23:00, rescuing the last closing of July

Last trading day of July ended:

The US stock market closed with broad gains: the Dow Jones rose 0.53%, the S&P 500 rose 0.7%, and the Nasdaq rose 1%.

Despite the gains, no one is really celebrating. Alongside the stock market's rise, US Treasury bonds faced a wave of selling, with the 10-year US Treasury yield soaring to 4.73% (crossing the 4.70% danger threshold); oil prices also continued to climb, as Brent crude approached $90.

The selling pressure in US Treasury bonds is more concerning than the stock market gains. The 10-year Treasury yield briefly rose to 4.747%, while the 30-year yield climbed to around 5.25%, the latter touching its highest level since 2007.

Around 22:00 Beijing time, a dramatic scene unfolded—three Federal Reserve officials who voted against keeping rates unchanged (in support of a rate hike) each released statements (publicly explaining their dissent):

The trio proposed a fairly comprehensive policy package: inflation has stayed above target for several consecutive years, the economy and labor market remain resilient, current rates may not truly constrain demand, and oil price shocks should not be dismissed as automatically temporary. Instead of waiting for inflation to reaccelerate, it is better to make a small 25 basis point adjustment now, effectively buying “insurance”. In short, a small rate hike now could help avoid the need for aggressive hikes later.

After the statements, Treasury selling intensified. The 10-year yield crossed 4.73% for the first time since January 2025, while the 30-year yield surpassed 5.25% for the first time since 2007. The market momentarily pushed September rate hike probability up to around 65%. At the same time, US stocks dropped sharply during trading: the Nasdaq 100 erased up to 1.8% in gains, and the S&P 500 quickly shifted from a 0.7% rise to a 0.5% drop.

· Notably, after the Federal Reserve held rates steady this Wednesday, short-term Treasury yields initially fell while long-term yields rose. The market interpreted this as the Fed being unwilling to raise rates in the short term, leading to lower short-term yields. However, this “inaction” could make long-term inflation harder to control, thus pushing up long-term yields.

· On Friday, following the statements from the three dissenters, the sell-off spread across the board: the bond market no longer worried just about long-term inflation, but began repricing the chances of a near-term rate hike.

At 23:00 Beijing time, Amazon’s earnings-driven buying and post-deleveraging demand came back on top—US stocks were rescued from underwater for the final July close.

But the bond market hasn't stopped; the US stock market is simply choosing not to listen, for now. (Wall Street Intelligence Circle)