Yields continue to rise yet the SPX isn't far off from the ATH. What is going on? Bond traders expect the Fed to hike again because of oil and a strong economy. Bond traders also want to be paid extra to hold long bonds because of the massive US debt and deficit issue. AI companies are selling bonds to pay for data centers and competing for the same buyers. This all adds upward pressure on bond yields. Why don't equities seem to care? Stocks have gotten cheaper this year because earnings have grown faster than prices. About half of that earnings growth comes from AI spending. But the S&P 500 is now expected to earn about 5.2% of its price over the next year. The 10Y Treasury pays the same and is backed by the US government (no default risk). Bonds are becoming a real option for people who own stocks. The S&P 500 depends on a few companies to keep spending on AI. But there is a question whether AI companies even care about rates. Those companies have kept raising their spending plans this year even as yields have climbed. That means Fed hikes may not slow AI spending. Higher rates hit housing and small businesses instead. The risk is if AI spending slows or yields keep rising the S&P 500 earns less than a safe bond pays at today's prices. For stocks to earn more than bonds again earnings have to keep growing fast or prices have to fall or bond yields have to come down. Each chart is broken down in the replies below.

Yields continue to rise yet the SPX isn't far off from the ATH. What is going on? Bond traders expect the Fed to hike again because of oil and a strong economy. Bond traders also want to be paid extra to hold long bonds because of the massive US debt and deficit issue. AI companies are selling bonds to pay for data centers and competing for the same buyers. This all adds upward pressure on bond yields. Why don't equities seem to care? Stocks have gotten cheaper this year because earnings have grown faster than prices. About half of that earnings growth comes from AI spending. But the S&P 500 is now expected to earn about 5.2% of its price over the next year. The 10Y Treasury pays the same and is backed by the US government (no default risk). Bonds are becoming a real option for people who own stocks. The S&P 500 depends on a few companies to keep spending on AI. But there is a question whether AI companies even care about rates. Those companies have kept raising their spending plans this year even as yields have climbed. That means Fed hikes may not slow AI spending. Higher rates hit housing and small businesses instead. The risk is if AI spending slows or yields keep rising the S&P 500 earns less than a safe bond pays at today's prices. For stocks to earn more than bonds again earnings have to keep growing fast or prices have to fall or bond yields have to come down. Each chart is broken down in the replies below.

ethereum:0x57e114b691db790c35207b2e685d4a43181e6061 with a great pump today because Ethena said USDe can now earn from trades on US stocks and not just crypto. ENA is Ethena's token and USDe is the dollar token Ethena makes. Ethena earns from traders who bet prices will go up and now it can do that with stocks like Nvidia and Tesla on Binance. This is another case of Wall Street stocks moving onto crypto exchanges. More ways to earn gives USDe more room to grow. Holders voted this month to use part of Ethena's revenue to buy ENA once USDe reaches $7.5 billion. Until then ENA gets none of the revenue. All remaining investor tokens unlock on October 5.

Please please read this thread, very very vital information. $BTC $SPX $DXY $ETH TA is nice but having an idea of what's going on in the background is necessary. By far the best Macro Breakdown YTD. @notanotherquant has been an absolute blessing in my TL. Theres actually a Gaggle of studs to follow. @Brikka_trading @HunterAllen4 @wallstnomads @BeardoTrader @Brownmoose Follow them all!!

We are seeing the yen starting to strengthen today. Trump told Japan's PM he is concerned about the weak yen and she told him an undervalued yen is problematic. She used to call it stupid for the Bank of Japan to even consider a hike. Her 2 appointees to the BoJ voted against the hike last meeting. The hike passed 7-2. Bessent has been pressuring Japan to keep raising rates for a while now. The reason the US wants a strong yen is that Japan sells US Treasuries to pay for buying yen. But raising rates starts to unwind the carry trade which can get out of hand if it speeds up out of control. It then forces leveraged positions to close. Those positions closing could cause a broader issue within the Treasury market and the US wants to make sure this is all slow and orderly. But the US is asking for two things that work against each other. A higher Japanese rate makes the yen stronger but it also brings Japanese money back to Japan and out of Treasuries which pushes US yields up. Odds for an October hike have increased from ~25% to 40% since the last hike.

Looking in at DXY DXY is at 101.3 and just under its June and July highs. A week ago the odds of another Fed hike in October were around 50%. Strong PMI data came out and a few Fed officials said more hikes will likely be needed and now those odds are 68.6% The euro is more than half of DXY and it is at a two month low. The ECB is also hiking but US yields have gone up more than German ones and the 10Y is at its highest since 2007. Higher oil is a big part of why rates are going up in the US and Europe in the first place. The Bank of Japan hiked last week and Japan has spent a record amount buying yen since July and the dollar still went up against the yen after the hike. August PCE inflation comes out on September 30 and the BEA is revising the past few years of data at the same time.

ethereum:0xfaba6f8e4a5e8ab82f62fe7c39859fa577269be3 is pumping because you can now buy a BlackRock designed portfolio of stocks and funds on Ondo as one token. I like ONDO and own it because it takes traditional assets like US Treasuries, stocks and ETFs and turns them into tokens that trade on a blockchain. Each token is backed by the real asset it tracks. Ondo and BlackRock have been working together for a while. Ondo's OUSG token has held BlackRock's BUIDL fund since 2024 and in July Ondo tokenized BlackRock's IVV ETF. Today BlackRock went further and designed portfolios for Ondo. Are you familiar with Ondo Finance?

So what is going on with this potential diesel export ban? Diesel hit a record $6.53 a gallon this week. That's a big cost for farmers and truckers and it's why some Republicans want a ban to keep more diesel in the United States. Politico said yesterday citing 5 sources that the administration was preparing a 90 day ban on diesel exports. The White House denied that story. But Politico also reported that Energy Secretary Chris Wright called oil CEOs on Tuesday night and warned them a ban was coming within days. Some of those CEOs then called the White House to complain. Remember they would make less money if they can't sell overseas where prices are higher. They also say a ban would force them to make less fuel and push gasoline and jet fuel prices up. Now Wright told the Wall Street Journal they're looking at restrictions rather than an outright ban. I have the rest of the timeline linked in the reply below.

I think it's time for another shoutout, and today I want to feature someone who has supported me right from the start when I barely had any followers at all, and that's @notanotherquant . Paul, the owner of this account, is not only a great supporter of others, but he is constantly churning out top quality content every single day, whether he is breaking down and analysing the latest economic data and macro news, or whether he is offering his own insights into the the price chart of Bitcoin, for example. Put simply, he is my go-to macro guy when I want to read some detailed and intelligent analysis. So please visit his page and drop him a follow if you haven't already done so because he deserves to have a lot more than 3000 followers.