly letter.

The situation in Iran continues to influence energy markets, although the broader stock market remained relatively calm. Oil prices jumped early in the week after Iran said a potential agreement with Oman would not fully reopen the Strait of Hormuz, then gave back part of those gains as diplomacy remained the base case and large-scale hostilities stayed muted. The push and pull between constrained shipping, elevated energy prices and the possibility of a negotiated reopening remains an important inflation risk, particularly as strategic oil reserves and stockpiles at refineries continue to decline.

Data released on Friday offered a softer read on the consumer. July retail sales unexpectedly declined, while preliminary University of Michigan consumer sentiment missed expectations and one-year inflation expectations moved higher. The results do not establish a new trend, especially after the timing of Prime Day and normal seasonal effects. They do add another data point to the mixed economic picture: inflation is easing at the margin, the labor market has softened, and household demand may be losing some momentum even as equity indices remain near record highs.

Next week’s calendar shifts toward housing, industrial activity, and the consumer. Building permits, housing starts, industrial production and pending home sales are due for release on Tuesday, followed by the July Federal Open Market Committee minutes on Wednesday. Earnings season also turns toward retail, with Home Depot (HD), Lowe’s (LOW), Target (TGT), TJX Companies (TJX), Walmart (WMT) and Ross Stores (ROST) among the notable reporters.

by Gavyn Jensen-Schneider, Research Associate

The dog days of summer may be over as market indices rallied to fresh record highs. The S&P 500 finished the week up +2.07%, while the Nasdaq rose +3.00%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.64%, down -7 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, fell -2 bps to 3.92%.

A total of 88% of S&P 500 companies have reported their earnings for the quarter, with primarily positive results. Specifically, 86% of companies beat Wall Street EPS estimates, and 76% have topped consensus revenue estimates. Blended earnings growth for the quarter is currently 54%, which—if this trend holds—would be the highest growth rate since 2021, when the economy rebounded after the COVID-19 recession.

While the stock market trends upward, the labor market seems to be losing its stable footing. July nonfarm payrolls were 107,000 behind Wall Street expectations, coming in at -23,000. Job losses in government were the largest contributor to the subpar labor report, accounting for a loss of 50,000 jobs. Stripping out public sector employment, private payrolls rose 30,000 in July. Even with the negative net new jobs last month, the unemployment rate fell 10 bps to 4.1%. Just like last month, the decline in unemployment has more to do with falling labor force participation, which has been moving lower throughout 2026.

Progress is reportedly being made to reopen the Strait of Hormuz and unclog shipping in the Middle East. Iran and Oman, the countries on either side of the Strait, are in the final stages of negotiating an agreement to manage commercial shipping through Hormuz. Official details have yet to be released, but current reporting suggests that: inbound cargo would transit through a northern (Iranian) corridor while outbound traffic would leave via a southern (Omani) corridor; vessels from nations “hostile” to Iran would have to pay compensation for damages accrued in the conflict; US and Israeli ships would be banned from using the Strait entirely; and a transit fee ranging from 3% to 7% would be charged on all commercial cargo. While any movement toward reopening the Strait would be an improvement over the current trade gridlock in the region, the outlined deal would have long-lasting ramifications for global trade, making it a step down from the unrestricted international transit enjoyed before the onset of the Iran conflict.

Inflation data headlines next week’s calendar, with the July Consumer Price Index (CPI) out Wednesday. Earnings season enters its fifth week with a slowdown in reports. Highlighting the conference call list are neocloud provider CoreWeave (CRWV), as well as AI enablers Super Micro Computer (SMCI) and Applied Materials (AMAT).

by Gavyn Jensen-Schneider, Research Associate

In a week of elevated volatility, the market marched ahead. The S&P 500 finished the week up +1.05%, while the Nasdaq rose +1.59%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.71%, up +3 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, fell -10 bps to 3.94%.

The July Federal Reserve meeting might be the most newsworthy “uneventful” meeting in recent memory. The Fed held interest rates at 3.50% – 3.75%, though the policy choice was not unanimous; three members dissented, voting in favor of a rate hike. Bond yields moved up following the lack-of-move, with the 30-year US Treasury reaching 5.2%, its highest level since 2007. The steepening yield curve reflects market uncertainty about the Fed’s path forward as, under Chairman Warsh, the Fed no longer provides forward guidance in its policy statement. The Chairman believes that short-term uncertainty from eliminating the forward-looking statement will be beneficial in the long run, as the “direct and unfiltered” reaction of the bond market will improve market efficiency and prevent the Fed from overcommitting to a certain policy direction.

The AI investment cycle was top of mind—as it has been for many months—with a swell of AI-related companies reporting their second-quarter earnings. Amazon and Microsoft saw revenue growth accelerations for their cloud computing platforms; Amazon Web Services grew +37%, its highest rate in over four years, while Microsoft Azure grew at an all-time high of +43%. Both firms’ earnings reports were received warmly by investors as the stock prices for both AMZN and MSFT jumped by +15%.

Other AI-exposed names saw a more caustic reception. Meta, the parent company of Facebook and Instagram, saw its stock fall -8% as investors fussed over its capital expenditure; the technology giant plans to spend between $130 billion and $145 billion to build out its AI data center capacity. Apple saw a similar -8% tumble post-earnings as rising component costs—particularly for memory storage—for the iPhone, iPad, and MacBook lines have resulted in price increases of $100 to $300, which may put a damper on the upcoming product release cycle.

The US economy slowed down slightly in the second quarter of the year. Thursday’s preliminary reading of Q2 GDP growth came in at 1.5%, 60 basis points slower than Q1 and Wall Street expectations. The small decline was due in part to elevated imports and a decline in government spending. Consumer spending’s contribution to economic growth increased from Q1, even as higher energy and gas prices have squeezed real incomes. June PCE inflation data was also released on Thursday, falling 40 basis points from last month to 3.7%, though core PCE remained steady at 3.3%.

The start of a new month brings a fresh set of labor market indicators: June JOLTS on Tuesday; Q2 labor productivity on Thursday; and July nonfarm payrolls and the unemployment rate on Friday. Earnings reports continue their onslaught, with a number of major healthcare and pharmaceutical companies on the docket including Eli Lilly (LLY) and Merck (MRK).

In office news, Nat was live on stage at the 8th Annual Private Wealth Great Plains Forum, held this week in Downtown Minneapolis. As part of the fixed income panel, Nat highlighted the emerging fixed income opportunities in the current interest rate environment, with active portfolio management playing a key role in navigating and capturing that value.