Nick Spencer-Skeen, Senior Executive Officer, Lunaro Markets Limited
Friday Closing Prices
- S&P 500 7,675 (+0.43%)
- Nasdaq 26,180 (+0.43%)
- Gold $4,603 (+1.86%)
- Brent Crude Oil $93.85 (+0.75%)
Source: Bloomberg
US rates controlled cross-asset price action last week, as renewed pressure on long-dated bonds forced an unusual policy response. 30-year Treasury yields briefly reached near two-decade highs before Treasury Secretary Scott Bessent launched a surprise buyback operation, temporarily easing the selloff1. Although the relief proved short-lived, subsequent flight-to-quality demand helped the 2-year and 10-year yields finish the week around 9bps and 8bps lower, respectively2.
Fed officials largely pushed back against the idea that the move reflected deteriorating inflation credibility. Mary Daly argued markets continued to trust the Fed’s policy stance, while Alberto Musalem pointed instead to heavy government borrowing as the primary driver of higher long-term yields3.
The broader reaction sparked fresh chatter around the debasement trade. For those unaware, this strategy involves selling currencies and government bonds to buy gold or other assets, because they are concerned that the large levels of national debt could destroy the purchasing power of cash. Last week, the dollar weakened, with DXY falling over 1% and EUR/USD gaining, while gold surged almost 6% and WTI crude rose amid ongoing geopolitical risk2.
Equities struggled with the combination of volatile rates and softer risk appetite. The S&P 500 fell 0.9%, and Nasdaq 100 dropped 2.3%, while the Stoxx 600 declined 0.6%. The commodity-heavy FTSE 100 gained 0.9%, while Japan’s Nikkei 225 underperformed sharply, falling 4.6%2.
Warsh Due to Speak at Jackson Hole
Investors will likely have one eye on the Jackson Hole Symposium this week, where leading central bankers will meet, discuss and hold briefings on monetary policy. Fed Chair Kevin Warsh’s speech on Friday is the main event4. Markets will likely be looking for greater clarity on the Fed’s reaction function after the volatile period for Treasuries, particularly whether persistent pressure at the long end changes the threshold for interest rate hikes.
The key question is whether Warsh treats higher yields as primarily a fiscal and supply problem, or as a signal that inflation risks require a more forceful monetary response. Any emphasis on fiscal dominance, Treasury market functioning or the limits of Fed policy could reinforce the debasement trade narrative we mentioned earlier, keeping pressure on the dollar while supporting gold.
Nvidia Earnings in Focus
Nvidia reports second-quarter 2027 earnings on Wednesday, with the release once again carrying implications well beyond the stock itself. The company guided to roughly $91 billion of revenue for the quarter, following record Q1 revenue of $81.6 billion and Data Center sales of $75.2 billion5. Importantly, that outlook assumed no Data Center compute revenue from China, leaving any improvement there as a potential source of upside.
The bigger question is whether earnings can continue validating the extraordinary scale of AI infrastructure spending. Investors will focus on demand for Nvidia’s latest systems, hyperscaler order visibility and whether gross margins can remain around the 75% level as production continues scaling5. In our view, Guidance will therefore matter considerably more than the backwards-looking quarter.
Concern around the rise in long-term yields could also impact Nvidia. The higher yields have recently pressured semiconductor stocks and revived questions around the financing and eventual returns on AI capex. In our view, Nvidia remains the clearest barometer for whether those concerns are beginning to affect underlying demand.
Tariff Risk Returns For Investors
Over the weekend, last-minute talks between the US and Canada failed, meaning the US is now imposing 50% tariffs on roughly $20 billion of Canadian goods6. Even though the measures reportedly cover around 5% of Canadian exports to the US, it provides a warning shot to investors as we start the week that global tariffs and the disruption caused by them could once again be a risk to asset prices.
Indeed, Bloomberg reports Canada has halted talks and pledged equal retaliatory tariffs, turning what looked like a negotiable dispute into a broader test of North American trade relations6.
Exposed sectors such as steel, aluminium and autos could see share price weakness as their margins and supply chains are already fragile. In our view, the move reinforces the idea that tariff risk is no longer a China-only story. It raises uncertainty around USMCA stability, pushes companies to reassess North American sourcing, and adds another layer of cost pressure at a time when markets are still sensitive to inflation shocks
