Week of Whiplash in Treasuries Closing With Traders on Pause

Summary

Kevin Gordon discusses the week's Treasury market volatility, arguing the bond buyback is only a temporary fix and that higher deficits, sticky inflation, and strong nominal growth support higher-for-longer interest rates. He also covers the negative stock-bond relationship, broadening equity market participation and small caps, labor data signals, and oil market risks tied to China and energy shortages.

• Treasury buyback seen as a temporary band-aid amid higher deficits and sticky inflation.
• Higher-for-longer rates make it hard to pull down long-end Treasury yields.
• Stock-bond correlation has turned negative, so rising yields pressure equities.
• Equity market breadth is improving, with over 70% of S&P 500 members above their 200-day moving average.
• Small caps are participating as a sign of broadening market leadership.
• July jobs and retail sales are viewed as false positives, with jobless claims a better labor signal.
• Oil markets are watching China import activity as a major swing factor.