Good morning. Yesterday US equities began the week by continuing the uninspired, summertime action we saw last week. Things turned more negative as the day went on. Oil rose and the long-end of the treasury curve sold off. The Iran situation seems no closer to resolution, if not deteriorating. The ceasefire ended yesterday with no extension agreed to, Iran said it was shifting posture from defensive to “fully offensive” and Trump threatened to bomb Oman if it gets the way. The S&P ended down 0.5% but the equal-weight (-0.8%) lagged. The Russell 2000 outperformed modestly. AI infra, chips and related groups were among the best performers but the megacaps/hyperscalers lagged (MSFT, META down 3-4%). Energy led overall with oil’s gain.

S&P futures weakened throughout the overnight session and are a little above their worst levels as we approach the open. Semis, memory and /storage names are under pressure with many down ~5% in the pre-market, reversing yesterday’s strength (DRAM +5%). Fabrinet is down over 10% after earnings, triggering some of the weakness, especially around optical names. Home Depot is trading up about 2% after beating estimates and reaffirming guidance. The company “saw broad based demand across the business as customers continued to engage in smaller projects.” Klarna (-20%) beat estimates though Gross Merchandise Volume (GMV) and revenue guidance was lowered, driven by FX and softness in Europe.

Treasury yields are up about 1bp across the curve. Lots of focus on the long end with the 30y finally trading back above 5.3% after yesterday’s move. Housing starts were lower than expected and fell from last month, reaching near a 5-year low. However Building Permits rose after 2 straight months of declines. Import prices declined for a second straight month, though they are still up 5.9% y/y and fuel imports (-7%) were the reason for the decline. Brent is slightly higher, consolidating yesterday’s gains. Metals are modestly lower with yields ticking higher and Dollar Index trying to break through 99.5. Bitcoin is slightly lower Ag is trading broadly higher.