• US 10-year tips yield rise to the highest levels since 2009
• NY Fed near-term inflation falls to lowest levels since 2021
• Nasdaq rebounds as AI trade returns

Summer trading and some choppiness has helped the US dollar continue to rally as rates remain volatile.  It has not been a smooth ride for the dollar as investors weigh concerns on rising debt levels, cooling inflation expectations, and rising confidence that the Fed will cut rates next year.  What is fascinating is that the 10-year TIPS yield is surging to the highest levels since 2009. 

EUR/USD Weekly Chart

Stocks

US stocks are rebounding as some traders decide to buy the two-week dip despite rising fears over China’s property market.  Declining inflation expectations are also providing some optimism that the Fed is done raising rates.  The Fed survey’s near-term inflation outlook declined from 3.8% to 3.5%, the lowest levels since 2021.  The New York Fed’s survey of Consumer Expectations added that “Year-ahead price growth expectations for food, medical care, and rent declined to their lowest levels since at least early 2021.”

The Nasdaq is outperforming as investors start buying into the recent weakness that hit Nvidia and Apple.  Nvidia is rising after JPMorgan analyst Moore said he continues to expect a good quarter and “strong visibility over the next 3-4 quarters.”  After almost falling 15%, Nvidia was looking attractive to a lot of traders as the AI trade appears to be only taking a break. 

Oil

After a nice seven-week rally, oil was ripe for a pullback and China’s property woes did the trick.  Crude prices are lower as the rallies and concerns grow for the world’s second largest economy.  If China doesn’t get some major stimulus, global growth concerns won’t be going away anytime soon.  The oil market is likely to remain tight, but if China jitters intensify, Brent crude could still drop a few dollars. 

Gold

Gold has been steadily declining since the middle of July and that bearish trend looks like it isn’t quite over as king dollar returns.  Gold traders might have been expecting to see some safe-haven flows come gold’s way but that didn’t happen as a weakening yuan triggered too much dollar strength.  Gold should be close to finding a floor, but first markets need to see some stability across China’s property market and the brewing contagion fears that the mainland economy will be dragged down. 

Bitcoin

Bitcoin remains anchored around the $29,000 level as the SEC delays their decision on Cathie Wood’s Bitcoin ETF.  Crypto bulls were hopeful a decision was imminent but now it seems we might have to wait several weeks or months as the regulatory agency is seeking public comment. After rejecting several applications for spot bitcoin ETFs, it seems the cryptoverse is not really any closer to seeing one getting approved. 

Bitcoin’s range might widen for the rest of the summer, potentially testing as low as $28,500 and as high as the $32,000 level.  

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