Last updated: August 7, 2026, 1:10 PM ET

Public Markets Briefing

Jobs Report Reshapes Fed Rate Expectations

The July jobs report delivered a major shock, with the U.S. economy shedding 23,000 jobs last month, far below consensus forecasts. U.S. stocks jumped after the cooler-than-expected data, while traders scaled back rate-hike bets across the curve. However, the weak jobs report doesn't rule out a Fed rate rise, as officials remain chiefly focused on inflation after five years of overshooting the 2 percent target. Bond traders are bracing for labor market data that could tip the scale on a September hike, with growing expectations that the Fed may begin raising rates as soon as next month.

Treasury yields fell sharply after the much weaker-than-expected report, while US Treasuries rallied as the data suggested labor market challenges that could impact the Fed's willingness to raise rates. Yields ticked down ahead of the BLS employment report after weaker-than-expected private payrolls gains, while yields rose earlier as job-cut plans remained calm in July alongside low weekly jobless claims. The bond market is signaling rising risks, with implications for home buyers and A.I. data centers, though it's also a boon for retirees. Warsh's silence is manufacturing market noise, as investors want to know how the Fed will react to changing economic data, and the pushback against Warsh is unwarranted as he drives much-needed reform.

Dollar Slumps, Yen Surges on Intervention

The dollar fell to its lowest level since May after soft US labor data reduced expectations that the Fed will raise rates in the near term. The WSJ Dollar Index fell 0.16% to 96.01, down six of the past seven trading days, while the dollar hit a seven-week low against a basket of currencies. The yen surged 1% against the dollar after the jobs data, with traders watching for intervention clues, and Japan confirmed three-day yen intervention during the spring Golden Week holiday to prop up the currency. The yen jumped again on the unexpectedly soft payrolls report, offering the latest fodder for speculation that authorities could intervene again.

The US decision to sell euros to support Japan's currency without warning European policymakers is adding to geopolitical risks, according to BlackRock, while Goldman Sachs is skeptical that yen support will threaten dollar dominance. The yen intervention illustrates dangers of monetary experiments, as Tokyo and Washington's desire for stability may create long-term danger, and Trump's yen intervention has reasons that are not solely economic. Bessent's yen trade has unintended consequences, with concerns the Fed is being roped into easing monetary conditions, while hedging costs jumped as Warsh ditches Fed rate guidance. The Fed's Fima repo facility went unused for an eighth straight week, suggesting Japan didn't use the tool in its latest intervention, and Bank of America sees the yen gaining 6% against the dollar by year-end. The Korean won rose to the strongest level in almost 10 months as exporters converted dollar earnings, while carry trades are powering on as investors sidestep the yen's gains.

Oil and the Strait of Hormuz

Oil futures moved lower in expectation of a deal to reopen the Strait of Hormuz, returning some of yesterday's gains, while oil fell to a three-week low after Treasury Secretary Scott Bessent said the US could be close to an agreement with Iran. Iran says it has reached agreement with Oman on a Hormuz shipping route, determined to retain control over the chokepoint, while Qatar reported progress with draft language of a deal being circulated. US stocks surged and oil fell sharply after Bessent said a deal could be reached "today or tomorrow," while oil prices plunged on hopes that talks were progressing.

Iran's oil exports have stalled and Kharg Island is idling under the US blockade, with naval interdiction appearing to halt tankers carrying Tehran's crude, while Saudi crude shipments to the US plunged to zero in July, the first time that's happened for an entire month since 1985. OPEC output rose in July led by Gulf nations including Kuwait, Saudi Arabia and Iraq, though opaque shipping data complicated tracking. US crude inventories posted a weekly increase of 2.5 million barrels, against expectations of a 1.2 million barrel decline, while oil analysts are stumped by the case of the missing barrels. The Houthis threaten to expand Red Sea attacks and claimed a strike on a Saudi tanker, while Houthi attacks on Yemeni military threaten to reignite civil war. Adnoc spent $1.3 billion to expand its tanker fleet to benefit from surging crude exports after the UAE left OPEC, and the Gulf's "Little Sparta" is taking on the oil world with a more assertive course.

Copper, Gold and Commodities Surge

Copper headed for new highs as the US and China squeeze buffers, with a two-way pull depleting LME inventories and raising the risk of another spike in futures. Copper prices rose to new records for the third consecutive trading session, with gold and silver also settling higher, while Comex copper climbed to a record high on tariff speculation. The copper market is tightening fast with a surge in shipments to the US and rising orders in China setting the stage for a rally to all-time highs, and copper headed for a record close on signs of tighter short-term supply. Codelco halted expansion work at its biggest copper mine in Chile after identifying a new source of seismic risk a year after a rock burst killed six workers.

Gold was set for its best week since January as dip-buyers supported prices above a key technical level, while gold jumped the most since February on prospects for a Hormuz deal and a technical breakout. Comex gold settled 0.09% lower at $4,242.00, snapping winning streaks, though gold climbed as the latest JOLTS report showed job openings little changed in June. China's central bank extended its gold buying streak to 21 months, ramping up additions as bullion prices built support above $4,000 an ounce, and China is stockpiling more gold in Hong Kong to support the city's push to become a major bullion-trading hub. Ghana made a $1.9 billion loss on gold purchases in 2025 under a domestic purchase program, according to the IMF.

Global food prices rose to a three-year high in July as renewed concerns over key grain export corridors compounded adverse weather, while food prices rose as the near-total closure of the Strait of Hormuz compounded expectations of a strong El Niño. El Niño threatens to disrupt the world's most-traded commodities, with this year's pattern set to be one of the strongest since 1950, and Ukraine grain exports could slump by more than half this season after Russian attacks disrupted Black Sea ports. Hungary warned of a dramatic hit from drought and a nuclear outage, while the Rhine drought threatens a vital economic artery in the heart of Europe with record low water levels disrupting supply chains.

Big Tech and AI Rally Resumes

Big tech stocks stormed back as AI fears fade and euphoria resumes, with the world's biggest technology companies suddenly leading the way. The tech melt-up drove a $3.5 trillion Nasdaq 100 rally in just four days, powered by strong earnings that emboldened investors, and tech euphoria has come back in just four days with sentiment turning around completely from last month. The S&P 500 is poised for another record as the AI spending narrative holds, with the latest batch of earnings pointing to strong demand. Wall Street bulls flocked to S&P 500 calls as the rally broadens, with traders unable to get enough of options betting on more gains.

Corporate America's adoption of AI tools is paying off, in a major relief to investors who had questioned massive investments in the technology, and the AI boom is "trickling down" to old-line stocks, according to Wells Fargo. SpaceX unnerved investors with lavish AI spending plans, with shares sliding even as quarterly revenues nearly doubled, and SpaceX spent $15.8 billion on AI projects in the second quarter with no plans to slow down. SpaceX stock dropped on ballooning AI bill, while SpaceX shares sank on AI spending plans and shares climbed after the $100 billion lockup expired with as many as 911.5 million shares released. SpaceX true believers propelled shares past the end of the epic lockup, with retail seeing an "insane opportunity" to buy, though SpaceX needs to make its bigger rockets work as none of its most ambitious plans are possible without Starship success.

Alphabet's jumbo bond sale drew $115 billion of investor demand, signaling renewed appetite for debt tied to the AI boom, while ByteDance is targeting a mega AI model nearing Anthropic's Mythos with a model three times larger than Moonshot's Kimi K3. Google's AI shake-up boosted Brin as Deep Mind's Hassabis steps aside, consolidating control as the London lab's scientific culture gives way to urgency, and four top Google AI researchers formed a new start-up led by Jeff Dean with Google's backing. Alibaba's latest AI model puts it back in the great game, hoping to recoup lost shine, while China's cheap AI is shifting investors' focus to internet stocks after years in the shadow of chipmakers. Chinese AI darlings slid on US ban fears after a report that Washington is drafting a ban on optical transceivers, and Atlassian shook off "SaaSpocalypse" as its chief vowed to spend $250 million buying shares after strong quarterly sales.

Hedge Funds and the AI Selloff

Hedge funds took a big hit in July after a bruising AI selloff, with a spate of well-known funds reporting steep losses as AI shares tumbled. Whale Rock sank 22% as the AI selloff crippled hedge fund returns, with a 21.7% drop in July erasing about half of its gains for the year. Citadel's flagship fund surged 6% after buying billions of dollars of AI stocks from Leopold Aschenbrenner's Situational Awareness, and Citadel "made a killing" after buying the bulk of the fund's stock book. Situational Awareness was not the target of predatory shorts, with losses appearing to be the result of highly concentrated positions in crowded trades. Wall Street and Silicon Valley investors got burned by Situational Awareness, and the heavyweight investors behind the fund included some who warned the founder about big risks. Big US hedge funds were targeted by a wave of cyber attacks, with Point72 and Citadel among firms hit by audio phishing schemes.

Corporate Earnings: Winners and Losers

WPP shares surged more than 25% as its overhaul began to bear fruit, with the advertising group's top-line decline easing thanks to a recovery in media-buying operations, and WPP soared the most on record since its 1995 IPO after the turnaround gained steam. Allianz posted record profit as Pimco saw €32 billion in inflows, with an 11% rise in group operating profit, while Allianz's net profit fell amid a portfolio reshuffle despite the record operating result. Siemens Energy profit tripled as orders hit record highs on US data-center demand, with the company expecting the higher end of its fiscal-year profit margin guidance of 10% to 12%. Siemens Energy's CEO sees a solid outlook on broad electrification, pointing to power-hungry data centers as only one driver, while Siemens shares fell as Digital Industries order growth missed expectations.

SoftBank's profit beat expectations with a boost from chip bets, helped by an $8 billion gain on its Intel stake, while SoftBank used its OpenAI stake to borrow $10 billion as it vows to become a leading builder of AI data centers. Honda doubled profit and lifted guidance on a weak yen, raising its outlook 30% as US hybrid demand lifted quarterly results to a record, while Fujifilm declined the most on record on a profit miss and spinoff plan. Take-Two logged higher sales but losses widened due to discontinued development of a title, while DraftKings revenue fell hurt by promotions with a $67.6 million loss versus a $157.9 million profit a year earlier. DraftKings sales and profit fell short amid the prediction market blitz, while option traders piled into bullish bets before earnings.

Under Armour lowered its revenue outlook on soft demand as traffic trends weakened, especially in North America and the Asia-Pacific, while Wendy's withdrew its outlook and slashed its quarterly dividend as its turnaround struggles. Burger King's turnaround gained steam powering Restaurant Brands' profit, with the revamped Whopper striking a blow in the fast-food burger wars, while Papa John's cut its outlook and suspended its dividend as North American business faces a soft consumer environment. Sweetgreen lowered its full-year outlook due to the cyclosporiasis outbreak with same-store sales expected to drop 7% to 8%, while demand for locally grown lettuce surged as sales of grocery chain salad kits drop. Monster Beverage sales rose 20% on international growth, while Celsius shares slumped as namesake brand sales tumbled on competition. Kraft Heinz raised its sales view despite a narrower loss, aiming to mitigate higher supply costs by raising prices, and Molson Coors sales fell as the company balances sluggish demand with higher supply costs.

Airbnb boosted its full-year forecast on strong demand as AI bets pay off, expecting revenue to increase by at least a mid-teens rate, while Expedia raised its revenue view to $16.05 billion to $16.22 billion. Uber reported moderating growth with a soft forecast as it invests heavily in autonomous vehicles, pledging $10 billion to win the robotaxi race, while Lyft's bookings climbed to $5.5 billion but growth is expected to moderate to 15% to 19%. Instacart shares rose on higher revenue of $1.04 billion versus $914 million, while Shopify signaled revenue acceleration as AI tools and merchant growth drive results. Eli Lilly posted higher revenue on continued GLP-1 demand, while Novo Nordisk lifted guidance after a strong second quarter, and both drugmakers raised profit outlooks as weight-loss drug demand soars.

M&A and Deal Activity

Dream Finders agreed a roughly $916 million deal to buy rival Beazer Homes, following several months of talks, while Dream Finders inked the deal for about $915 million. Nielsen agreed to buy DoubleVerify in a deal with an enterprise value of about $2.15 billion, while Disney sold its stake in A+E Global Media to Hearst for about $1.2 billion. P&G sealed a $3.8 billion deal for supplements company Thorne, expanding its health business in a sector that has boomed since Covid, while Kirin pushed into vitamin sales with a $1.4 billion Jamieson deal that values the Canadian vitamins company at near-record levels. Apollo invested $1 billion in a joint venture with Starwood Real Estate Income Trust, while BlackRock BDC moved $523 million in loans to a Pantheon-backed fund involving nearly half of its debt investments.

Gainwell Technologies kicked off a $5.8 billion debt overhaul that would be the US software sector's biggest of 2026, while Jane Street is in talks to shift its $11 billion in debt to investors including Pimco. Biggest US law firms are exploring selling stakes to private equity, with Paul Weiss, Quinn Emanuel and Proskauer among firms that have had conversations, and Big Law's new private equity era is taking shape. Bodycote received two takeover bids from CVC and Veritas valuing the FTSE 250 industrials group at about £1.8 billion including debt, while Goodwin explored a sale of its defence business with bids from buyout firms. Partners Group neared a €2 billion deal for beauty group Aroma-Zone, with Eurazeo in talks to sell its stake, and Ares is eyeing a $2 billion loan deal in private credit's slow year.

Monte dei Paschi is weighing options to fend off Intesa Sanpaolo's $35 billion takeover bid, while Commerzbank unveiled a €1.2 billion buyback as UniCredit talks loom, and Commerzbank's CEO called for dialogue after the Italian bank achieved a near majority stake. Allianz agreed to buy UOB's asset management unit as CEO Oliver Baete pursues Asia growth, while Paramount secured UK approval for the $110 billion WBD deal with editorial safeguards. The antitrust trial over Paramount-Warner is set for March with a dozen states suing to block the $81 billion deal, and a judge set the trial after Paramount requested a November date.

Housing, Real Estate and Financials

The UK housing market is in "suspended animation" as Lloyds' data shows house prices unchanged in July with higher mortgage rates stretching affordability. Top US mortgage lender United Wholesale Mortgage plunged 49% after announcing a net loss of $452 million and suspending its dividend for the first time, while Rocket's revenue surged on mortgage market share gains in both purchases and refinancings. Zillow swung to a loss on restructuring costs of $36 million despite higher revenue, while Zillow's revenue jumped 18% to $772 million with rentals offering a "bright spot." Lumber prices surged despite a housing slump, with steep duties on Canadian lumber, wildfires and sawmill closures cutting supply, while home-building is sputtering but lumber prices haven't been so high in years.

Consolidated Edison reported higher profit of $308 million, up from $246 million a year earlier, while AIG profit beat estimates under new CEO Eric Andersen with strong underwriting. MetLife's earnings beat expectations boosted by strong underwriting and volume growth, while Prudential topped estimates as revenue from its asset manager surged. Swiss Re profit beat estimates as the re-insurer boosts cost cuts, while Munich Re cut its revenue outlook after a volume drop in July contract renewals. Zurich Insurance saw no material exposure to wildfires, reporting a 13% gain in first-half profit on data center demand, and Blackstone BDC profit dropped 94% as the value of holdings declined though loan performance steadied.

Global Markets Roundup

European stocks extended record highs with the Stoxx 600 up and industrial and retail stocks gaining, while European indexes gained in muted early trade ahead of US jobs data. European stocks gained for a fourth day on strong earnings with WPP leading gains in the media sector, while European stocks were subdued as HSBC and Novo Nordisk led declines. Australia's stocks rose to a record on Iran hopes and economic bets, while Asian stocks were seen lower amid Iran tensions before the jobs report. The S&P 500 hit a record high rising 1.8% and pushing past its previous peak, capping a big turnaround from the tech selloff, while strong earnings powered the Dow to another record with the blue-chip average notching its 24th high of the year. US stocks were mixed as tech wobbles offset Hormuz hopes, while the Dow was poised to break its winning streak as oil prices rose amid Middle East uncertainty.

India's forex reserves are expected to rise to a near-record high within weeks driven by stronger capital inflows, while India raised $40 billion from its diaspora to support the sagging rupee with stronger than expected inflows. India's top bank beat profit estimates as State Bank of India benefited from strong credit growth, while Bajaj Finance shares dropped as the RBI proposed to bar shadow lenders from offering revolving credit facilities. The Philippine economy grew at its slowest pace since 2009 excluding Covid as the Middle East conflict stokes inflation, while China's export boom rolls on despite trade backlash with factories finding eager buyers abroad. China's new export engine is supplying the factories of the world with high-value items that underpin global manufacturing, and Shanghai is tackling its chronic land lease issue by permitting owners to extend leases for commercial property upon expiry.

Bond Markets and Debt

US Treasuries rallied after data showed employers unexpectedly cut jobs in July, suggesting labor market challenges that could impact the Fed's willingness to raise rates. Treasury yields fell on hopes for an Iran deal amid a busy day of US economic indicators, while Treasury options splurge risks igniting bigger market turbulence as bond traders spend millions guarding against declines in long-dated Treasuries. The US signaled steady debt sales to 2027 with no change in note and bond auction sizes even as federal borrowing needs climb, while bonds and the dollar were weighed down by Washington policy decisions. The "Sell America" debate re-emerged as global bond and currency investors debate whether to dust off the trade after a flurry of policy decisions. Japan's 30-year bond sale brought relief amid fiscal concerns, delivering calm to a market buffeted by currency turmoil, while Japan's biggest insurers posted $96 billion in bond paper losses as soaring interest rates hurt the industry. Wellington funds pivoted from Treasuries to German bonds after the Fed meeting fueled doubts about its inflation-fighting credentials, while Barclays and HSBC say inflation-protected bonds appeal given concern the Fed is dragging its feet on inflation. China sold long-dated offshore yuan bonds at record-low yields in Hong Kong, underscoring strong demand from global investors, while Kazakhstan eyes a return to panda bonds with a $500 million deal. Germany, France and Spain balked at yuan bond sales after exploratory discussions with bankers, and Chinese banks expanded direct settlement to aid the yuan's global role by bypassing the dollar in cross-border trade.