Newsquawk US Market Wrap: Stocks mixed while crude tumbles to pause in US/Iran strikes

• 
  SNAPSHOT: Equities mixed, Treasuries up, Crude down, Dollar flat, Gold up


• 
  REAR VIEW: US pauses strikes on Iran over the weekend, reports point towards concern on shrinking inventory of defenses; Trump says having very deep talks with Iran, if unsuccessful,"we will go back to very powerful military action"; Iran says they have not requested the resumption of talks; Houthis claim responsibility for the drones that targeted Saudi oil infrastructure; Oil tanker blows up in the Strait of Hormuz after hitting a mine on Sunday; US Durable Goods Orders growth misses expectations; Strong US 2yr note auction, weak 5-year auction; SNB reportedly expects zero rates until the end of 2027; China has reportedly started mass production of domestically developed DUV lithography equipment; LVMH earnings & rev beat.


• 
  COMING UP: Data: Spanish Retail Sales (Jun), US ADP Employment Change Weekly, Goods Trade Balance Advance (Jun), Retail Inventories Ex Autos Advance (Jun), Wholesale Inventories Advance (Jun), Consumer Confidence, Atlanta Fed GDP (Q2). Speakers: RBA's Bullock. Supply: Australia, UK, Italy, Netherlands, US. Earnings: PayPal, Boeing, UPS, Ford, EssilorLuxottica, Kering, Air Liquide, Eni, Mercedes-Benz, Barclays, GSK, Unilever.


• 
  WEEK IN FOCUS Highlights include: FOMC, BoE, BoJ, US PCE, US GDP, and EZ CPI. Click here for the full report.
  


• 
  WEEKLY US EARNINGS ESTIMATES: Earnings plentiful with Mag-7 names the standouts. Click here for the full report.
  

MARKET WRAP

Monday's session saw two-way price action, with the initial optimism in equities fading as the session progressed. Sentiment was initially supported by the US and Iran pausing strikes against each other over the weekend, which saw oil prices tumble. Crude hit its lows during the European morning as US equity futures traded around their peaks, although both moves began to retrace as US participants arrived.

The downside in equities was concentrated in tech, with the Nasdaq closing lower while the S&P 500 was broadly flat and the Russell 2000 and Dow gained. The equal-weight S&P 500 (RSP) also outperformed, highlighting positive underlying breadth. Nvidia (NVDA) was weighed on by reports that the company is in talks with OpenAI to guarantee USD 250bln in financing for a data centre, while ASML (ASML) fell following reports that China has begun mass production of domestically developed DUV lithography equipment.

The sharp decline in oil prices supported T-notes across the curve as some of the recent inflation concerns eased, although the Treasury move was considerably more contained than that seen in crude ahead of Wednesday's FOMC decision. Treasury supply was mixed, with the 2-year auction stopping through the when-issued yield by 0.5bps, while the subsequent 5-year auction tailed by 0.9bps.

In FX, the Dollar was little changed overall, with AUD outperforming while CAD and NZD lagged. AUD and CAD were influenced by the respective moves in their commodity exposures, while CHF was pressured by Bloomberg source reports suggesting the SNB is expected to keep rates unchanged through the end of 2027.

Gold and silver prices were firmer as the sharp decline in crude eased inflation concerns and Treasury yields moved lower.

US

DURABLE GOODS: Headline Durable Goods Orders rose 0.3% M/M in June, below the 1.6% forecast, while the prior was revised up to -4.0% from -4.5%. In nominal terms, orders increased by USD 1.1bln to USD 334.8bln. Ex-transport orders rose 0.6%, below the 0.9% forecast, although the prior was revised sharply higher to 1.8% from 1.3%. Ex-defence orders rose 0.3%, following an upwardly revised -4.3% (initially -4.5%). The closely watched non-defence capital goods orders ex-aircraft, a proxy for business investment, rose 0.9%, slowing from an upwardly revised 1.9% (initially 1.6%). Computers and electronic products, which have risen in nine of the last ten months, led the increase, rising USD 0.9bln, or 3.1%, to USD 31.1bln. Meanwhile, non-defence capital goods shipments ex-aircraft rose a strong 1.9%, accelerating from 0.2% previously. Pantheon Macroeconomics said the shipments data are consistent with an annualised increase in business equipment investment of around 8% in Q2. Overall, Pantheon described the release as another strong report despite the headline miss, which was partly driven by declines in autos and defence aircraft components. Underlying orders remained solid, particularly when accounting for the upward revisions to prior data. Pantheon also highlighted that AI-related demand continues to boost orders, although some of the recent strength may also reflect temporary stockpiling as firms seek to get ahead of potential supply-chain disruptions stemming from the energy shock.

FIXED INCOME

T-NOTE FUTURES (U6) SETTLED 8 TICKS HIGHER AT 108-18+

T-notes rose across the curve as oil prices tumbled in the wake of the US and Iran pausing strikes over the weekend. At settlement, 2-year -1.9bps at 4.318%, 3-year -2.3bps at 4.347%, 5-year -3.4bps at 4.397%, 7-year -4.2bps at 4.509%, 10-year -4.0bps at 4.641%, 20-year -3.4bps at 5.152%, 30-year -3.4bps at 5.127%.

THE DAY: Treasury yields moved lower across the curve on Monday, tracking the sharp decline in oil prices. The US paused strikes against Iran over the weekend, while reports and commentary from officials, including President Trump, suggested the two sides could hold talks and potentially meet. The de-escalation and increased hopes for diplomacy saw oil prices tumble by over USD 7/bbl, helping ease some of the recent inflation concerns ahead of Wednesday's FOMC decision.

Aside from the reduction in the geopolitical risk premium, Monday's session saw two Treasury note auctions with mixed results. The 2-year auction was strong, stopping through the when-issued yield by 0.5bps, while the 5-year was soft, tailing by 0.9bps. Some of the concession into the 5-year auction had faded following the strong 2-year offering and subsequent richening in Treasuries, potentially reducing the attractiveness of the yield on offer at the margin.

Elsewhere, US data had little impact on price action. Durable Goods Orders missed expectations on the headline, although the underlying details were more encouraging. Core capital goods orders remained firm, shipments accelerated and prior readings were revised higher, pointing to continued strength in business investment, supported by AI-related demand and some stockpiling by firms. Following the data, the Atlanta Fed's GDPNow estimate was revised slightly lower to 1.6% from 1.7%.

Attention turns to the 7-year note auction on Tuesday to see how demand fares following Monday's mixed results, while the week's main event will be Wednesday's FOMC decision, followed by the US GDP and PCE on Thursday

SUPPLY

Notes

• US sold USD 69bln of 2-year notes; Stop through 0.5bps.


• US sold USD 70bln of 5-year notes; Tail 0.9bps


• US to sell USD 44bln 7-year notes on July 28; US to sell USD 30bln 2yr FRN on July 29th; all to settle on July 31st.

Bills

• US to sell USD 92bln 13-week bills and USD 79bln 26-week bills on July 27; to sell USD 95bln 6-week bills on July 28; all to settle on July 30


• US sold 4-wk bills at high-rate 3.730%, B/C 2.79x; sold 8-wk bills at high-rate 3.795%, B/C 2.31x

STIRS / OPERATIONS

• Fed Pricing: 36.3bps (prev. Dec 36.5bps)


• EFFR at 3.63% (prev. 3.63%), volumes at USD 106bln (prev. USD 104bln) on July 24th


• SOFR at 3.64% (prev. 3.64%), volumes at USD 2.979tln (prev. USD 2.971tln) on July 24th


• NY Fed RRP op demand at 1.38bln (prev. 0.68bln) across 3 counterparties (prev. 2) on July 27th.

CRUDE

WTI (U6) SETTLED USD 6.70 LOWER AT 82.61/BBL; BRENT (V6) SETTLED USD 5.81 LOWER AT 85.87/BBL

Crude prices entered the week significantly lower following a weekend lacking further escalation between the US and Iran. The NYT reported that private deliberations in the Trump admin have focused on the Pentagon’s shrinking inventory of Patriot interceptors and other air defences. The US paused strikes on Iran starting from Saturday after 13 consecutive days of strikes, with Iran seemingly pausing strikes as well. However, the Houthis have still shown frustration with the Saudis. Over the weekend, the Houthis said on Sunday that they attacked three Saudi oil tankers in the past 48 hours and are enforcing maritime blockade measures against vessels linked to Saudi Arabia. Additionally, the Iran-backed militia took responsibility for today's attacks on the huge Abqaiq oil facility in eastern Saudi Arabia.

In the US afternoon, Trump said we are having deep talks with Iran, N12 reports; "I'm not giving much time to negotiations - either it will move quickly, or it won't happen at all". However, an Iranian Foreign Ministry spokesperson said earlier today that they have not requested the resumption of talks with the US.

As it stands, it is a tentative ceasefire, lacking a formal declaration from both sides, leaving the situation still very volatile. While Axios reported that regional sources said negotiations between Oman and Iran have made progress, no agreement has been reached on the Strait of Hormuz. WTI (U6) and Brent (V6) traded between 81.99-86.20 and 84.65-88.95, respectively.

EQUITIES

CLOSES: SPX +0.02% at 7,413, NDX -0.32% at 28,039, DJI +0.51% at 52,215, RUT +0.62% at 2,948

SECTORS: Energy -2.01%, Utilities -1.32%, Technology -0.97%, Real Estate -0.47%, Materials +0.26%, Industrials +0.32%, Health +0.53%, Consumer Discretionary +0.76%, Financials +1.01%, Communication Services +1.46%, Consumer Staples +1.58%.

EUROPEAN CLOSES: Euro Stoxx 50 +0.09% at 6,286, Dax 40 +1.17% at 25,385, FTSE 100 +0.43% at 10,783, CAC 40 +0.40% at 8,406, FTSE MIB +0.49% at 52,056, IBEX 35 +0.80% at 19,743, PSI -1.01% at 9,122, SMI +0.57% at 14,409, AEX -0.82% at 1,081

STOCK SPECIFICS

• 
  NVIDIA (NVDA): Reportedly discussing a ~USD 250bln financing backstop for OpenAI’s planned 10GW Ohio data-centre project


• 
  Baker Hughes (BKR): Adjusted EPS and revenue beat


• 
  Rocket Lab (RKLB): Awarded USD 266mln US Space Force contract covering 12 suborbital launches


• 
  Capricor Therapeutics (CAPR): Phase 3 HOPE-3 study failed to meet its primary and secondary efficacy endpoints


• 
  Forte Biosciences (FBRX): argenx to acquire Forte Biosciences for USD 77/shr in cash


• 
  D-Wave Quantum (QBTS): AT&T signed an agreement to expand its use of D-Wave's quantum computing technology


• 
  Alphabet (GOOG): Upgraded at Phillip Securities to 'Buy' from 'Accumulate'


• 
  Mobileye Global (MBLY) / Rivian Automotive (RIVN): Both upgraded at Piper Sandler to 'Overweight' from 'Neutral'


• 
  ASML (ASML): China has started mass production of domestically developed DUV lithography equipment, marking a further advance for the country's domestic semiconductor manufacturing industry, The Information reported.


• 
  Paramount (PSKY) CEO Ellison has emailed to say the deal is on hold with Warner Bros. (WBD), NY Times' Mullin reports.


• 
  LVMH (MC FP) Q2 2026 (EUR): Revenue 19.52bln (exp. 19.45bln), Fashion and leather goods revenue 8.69bln (exp. 8.97bln); H1 profit from recurring operations 8.69bln (exp. 8.45bln).


• Samsung Electronics and Broadcom (AVGO) announced the signing of a MoU; companies expect the collaboration to be estimated at more than USD 200bln across memory and foundry over the next five years through 2030.

FX

USD was kept afloat in today's trade despite oil prices tumbling lower. The welcome move lower in crude prices wasn't met with a proportionate move lower in US yields and FX, likely as expectations of a hawkish Fed at this week's meeting have remained, even when taking into account the positive geopolitical developments over the weekend. For now, the US and Iran have paused direct strikes on each other, with US President Trump today noting they are having deep talks with Iran. However, risks remain that are posed from Houthis' strikes on the Saudis as well as risks to shipowners after an oil tanker blew up over the weekend after hitting a mine in the Strait of Hormuz. Given the inertia in FX amid the oil drop, risks are skewed to the upside for USD ahead of the Fed meeting.

US Durable Goods missed on the headline, yet underlying orders remained solid, with the proxy for business investment, nondefense capital goods orders ex-aircraft, rising 0.9%; muted USD reaction seen in response.

CHF weakened in response to reports that the SNB is expecting to keep rates at zero until the end of 2027, Bloomberg wrote, citing sources. The sources added that the view is mainly influenced by inflation forecasts, as well as the CHF's recent weakening against the euro and the rate differential between Switzerland and the currency bloc. USD/CHF made new YTD highs of 0.8192 while EUR/CHF failed to breach the YTD high of 0.93158.

AUD was the only G10 FX to post strength against USD, helped by higher gold prices. Meanwhile, GBP lagged ahead of the BoE meeting this week, at which policymakers are expected to keep rates on hold. The vote split will provide a better gauge of sentiment amongst members; consensus expects a 7-2 split.

27 Jul 2026 - 21:06- Fixed IncomeGeopolitical- Source: Newsquawk