Good riddance to July and for investors that were heavily allocated to AI or other momentum trades it could not have come fast enough. The last week of the month was a very busy and volatile one, not what you would typically associate with the middle of the summer. There were a ton of earnings, key central bank rate decisions and the continuation of the momentum unwind early in the week before a clearing event on Thursday when Citadel bought the levered positions of hedge fund Situational Awareness. The mega-cap earnings were a mixed bag with Microsoft and Amazon posting very strong numbers particularly within their cloud segments while both Meta and Apple left a bit to be desired. The S&P 500 ended the week up 1% reclaiming its 50d ma on Friday and was essentially unchanged for the month, which does no justice to the volatility seen beneath the surface. The macro was also busy - Treasury yields moved higher throughout the week with the long-end hitting new YTD highs and there was coordinated Yen currency intervention heading into the weekend. Oil prices ended the week down after a de-escalation over the weekend before Iran broke the peace leading to a new round of strikes.

It’s like Ground Hog’s Day here yet again after President Trump called off strikes over the weekend suggesting negotiations taking place today could lead to a diplomatic resolution though Iranian officials have denied direct negotiations with the US. Oil prices are pulling back again with ICE Brent down ~5% trading ~$84 after testing its 50d ma overnight ($83). This is helping to take some of the pressure off of Treasury yields which are down ~5bps across the curve but off the lows. Continued currency intervention is the other big story on the macro front with both the US and Japan confirming the first coordinated currency intervention since 2011 and suggesting further action could be taken. Treasury Secretary Bessent supported the use of the FIMA Repo Facility which allows central banks to use Treasury holdings as collateral to access dollars as opposed to selling bonds in the open market. The Yen has continued to strengthen breaking below its 200d trading around 157¥/$ from ~164¥/$ last Thursday.

The Iran headlines and pullback in oil/yields is helping the risk on sentiment. Equity markets opened higher and have extended gains. The S&P 500 is up around 1.5% approaching 7,600 the upper end of the loose range it has been in since the start of May (7,200 - 7,600). While mega-cap tech is doing much of the heavy lifting with the NYSE FANG+ index up ~3%, the equal-weight S&P 500 is also up 0.75% with decent breadth >2:1 adv:dec. Energy and the more defensive sectors are underperforming.