Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1.Did Markets listen to the Bell?
Fixed Income:
- 30-year Treasury yield down 15.7 bps to 4.769% on the week; 20-yr yield down 15.9 bps to 4.713%; 10-yr down 13.9 bps to 4.09%; 7-yr down 12.3 bps to 3.809%; 5-yr down 9.8 bps to 3.601%; 3-yr down 8.9 bps to 3.496%; 2-yr down 9.3 bps to 3.528%; 1-yr down 17.3 bps to 3.669%;
- TLT up 2.3%; EDV up 4.2%; ZROZ up 4.9%; TMF up 7.9%; HYG up 1 bps; JNK flat; EMB up 69 bps; leveraged DPG down 1.7%; leveraged UTG down 1.5%;
Recall that MacroViewpoints cut its ONR (over-night rate) by 50 bps to 3.25% two weeks ago on August 17, 2025. A week later, Fed Chair Powell delivered his stunner of a speech at Jackson Hole.
We are glad we did so because, despite the above, MV-ONR is below even the sub-3.5% 3-year Treasury yield and the multi-year low in the 5-yr Treasury yield. Our concept is that we are seeing a shift in the tectonic plates under our feet &, in such conditions, the Fed must outrun the shifting downwards movement.
Stephanie Pomboy of Macro Mavens put it differently:
- “everyone looks over to tariff headlines; in the meantime, .. the existential threat to the economy which is rates staying at this level .. doesn’t seem to get that kind of attention… we continue to grind lower & lower on the consumer to the point that it creates a little bit of a credit panic … ” (look at TLT up 2.3% vs. HYG up 1 bps & JNK flat last week).
Ms. Pomboy continues:
- “a credit panic where credit risk in repriced across the entire credit market not just in consumer segment … ; soon people start saying look these people got sloppy in their underwriting standards… not just in consumer debt but may be also in corporate debt … ”
Look what the financials did last week – not all that bad but much worse than other sectors:
- BAC down 1.9%; C down 1.2%; GS down 94 bps; JPM down 2.3%; KRE down 9 bps; EUFN down 36 bps; SCHW down 4%; APO down 3.4%; BX down 82 bps; KKR down 2.8%;
Then Ms. Pomboy brought up the parallel:
- “what happened in 2008-2009 was actually the consumer was in recession in 2007 & it took a long time for the markets to begin to reprice the credit risk; then you had the spectacular credit bust which then exacerbated the existing recession & made it worse”
Recall or check the charts to notice that US Indices actually took heart from the bad payrolls number in September 2007 because of a near guarantee of rate cuts. And the S&P went on to make a new high by mid-October 2007.
This week wasn’t bad, right?
- Dow down 32 bps; SPX up 34 bps; RSP down 10 bps; NDX up 1%; SMH up 1%; RUT up 1.1%; MDY up 1.3%; XLU down 1%; VIX down 1.4%;
On that note,
- Trader Z@angrybear168 – $SPY weekly tension closed bullish.
And,
- Trader Z@angrybear168 – $SPY still trading above shorter term vwap, stay with the trend.
And look how the sector that generates all its cashflow & doesn’t depend on the credit markets partied this past week!
- AAPL up 3.2%; AMZN up 1.5%; GOOGL up 10.4%; META up 1.9%; MSFT down 2.4%; NFLX up 3%; NVDA down 4.1%; AVGO up 12.6%; MU up 10.4%;
That brings up:
- Seth Golden@SethCL – The 2 most heavily weight sectors and industries ( $XLK $SMH ) in S&P 500 have gone absolutely sideways for 3 months. Stilling holding the 21-EMA, but have not contributed to new $SPX highs and seemingly trend-less. Time consolidation will not last forever. $SPY $QQQ $SOXX $NVDA $MU $AMD $AAPL
Dollar was up 11 bps on UUP & down 1 bps on DXY:
- Gold up 3.8%; GDX up 5%; Silver up 2.9%; Copper down 44 bps; CLF up 6%; FCX up 4.4%; MOS down 2.8%; Oil down 3%; Brent down 3.6%; OIH down 67 bps;
In support:
- zerohedge@zerohedge – “Still Room To Run Higher” In Stocks; Top Goldman Trader Likes Gold & Gold-Miners
And in contrast:
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – Halliburton cuts workforce as oil activity slumps – Reuters
International Stocks:
- EEM up 1.2%; FXI down 3 bps; KWEB up 68 bps; EWZ up 44 bps; EWY up 1.9%; EWG down 1.3%; INDA up 96 bps; INDY up 81 bps; EPI up 1.4%; SMIN up 1.3%;
2. Another Global Bell
What a show last week was? The sight of President Putin, Chairman Xi & Prime Minister Modi meeting at the SCO meet in China & laughing, shaking hands & demonstrating a new united side in business to the world. Sadly &, as usual, most of the media coverage was hyped-up & in an entirely narrow perspective.
The really big winner from last week was the BRICS grouping – the organization led by Brazil, Russia, India, China & South Africa. BRICS had become large with a diverse membership list but it had not made a real impact on global commerce or relations. Partly because BRICS was viewed as a body essentially dominated by China with India more focused on QUAD (USA-Japan-Australia-India) & Russia mainly focused on Europe.
The main product & service provided by BRICS was a way to transact business & wire monies from one BRICS member to another bypassing the Dollar. Some in BRICS tried to promote a de-dollarization focus that was vetoed by India. It was widely known & understood that India & China had opposing viewpoints & interests. That was one big reason why many countries stayed away from BRICS. India was deemed as too pro-USA & Iran had publicly complained to Russia to designate India as an ally of USA & downgrade its membership.
Then everything changed last weekend. The public spat between USA & India was heaven-sent for BRICS. India was no longer deemed as a US ally & that opened the doors to make BRICS a truly non-aligned membership organization. The spectacle was superb & delivered the central message.
The huge new reality was that BRICS was now viewed as a non-controversial & pro-business body that everyone could participate in. PM Modi first visited Japan & the Japanese PM discussed a $78 billion investment program in India. Australia went the other way and transferred quarter of its reserves into Beijing’s currency into Yuan, China’s currency. That was in addition to Australia’s Treasury issuing its first Yuan bond. According to the IMF, “no advanced economy has ever moved this fast“.
If Australia’s new dealings with BRICS weren’t shocking enough, guess what else was reported? Canada, America’s most important partner & neighbor, was in discussions to potentially join BRICS and that Canada had already done a trade each in Chinese Yuan & Indian Rupee using the BRICS mechanism. And Japan has also reportedly done trades in Chinese Yuan & Indian Rupees using the BRICS mechanism.
Now that both China & India are active business partners in BRICS & Russia is a supporter, the misgivings of US Allies using BRICS are being reduced. This, in our opinion, is the most important result of last weekend’s BRICS meeting in Shanghai. Everybody noticed that PM Modi left a day early deliberately missing the Chinese Military period, a signal that BRICS is mainly an economic-trade body.
Turn to the other lateral of the world & notice that India has re-opened its earlier relationships with Nigeria by signing a deal to import Nigerian crude. And search “India & Burkina Faso” on YouTube to see the diverse deals India is establishing with Burkina Faso re Oil, Natural Gas & minerals. And all these deals in Indian Rupees with African currencies.
All of this because BRICS is now deemed to be a free organization that is not under control of either China, India or any other grouping. All the above may be more noise than reality, but the mere prospect of Canada, Australia & Japan working with China, India and Africa in non-Dollar terms without going thru US markets is a very material.
What might a smart & deft USA do? Wait & see whether BRICS actually becomes successful. If so, why shouldn’t USA join BRICS too? That way US can work with such a large block of trading nations either via BRICS or via America’s own Dollar mechanism. That way, USA can cherry-pick the deals it wants using the power & depth of US financial markets & use BRICS for other non-critical deals.
Going back to the drama of USA vs. India, just a passing phase in our opinion:
- Pres. Trump – “ I will always be friends with Modi, he is a great Prime Minister; .. India and the United States have a special relationship. There is nothing to worry about“
- Pm Modi – “Deeply appreciate and fully reciprocate President Trump’s sentiment and positive assessment of our ties. India and the US have a very positive and forward-looking Comprehensive and Global Strategic Partnership”
https://www.youtube.com/watch?v=nJIstcqnhB4
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