Massive Relax

By Benjamin Picton, Senior Macro Strategist at Rabobank

Oil futures are being offered this morning after President Trump on Friday declined to continue strikes on Iran. The ‘pause’ was extended over the weekend and reciprocated by the Iranians, marking the first ‘cease’ of the ceasefire in almost a fortnight.

According to Axios, Donald Trump’s advisors had provided the President with attack plans for the day but CENTCOM commander Admiral Brad Cooper reportedly advised against further strikes, arguing that Iran’s ability to disrupt shipping in the Strait of Hormuz had already been substantially degraded and that the aerial campaign had reached the limits of its effectiveness.

In a similar vein, the New York Times published a report over the weekend revealing that General Dan Caine, Chairman of the Joint Chiefs of Staff, had cautioned the President that further escalation was possible but that it would dangerously deplete CENTCOM’s stock of interceptor missiles. This would expose the nineteen-odd US bases across the Middle East to even greater damage than they have already sustained, to say nothing of the infrastructure of GCC allies and the strain on the US’s defence priorities in the Pacific and elsewhere. President Trump denied the reports, telling the Wall Street Journal “we have far more [interceptors] than we need.”

In a further hopeful sign, an Omani team of negotiators has reportedly met with counterparts in Tehran to discuss arrangements to re-open the Strait of Hormuz. Iranian foreign ministry spokesman Baqaei said that the talks had been “useful” and that progress had been made, but that there was no change in the status of the strait at this point. It also remains to be seen whether any agreement reached between Iran and Oman would be accepted by the United States.

Nevertheless, President Trump’s threats of ‘massive attack’ late last week that saw Brent crude surge above $100/bbl, higher bond yields, and equities under pressure has now given way to a massive relax, with Brent below $92/bbl, equity futures pointing higher and sovereign yields lower across the board.

Though it hardly bears noting, at this point it would behove us to caution that the war is not over and that we certainly are not out of the woods from either an energy security or financial markets perspective. 

To illustrate this point, the Wall Street Journal carried a story over the weekend regarding the escalating tit-for-tat between the Saudis and the Houthis that threatens to conflagrate into all-out war. Houthi attacks on Saudi Aramco infrastructure at the critical port of Yanbu (the Red Sea release valve for Saudi oil exports) over the weekend followed a declaration last week that Saudi Arabia’s Red Sea ports would be subject to a blockade that further threatens to starve energy-poor Asia of vital crude oil flows. For now, China is continuing to play the constructive role of balancing item by holding its crude imports well below the usual levels.

Similarly, Israel was reportedly bracing for escalation over the weekend with the Jerusalem Post noting that public bomb shelters had been re-opened in major cities. Israeli Prime Minister Netanyahu said that the war would continue until the Iranian regime fell or gave up its nuclear ambitions, again highlighting the likelihood that hostilities will remain ongoing until one is forced to concede on the nuclear issue – and likely concede its regional influence in the process.

A further coalescing of an anti-Iranian bloc is also becoming more evident. Al Jazeera reports that Syrian President Al-Sharaa is seeking a security agreement with Israel that will apparently include several other countries and likely include provisions to stem to flow of weapons to Hezbollah in Lebanon. This as Israeli government sources indicate that Israel has dramatically stepped-up its engagement with the GCC since the outbreak of the war, which has perhaps already yielded fruit through the UAE’s decision to leave OPEC and OPEC+. Détente between Gulf states and Israel holds out the prospect of less fragile supply chains in the future, where oil flows West rather than East and Iran loses its leverage over the global economy, but that potential future is riddled with ‘ifs’, and solves none of our near-term problems.

Elsewhere, Iranian Foreign Minister Araghchi accused Ukraine of doing Israel’s bidding after the former struck an Iranian vessel in the Caspian Sea, killing at least one crew member. Ukrainian President Zelensky defended the action by stating that Kyiv was targeting vessels involved in military cargo shipments alongside Russian warships, again raising the prospect of two conflicts merging into one.

While geopolitical considerations will doubtless continue to set the tone this week, the Fed, Bank of England and Bank of Japan will all be meeting to set their respective policy rates. None are expected to raise their rate targets this time around but the inflationary impacts of war, and considerations over how persistent those shocks may prove to be, will surely loom large in their deliberations.

This week will also bring Q2 GDP readings for the United States and the Eurozone, along with Q2 PCE for the former and July CPI for the latter.

Tyler Durden Mon, 07/27/2026 - 10:20

Deutsche Bank Says Starship Flight 13 Made "Solid Progress" Despite Booster Setback

Following last month's record-setting IPO, SpaceX shares have plunged 50% from their peak and now trade about 15% below the $135 offering price. The post-IPO euphoria has faded, stripping Elon Musk of his trillionaire status - at least for now.

On Friday evening, SpaceX launched Starship on its 13th test flight and successfully deployed 20 next-generation Starlink V3 satellites, making solid progress toward full reusability. The upper-stage spacecraft completed all its primary objectives, despite another landing-burn failure involving the Super Heavy booster.

Deployment of 20 @Starlink V3 satellites complete. Today's test will provide critical data as we prepare to expand our Starlink constellation pic.twitter.com/jWKLwXGlsk

— SpaceX (@SpaceX) July 24, 2026

Deutsche Bank analyst Edison Yu offered clients a post-mortem on Flight 13, noting that the latest Starship test.

Here is Yu's take:  

Starship Test Flight 13 illustrated solid progress for the program, in our view. For context, this was the second time the upgraded V3 iteration of Starship was flown. Interestingly, the rocket's second stage (Ship) executed all primary objectives whereas the first-stage booster (Super Heavy) performed well for most of the mission until an incomplete engine relight led to a harder splashdown than planned which was also an issue observed on Flight 12. As such, it does appear SpaceX may attempt a catch recovery of the second stage on the next test flight; if successful, this would represent a key milestone given the very high technical difficulty. Additionally, Flight 13 saw the successful deployment of 20 functional Starlink next-gen V3 satellites. Overall, while the initial abort was optically not ideal, we think Starship continues to progress in line with our base-case expectations

What caused the initial abort?

During the first launch attempt on July 16th , Starship reached T-0 and began the engine start sequence. However, 4 of Super Heavy's 33 Raptor engines failed to ignite. Therefore, the flight computer automatically aborted because the launch commit criteria permits a maximum of 2 engines out at liftoff. The company identified the cause to be off-nominal spin response in the liquid oxygen (LOX) turbopumps of 6 engines (4 failed to light plus 2 that displayed off-nominal behavior). The most likely cause of this dynamic was residual moisture that had collected inside the turbopumps from earlier operations. When the extremely cold cryogenic propellant was loaded, that moisture appeared to have frozen. As a result, the ice either slowed the turbopumps dramatically or stopped them from spinning up properly, so those engines never reached the required conditions to ignite. To address this, SpaceX removed and replaced 6 Raptor engines, performed verification testing including spin checks after chill. Then the attempt on July 23rd was postponed due to weather conditions in order to preserve visual coverage of the heat shield tiles during ascent. For background, the heat shield is still being iterated upon and considered one of the higher risk + less mature parts of Starship; therefore, gathering optical data is

What went well?

• Ascent & staging: All 33 booster engines and all 6 Ship engines performed well through their powered phases. Hot-staging was clean - rocket separation where the upper stage ignites its engines while still attached to the lower stage booster, which is also still firing.
• Boostback: First successful completion of the high-thrust portion of the boostback burn with all 33 engines running on V3 boosters. This is the maneuver that reverses first-stage booster's horizontal forward momentum and steers it back toward the ocean.
• Starlink V3 deployment: First flight of functional (not simulator) next-gen V3 satellites. All 20 sats deployed, extended solar arrays and antennas, established RF and laser links, and returned telemetry before burning up on reentry after ~20 minutes.
• In-Space Raptor relight: Successful single-engine restart in space; the longest demonstrated to date. Important capability for future orbital missions and controlled de-orbit.
• Ship reentry & landing: Soft, controlled splashdown in the Indian Ocean. Ship 40 remained intact, continued transmitting telemetry and imagery, and provided the first high-quality views of an intact heat shield after a full reentry under higher dynamic pressure; should be ideal for heat-shield data collection.

What needs to improve?

• Booster landing burn: Only a subset of the Super Heavy engines (seemingly 8 out of 13) successfully relit for the landing burn. Hence, there was a hard splashdown rather than a soft, controlled impact. This remains the primary technical open item on the first-stage booster.

Next up: Flight 14

Following Flight 13, Elon Musk posted on X: "Unless we discover problems after mission data review, SpaceX will attempt to catch the ship with the tower on next flight." This would be the first attempt to catch the upper stage using the Mechazilla tower arms and if successful, would represent a major milestone for the program given the much higher technical difficulty level compared with catching the first stage (energy, speed, flip maneuver, margin of error, etc...). We estimate a target window in late August or September. Separately, we note that Starlink V3 satellites can be deployed on Starship even with partial reusability.t a catch recovery of the second stage on the next test flight;

SPCX shares dipped 1.5% in Monday premarket trading, falling to the $113 handle as the stock searches for a floor following its dismal post-IPO performance.

Looking ahead, SpaceX faces its first major post-IPO lockup expiration on Aug. 6, just two days after its scheduled quarterly earnings report. About 911.5 million shares will become eligible for sale, creating a potentially significant supply overhang.

Tyler Durden Mon, 07/27/2026 - 10:00

Appeals Court Blocks Trump Mail-In Voting Order In 23 Democrat-Led States, Setting Up SCOTUS Fight

Via American Greatness,

A federal appeals court sided with 23 Democrat-led states and blocked the Trump administration from enforcing key pieces of the president’s election integrity order, setting up a likely showdown at the Supreme Court just months before the midterms.

The 1st U.S. Circuit Court of Appeals ruled 2-1 to deny the Justice Department’s request to pause a lower court injunction while the administration’s appeal moves forward, leaving in place a ruling that stripped federal agencies of the power to enforce several provisions of President Donald Trump’s order in those states through the Nov. 3 elections.

The Justice Department has signaled it may now turn to the Supreme Court for emergency relief, a path the administration flagged earlier in the litigation should it fail to prevail at the appellate level.

Trump signed Executive Order 14399 in March, directing the Department of Homeland Security to compile lists of confirmed citizens eligible to vote and hand them to states, ordering the U.S. Postal Service to set new handling standards for mail-in ballots, and instructing the Justice Department to prioritize investigations of state and local officials who send federal ballots to people who should not receive them.

The measures represent one of the most significant pushes yet from the administration to shore up confidence in an election system Republicans have long argued is vulnerable to fraud and error, particularly through loosely regulated mail voting.

The administration argued the lawsuit was filed too soon, since federal agencies had not yet finalized the rules needed to carry out the order. The panel’s majority rejected that argument, finding the states already faced fast-approaching deadlines tied to the order and had no choice but to begin preparing for compliance.

“As the district court reasoned, the (executive order) lays out a clear set of rapidly approaching deadlines by which states must coordinate with federal officials and comply with new voting procedures,” the majority wrote.

“The Plaintiff States have no practical choice but to respond to the (order) now.”

The lawsuit, led by California, Massachusetts, Nevada and Washington, was joined by 19 other states and the District of Columbia, all governed by Democrats who have resisted the administration’s election security efforts from the start.

The states claim the Constitution gives them, not the president, primary authority over administering federal elections, an argument U.S. District Judge Indira Talwani accepted in June when she ruled several provisions likely exceeded Trump’s authority.

Saturday’s decision does not settle the underlying dispute over presidential power but keeps Talwani’s injunction intact while the case winds through the courts, a delay that could push final resolution dangerously close to the midterms.

Critics of the ruling argue that leaving basic safeguards, like verifying citizenship and tightening mail-ballot standards, in legal limbo only benefits officials in blue states with a history of loose election administration.

Tyler Durden Mon, 07/27/2026 - 09:40

Trump Accounts Are Now Open: What Parents And Grandparents Need To Know Before Contributing

Authored by Adam H. Douglas via The Epoch Times,

As of July 4, 2026, money can officially flow into Trump accounts, the new child savings vehicle created by last year's tax law.

rblfmr/shutterstock

Millions of families have already signed up, and millions more are asking the same practical questions: does my child qualify, how do I claim the $1,000, and is this better than the 529 plan we already have?

Most coverage explanations answer these questions in tax-professional language. Here are the essentials in plain terms, including one state-level catch that could surprise you at tax time.

Quick Answer: Who Qualifies for a Trump Account?

Any child who is a U.S. citizen with a valid Social Security number can have a Trump account, as long as it is opened before the year they turn 18. The one-time $1,000 federal seed contribution is narrower: it goes only to eligible children born between January 1, 2025, and December 31, 2028. Parents or guardians claim it by submitting IRS Form 4547, which can be filed through the Trump Accounts app, at trumpaccounts.gov, through an IRS Individual Online Account, or when filing taxes. Once the Treasury confirms the account is active, it deposits the $1,000.

What Your Child Gets, by Birth Year

The seed money depends entirely on when your child was born.

Dozens of companies, including several major banks and technology firms, have pledged to match the federal $1,000 for employees' children. If you or your child's other parent works for a large employer, it is worth asking human resources before assuming the seed money is all your child will receive.

The Contribution Rules in Plain Terms

Once the account exists, here is how money goes in:

• The combined cap is $5,000 per year. Parents, grandparents, and anyone else contribute after-tax dollars, and all of it counts toward one shared limit per child. The cap adjusts for inflation after 2027.
• Employers get special treatment. An employer can put in up to $2,500 per year for a worker's child. That amount counts toward the $5,000 cap but is excluded from the employee's taxable income.
• Some money does not count against the cap. Contributions from qualifying charities, states, tribes, and local governments sit outside the $5,000 limit, as does the federal seed itself.
• Contributions stop the year before the year your child turns 18.

For grandparents, the practical takeaway is coordination. Because the cap is shared, a grandparent writing a $5,000 check uses up the entire year's room for everyone.

How the Account Actually Works

A Trump account is best understood as a special kind of IRA with training wheels. The money is invested in a low-cost index fund tracking the S&P 500, so the balance rises and falls with the stock market.

Earnings grow tax-deferred at the federal level, and the funds are locked until the child turns 18, with only limited exceptions. On January 1 of the year the child turns 18, the account essentially converts to a traditional IRA in the child's name.

That last detail matters: Withdrawals in adulthood are generally taxed as ordinary income, the same as any traditional IRA.

The State Tax Catch Almost Nobody Explains

Here is the wrinkle buried in most coverage explanations.

Federal tax deferral does not automatically mean state tax deferral. State tax codes must conform to the new federal rules, but some states have not done so.

California is the most prominent example: Unless state law changes, annual earnings inside a Trump account could be taxable on your California return each year, even while federal taxes wait until withdrawal.

That does not make the account worthless in a nonconforming state. The $1,000 seed is still free money, and federal deferral still helps. But it changes the math on large voluntary contributions and creates a recordkeeping chore.

Before contributing beyond the seed, check your state's current treatment with your state tax authority or a tax professional, because conformity decisions are still moving in several states.

Trump Account vs. 529: The Short Version

If you already fund a 529 plan, the two are not interchangeable.

• A 529 offers tax-free withdrawals for qualified education expenses, and many states add a deduction for contributions - a Trump account offers neither.
• A Trump account has no education restriction - at 18 it becomes retirement-oriented IRA money, giving your child a decades-long compounding head start.
• The sensible sequence for most families: claim the free seed money if your child qualifies, keep education savings in the 529, and treat additional Trump account contributions as a separate, long-horizon decision.

FAQs About Trump Account Eligibility Is the $1,000 Seed Contribution Automatic?

No. Eligible children born between 2025 and 2028 do not receive the money by default. A parent or guardian must first open the account and elect the contribution by submitting IRS Form 4547, whether through the Trump Accounts app, trumpaccounts.gov, an IRS Individual Online Account, or a tax return. After the Treasury confirms with the account trustee that the account is active, it deposits the $1,000. No account, no seed money.

Can Grandparents Contribute to a Trump Account?

Yes. Grandparents, other relatives, and even friends can contribute, but everything counts toward the single $5,000 combined annual cap per child, alongside contributions from parents and employers. Contributions are made with after-tax dollars and are not deductible. Families should coordinate before year-end so a well-meaning gift does not crowd out an employer match, which carries the added benefit of being excluded from the employee's taxable income.

What if My Child Was Born Before 2025?

Your child can still have a Trump account, opened any time before the year they turn 18, and family or employer money can go in under the normal rules. They simply will not receive the federal $1,000. Children born from 2016 through 2024 may qualify for a $250 Dell Foundation deposit if they live in a ZIP code where the median income is $150,000 or less, which covers most of the country.

Will My State Tax the Earnings Each Year?

Possibly, depending on where you live. The accounts are tax-deferred under federal law, and states must conform to that treatment, but some, including California, may tax annual earnings at the state level unless their laws change. In a nonconforming state you could owe state tax on gains yearly while federal tax waits. Check your state's current position before making large contributions, since several legislatures are still deciding.

Tyler Durden Mon, 07/27/2026 - 09:00

Futures Jump As Brent Tumbles Below $90 On Fresh Round Of Iran Ceasefire Optimism

A sharp drop in oil prices prompted by a quieter weekend for geopolitics and a pause in MidEast hostilities also sparked a drop in bond yields and the USD. A powerful relief rally in stocks and bonds emerged after a lull in hostilities in the Middle East, and started a week packed with earnings and a stack of interest-rate decisions on a positive note. As of 8.00am ET, Nasdaq futures surged after the index logged its first back-to-back weekly declines since March; S&P 500 futures rose 1%. After Friday's rout, all Mag 7 stocks gained amid the relief rally in tech and AI-related stocks (Meta Platforms +1.8%, Alphabet +1.7%, Amazon +1.4%, Tesla +1.3%, Microsoft +1%, Nvidia +0.9%, Apple +0.1%). While Asian markets closed mixed, European stocks advanced as broader risk sentiment gets a boost from a pullback in energy prices. Brent crude futures for September fell 9% to around $88 a barrel (these hit $100 late last week) after a lull in hostilities in the Middle East over the weekend. Bond yields fell around the world, with the rate on 10-year Treasuries declining four basis points to 4.64%. The easing came after the US paused a nearly two-week run of strikes against Iran for a third straight night, sending Brent 8.2% lower to $89 a barrel. The dollar fell 0.2%, while gold hit $4,100 an ounce. UK and German 10-year borrowing costs dropped 4-5 bps each. The Bloomberg Dollar Spot Index fell 0.2%; the Swedish krona and Swiss franc are the best performing G-10 currencies, rising 0.4% each. Precious metals advance, with spot silver up around 2%. Today's eco calendar has US Durable goods and the Dallas Fed Mfg Activity (est. 2.0). A slew of earnings, including fresh clues on the pace of AI infrastructure investment, will keep traders on their toes in coming days. On top of that, there’s a Fed interest-rate decision and a reading of its preferred, core PCE inflation index this week. 

In premarket trading, Magnificent 7 stocks all gained, boosting US stock futures, as a sharp drop in crude prices spurred a relief rally in tech and AI-related stocks (Meta Platforms +1.6%, Alphabet +1.2%, Amazon +1.2%, Tesla +0.8%, Microsoft +1.4%, Nvidia +0.6%, Apple +0.2%)

• Chipmakers and other AI infrastructure stocks are rallying as traders return to risk, heartened by a pause in US strikes against Iran that’s causing oil prices to slide.
• D-Wave Quantum (QBTS) climbs 8% after AT&T signed an agreement to expand its use of the company’s quantum computing technology.
• Ford Motor (F) gains 2% as Jefferies upgrades to buy ahead of second quarter earnings report, saying with US market conditions healthy, management could raise guidance.
• Forte Biosciences (FBRX) rises 39% after Argenx SE agreed to buy the company for about $2.2 billion in cash to expand its portfolio of immunology medicines.
• General Motors (GM) rises 1.9% as Jefferies upgrades the stock to buy on confidence that 2027 will further strengthen the automaker’s position “within the US profit oligopoly.”
• Gossamer Bio (GOSS) climbs 30% on plans to submit a new drug application for seralutinib in pulmonary arterial hypertension in September 2026.
• MapLight Therapeutics (MPLT) sinks 54% following Phase 2 trial results for a drug aimed at treating adults with acute schizophrenia.

Elsewhere in AI, Nvidia is in talks to back OpenAI’s lease of a $500 billion data center, highlighting the circular financing supporting the AI boom. Samsung won a contract worth more than $200 billion to make chips for Broadcom. And memory is back in focus, after CXMT’s blockbuster trading debut in Shanghai and a WSJ report of Micron warning the US against letting Apple buy China chips. In deals news, Jack Daniel’s owner Brown-Forman said its board of directors rejected an unsolicited takeover offer from Sazerac, which asked the company to reconsider the $15 billion bid that was rebuffed earlier this year. Meanwhile, Argenx agreed to buy Forte Biosciences for about $2.2 billion in cash to expand its portfolio of immunology medicines.

Traders are finding some respite from weaker oil prices after Brent surged by more than a third this month, stoking concerns that central banks will need to tighten monetary policy to contain inflation. Questions over whether Big Tech firms’ spending spree on artificial intelligence is sustainable have also fueled a prolonged stretch of volatility.

Monday’s rally is doing little to ease caution ahead of the busiest week of the earnings season, when a raft of megacaps including Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. will put AI spending back in the spotlight. Another major event is the Federal Reserve’s rate decision on Wednesday, with markets still pricing around a one-in-three chance of an interest rate hike.

“I expect a volatile week with the Fed, tech results, and a bunch of European inflation data coming out,” said Andrea Gabellone at KBC Securities. “Moreover, the Iran situation is still very fragile. For now, the President said that ‘all options are still open,’ so it will be difficult to put risk back on the table.”

US equity investors are likely to rotate into high-quality stocks as the focus returns to free cash flow generation and margin expansion, according to Morgan Stanley strategists. Meanwhile, Deutsche Bank’s Parag Thatte notes positioning has fallen sharply in large-cap tech from extended levels to near neutral, with rotation out of the sector about three-quarters of the way through.  

A busy week of data releases includes June durable goods today, consumer confidence Tuesday and the Fed’s preferred inflation gauge of core PCE for June on Thursday. Sandwiched in between is the FOMC rate decision, when a hawkish hold is expected. Dissent may come from some officials - possibly Dallas Fed President Lorie Logan and Cleveland’s Beth Hammack - who favor a rate increase now. There’s also been widespread discussion over whether new Chairman Kevin Warsh might surprise investors with a hike. No major US earnings are due ahead of the bell on Monday, but that’s the calm before the storm. More than 170 companies in the S&P 500 are set to report this week. The narrative around AI capex is in sharp focus, with last week’s selloff in Alphabet signaling a market in revolt about spending on the tech. It creates a tough setup for earnings from Microsoft and Meta Platforms due on Wednesday and those from Apple and Amazon on Thursday.

Big tech’s appetite for AI investment is also driving a wave of bond sales, having a greater impact on the US corporate debt market than might be obvious. SoftBank’s $40 billion bridge loan for its investment in OpenAI has attracted a new group of 21 lenders in a broader syndication phase.

In the latest market structure lunacy, CME Group will launch single-stock futures today, allowing investors to hedge or speculate on more than 50 of the largest US companies. The contracts, offering leverage without the complexity of options, will be cash-settled on the closing price of the stocks they’re tied to.

The political uncertainty surrounding November’s US midterm election adds to a near-term argument for owning index volatility, according to Goldman strategists. Record low correlations across stocks continue to suppress index volatility, a trend highlighted over the weekend. 

Turning to earnings, of the 135 S&P 500 companies to have reported to date, 86% have beaten analysts’ EPS forecasts, while 10% have missed. On sales, 69% of companies have positively surprised, while 15% have missed.  Bank of Hawaii and Northwest Bancshares are among those due to report before the market opens. Earnings from Welltower and Cadence Design come later in the day.

European stocks also rose as tensions ease in the Middle East, broadly shrugging off comments from a European Central Bank rate-setter, who said the institution will have to raise interest rates at least one more time to curtail inflation risks. Energy is the worst performing sector as oil prices slid while tech and retail outperformed. Stoxx 600 rises 0.8% to 649.47. Here are some of the biggest movers on Monday: 

• AstraZeneca shares rise as much as 2% after the drugmaker reported better-than-expected core earnings per share for the second quarter.
• Evolution shares rise as much as 4.4% in Stockholm, the most in a week, after Candle Lake crossed the threshold for a mandatory offer for the Swedish gaming company.
• Vodafone shares are up as much as 4.3% after the telecom operator reported growth in organic service revenue in Germany, a positive surprise to analysts that have forecast almost no growth in the company’s biggest market.
• SES, Eutelsat rally on Monday after both companies said they are expecting to receive payments from the release of C-band spectrum in the US.
• Interroll jumped as much as 7.5% after Oddo Bhf raised its rating, arguing that a drop in the shares of the Swiss maker of automation equipment and storage solutions had made them “too cheap to be ignored.”
• Pharos Energy shares soar as much as 31% after the firm agreed to a takeover by fellow London-listed Serica Energy, with shares almost reaching the total offer price.
• Kinepolis shares rise as much as 6.2% after Degroof Petercam set a Street-high price target for the Belgian cinema chain and reiterated its buy rating ahead of 1H results due on Aug. 20.
• Irish Continental Group surged as much as 30% after agreeing to a management buyout, with the stock hitting a new all-time high and briefly surpassing the offer price.
• Inditex shares climb 3.3% after Barclays raises its recommendation on the Zara parent to overweight from equal-weight, saying recent muted shareholder return performance presents an opportunity with the Spanish retailer’s valuation at reasonable levels.
• Zabka shares fell as much as 14%, the most on record, after Seven & i abandoned plans to buy an equity stake in the Polish convenience-store operator.
• Havas shares fall as much as 3.8% after JPMorgan analysts say the stock had outrun its growth potential and reduce their rating to neutral from overweight.
• Cranswick shares erase early gains to fall as much as 2.2% after the British meat producer reported a slowing in its like-for-like revenue growth rate.
• IP Group shares fall as much as 3.3% after Railpen said it does not intend to make an offer for the science investor in a statement.
• Vesuvius shares plunge as much as 12% as analysts warned of potential cuts to consensus estimates after the materials technology company adjusted its guidance lower due to ongoing operational issues.

Earlier in the session, Asian stocks gained after Friday’s selloff, boosted by a slump in global oil prices and gains in Chinese internet companies as investors brace for an event-heavy week. The MSCI Asia Pacific Index rose 1%, with SK Hynix, Samsung and Tencent the biggest contributors. Chinese equities gained, with sentiment getting a lift as memory chipmaker CXMT debuted with a 466% jump. Stocks also rose in Australia and India, helped by a more than 7% drop in oil prices. 

Traders are closely watching as an event-packed week gets underway. The US Federal Reserve is set to review monetary policy, while mega-cap technology giants like Meta and Microsoft are scheduled to report earnings. Investors will be paying particular attention to hyperscalers’ spending plans for signs of continued AI investment. Indonesian stocks fell as much as 0.8% before paring losses after the country’s central bank head Perry Warjiyo resigned citing personal reasons.

“For Asia more broadly, a falling oil price is very beneficial,” said Leonid Mironov, portfolio manager at Gavekal Capital Ltd. “There are outstanding issues with the yen weakness, but the core drivers of performance this year — chip and AI names — are more levered to global AI capex rather than domestic issues.”

Looking at today's calendar, the provisional June reading of durable goods due at 8:30 a.m. ET, followed by Dallas Fed manufacturing activity for July at 10:30 a.m. The Fed’s external communications blackout continues. 

Market Snapshot

Top Overnight News

• Iran will halt its own attacks as long as the United States does the same, a senior Iranian official told Reuters on Sunday. The development comes as the United States pressed ‌pause on its bombing campaign after President Donald Trump's advisers told him they were running out of targets and expressed worries about depleting the U.S. arsenal. RTRS
• A US appeals court refused the DOJ’s request to let federal officials move ahead with Trump’s mail-voting overhaul ahead of the November midterm elections. BBG
• DeepSeek is said to have told prospective investors it’s pausing a fundraising round, after comments widely attributed to its founder about US-China AI competition went viral. BBG
• CXMT jumped 466% in its Shanghai debut after the chipmaker raised $9.8 billion in its IPO, turning it into China’s largest onshore-listed company. BBG
• The ECB will have to raise interest rates at least one more time to ensure that inflation risks don’t spin out of control, Governing Council member Peter Kazimir said. BBG
• The Agriculture Department is lifting a more than yearlong ban on Mexican cattle imports, a move that could ease soaring beef prices. The U.S. plans to resume importing Mexican cattle at the port of entry in Douglas, Ariz., in 30 days and eventually open two additional ports of entry in New Mexico.
• Big Companies Are Starting to Hire Again, Defying Predictions of AI Wipeout. After a year of holding back on new hires, companies from tech and transportation to defense now say they need more people to work alongside AI. WSJ
• Employers fear labor shortage as many immigrants lose protected status. A recent Supreme Court ruling cleared the way for the Trump administration to end a humanitarian program that has allowed about 1 million immigrants to work illegally in the US. NYT
• Nvidia is in talks to provide a guarantee of as much as $250 billion to help OpenAI lease computing from a data center project in Ohio, people familiar said. BBG
• Mirroring the pre-election patterns in uncertainty, volatility, and investor flows, US equities have typically traded sideways in the few months ahead of midterms. US equity returns are generally modest during this part of the calendar year but have been weaker on average in midterm election years. During midterm election years of the past few decades, the S&P 500 has generated a median return of 0% from the start of August through Election Day. Returns have typically improved as uncertainty subsided post-election, with the S&P 500 returning a median of 6% in the subsequent 3 months. Goldman Research
• Sources say Bipartisan Senate talks over funding federal agencies past the 30th September deadline are trending in the right direction: Punchbowl
• A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly positive, with risk sentiment underpinned as oil prices and yields declined following a halt in US-Iran strikes over the weekend, although some of the gains are capped, with price action somewhat choppy during the session as participants also await several major central bank meetings and key earnings later in the week. ASX 200 was led higher by strength in tech, materials and miners, while energy and defensives lag.
Nikkei 225 swung between gains and losses with price action choppy amid recent currency moves, intervention risks, lower yields, and softer-than-expected Services PPI data, while participants also await the BoJ later in the week. KOSPI saw two-way trade and ultimately declined despite reports of NVIDIA deals with South Korean firms including SK Group and Naver, with the sector cautious ahead of key tech earnings. Hang Seng and Shanghai Comp were positive as Hong Kong was led higher by tech stocks including CXMT stakeholders such as Xiaomi and Meituan, with energy at the other end of the spectrum following the drop in oil prices, while the attention in the mainland was on CXMT, which soared over 500% on its debut in Shanghai's STAR Market, making it mainland China's most valuable company by market cap.

Top Asian News

• Chinese President Xi holds phone talks with Brazilian President Lula, while Xi called for China and Brazil to play a greater role in improving the global governance and upholding international fairness and justice. said:. China is ready to further strengthen bilateral multilateral strategic coordination with Brazil. China and Brazil should jointly promote high-quality development of the Greater BRICS Corporation. Supports Brazil in rejecting external interference.
• Seven new suspected H5 bird flu cases were identified in South Australia.
• Japanese PM Takaichi said the government is ready to take further timely action as needed to cushion economic blow from the Middle East conflict, adds FX rates move on various factors and it's hard to identify impacts of any specific factor. said:. Raising Japan's growth potential and its competitive advantage will boost market trust in the yen. Monetary policy adjustment and specific monetary policy means are up to the BoJ to decide.
• Japanese PM Takaichi will address measures including a consumption tax reduction in her press conference later today.
• Japanese PM Takaichi said cutting debt-to-GDP ratio is key to fiscal management.
• Japanese PM Takaichi does not comment about the possibility of a cabinet reshuffle.
• Japanese panel said to be looking at revising up minimum wage target; looking at hiking to "high JPY 1100 range", Kyodo reported.
• Japan PM Takaichi noted Japanese inflation is amongst the lowest in the G7, adds that there are encouraging signs emerging for the wage outlook.

European Bourses - Begin the week firmer (STOXX 600 +0.8%) as oil prices and yields fall after the US halts strikes on Iran. The DAX outperforms as SAP continues to climb, while Spain’s IBEX is supported by strength in Retail and Travel. The FTSE 100 and OMX Copenhagen lag as Shipping and Oil majors come under pressure. Sectors - Trade broadly higher, with the exception of Energy and Utilities. Moves are driven by geopolitical de-escalation, with Retail and Travel & Leisure leading, while Tech also outperforms following CXMT’s surge on its Shanghai debut.

Top European News

• European Commission is considering watering down a large business levy which was designed to raise funding relating to the next 7yr budget, Politico reported citing sources. Officials said to be considering exempting loss-making companies and raising the revenue threshold to exclude smaller businesses for the "Corporate Resource for Europe" charge.
• UK PM Burnham hinted he will make it more difficult to claim benefits to bring down the welfare bill, according to Huffington Post. It was separately reported that Burnham said UK must get really serious about cutting welfare.
• France questioned UK involvement in EU’s EUR 5bln tech start-up fund, according to FT.
• Italy cabinet to meet at 16:30EDT/17:30CET to discuss diesel costs.

FX

• DXY - Softer (-0.2%) as oil and yields moderate following the US halt to strikes on Iran. The index trades within a tight 101.11–101.32 range, with the geopolitical pause and easing tightening bets weighing on the Buck, though the outlook remains fluid ahead of the Fed this week.
• JPY - Firmer amid the softer USD backdrop and lower yields though moves remain contained in a 163.32-163.71.
• EUR- EUR is stronger against the USD, with EUR/USD briefly moving above 1.14 to a 1.1418 peak before paring gains. Newsflow light, with Ifo broadly in line and focus turning to upcoming growth and inflation data later in the week.
• GBP - GBP is modestly firmer vs USD but underperforms EUR, with EUR/GBP higher. Price action is likely driven by the unwinding of recent Sterling outperformance, while attention turns to the BoE meeting where a pause is expected, with the vote split in focus.
• Antipodeans - Antipodeans outperform as risk sentiment improves, supported by the pullback in oil and yields alongside the broader USD softness.
• RBI likely sold USD via state run banks to lift INR past 96, according to traders.
• PBoC set USD/CNY mid-point at 6.7911 vs exp. 6.7703 (prev. 6.7939).

Fixed Income

• UST - Firmer, benefiting from the pullback in energy prices following the pause in US strikes on Iran. The contract reaches a 108-22 peak, up around 10 ticks on the day, though remains shy of recent 109-00 and 109-08+ highs. Focus turns to upcoming 2yr and 5yr supply, while broader attention also builds around US midterm developments.
• Bund - Bunds move in tandem, lifting to a 124.95 peak but failing to test the 125.00 handle or last week’s 125.10 high. There was little reaction to the Ifo release, which is broadly constructive despite softer current conditions, nor to ECB’s Kazimir, who reiterated a hawkish stance with a high bar to avoid a September hike.
• Gilt - Gilts gap higher and extend gains by over 50 ticks, approaching but not reaching last week’s 87.37 peak. The move is driven by the broader fixed income bid on lower yields, with some additional support from reporting around PM Burnham's approach to the welfare bill.
• Australia sold AUD 300mln 3.00% March 2047 bonds b/c 3.22, avg yield 5.4319%.

Commodities

• Crude futures - Crude was sharply lower following the US pause in strikes on Iran, though losses were trimmed into the European morning. Brent Oct’26 fell over 7% at worst to USD 84.91/bbl (vs high USD 88.95/bbl), while WTI Sep’26 dropped to a USD 82.46/bbl trough (vs peak USD 86.20/bbl). Dutch TTF also slumped, dipping below EUR 58/MWh before recovering towards EUR 59.50/MWh.
• Precious metals - Precious metals were firmer intraday but off best levels as energy pared losses. Spot gold traded towards the lower end of a USD 4,083.80–4,116.19/oz range (vs Friday’s USD 4,052/oz close). Spot silver similarly sat towards the bottom of a USD 59.08–60.09/oz range (vs Friday’s USD 58.20/oz low).
• Base metals - Base metals posted modest gains but also came off highs as energy recovered. 3M LME copper traded within a narrow USD 13,615.00–13,730.43/t range.
• CPC’s Black Sea terminal expected to resume oil loadings today following a one week suspension after drone attacks, sources say.
• Iraqi militias and political parties have received official approvals to establish oil facilities; Iraq has allocated about 1.5mln BPD for domestic consumption, including 300K BPD for the Ministry of Electricity. The reported note that more than a third of Iraq’s oil production revenues since 2011 have gone to militias and political parties.
• A magnitude 5.5 earthquake struck the Antofagasta region of Chile, according to EMSC.

Central Banks

• ECB’s Kazimir said second round effects are costly to reverse, ECB must act before they are visible; at least one more hike needed as part of measured adjustment to inflation risks. A rate hike will be warranted even if the inflation situation improves somewhat. Should the situation escalate, with the price pressures becoming stronger and more persistent, we will need to tighten more over the next quarters than is currently expected. Incoming data and geopolitical developments would need to be very convincing to do for me not to advocate another hike in September; We didn’t surprise the markets now, we shouldn’t surprise them in September.
• Swiss Total Sight Deposits (w/e Jul 18) 469.27bln (prev. 469.4bln W/W), Domestic 442.66bln (prev. 443bln W/W).
• Indonesia Central Bank Governor Perry Warjiyo steps down due to personal reasons, while Deputy Governor Destry Damayanti will act as interim Governor. Damayanti said Bank Indonesia will continue to prioritise professional governance and will work with the government to run the economy, also said they will do their mandate as normal and in accordance with best practices.
• Monetary Authority Singapore slightly raises the rate of appreciation of the SGD NEER policy band, while it makes no change to the width and level it is centred. said:. Inflation could pick up more strongly than anticipated if energy price spikes anew. MAS core inflation is projected to step up from July and remain elevated, but should moderate discernibly from around mid-2027. Expectation is that overall GDP will be sustained at high levels in the near term. Singapore's economy is forecast to record a firm pace of growth for 2026 as a whole. Singapore's imported costs are likely to rise in the quarters ahead.

Trade/Tariffs

• China Foreign Ministry said China's countermeasures on EU do not target any one country.

Geopolitics: Russia-Ukraine

• US President Trump will meet with Ukrainian President Zelensky at the White House on Tuesday, according to Axios.
• Ukraine air force noted ballistic missile threat from the east and UAV detected in Dnipropetrovsk region.
• Multiple apartments and 15 vehicles are on fire in Russia's Belgorod after a UAV attack, according to TASS.

Geopolitics: Middle East

• Iranian Foreign Ministry spokesperson said some countries in the region are continuing to be involved in the conflict, they need to stop. The conversation between Iran and Oman regarding Hormuz have been positive.
• Iranian Foreign Ministry spokesperson, in an interview on Sunday, said Iran has no fear of negotiations, but it will not accept negotiations whose goal is to dictate or impose demands.
• Yemen Navy official said that a Navy patrol boat was attacked and destroyed on Sunday in the Red Sea, which left three crew members missing and the official blamed Houthi militants firing from several small boats.
• Fewer than 10 ships transited the Strait of Hormuz daily over the weekend, according to shipping data. It was separately reported that shipping traffic through Bab el-Mandeb fell on Sunday after Yemeni Houthis attacked Saudi oil installations along the ‌Red Sea coast.
• US Central Command Commander Cooper stressed that the two weeks of strikes in the Strait of Hormuz area had significantly degraded Iran's ability to attack ships, according to Axios's Ravid.
• Iran's Foreign Ministry spokesperson said diplomacy remains open, but our priority is defending the nation.
• Yemen's Houthis said on Sunday that it attacked three Saudi oil tankers in the past 48 hours and is enforcing maritime blockade measures against vessels linked to Saudi Arabia.
• Houthi-Affiliated Al Masirah TV said Saudi strikes attack Yemen’s Kamaran Island.
• Iranian Foreign Ministry Araghchi met with his Chinese counterpart, Mehr News reported; the sides discussed the Middle East situation.
• Iranian Foreign Ministry spokesperson said they have not accepted a 10 day ceasefire.
• Iranian Foreign Ministry spokesperson said they have not requested the resumption of talks with the US, intermediaries are conveying messages to the US. Kuwait has effectively made its territory available to the US.
• Iranian Foreign Ministry spokesperson said the situation around Hormuz has not changed, it remains shut.
• IDF intercepted two drones over the border with Jordan, TimesofIsrael's Fabian reported.
• Iranian army reiterates that it will response more severely to "any possible incursions by the enemies", Tasnim reported.
• Saudi Foreign Ministry said Saudi Arabia discussed with Oman the issue of ensuring the freedom and safety of navigation in the Strait of Hormuz, Al Hadath reported.
• Iranian TV said a ship was involved in an accident, and five ships that attempted to pass through the Strait of Hormuz via the unsafe passage this morning were turned back.
• Explosion reported in Erbil, Northern Iraq, according to Press TV.
• Israeli forces raid areas in West Bank and Jerusalem, according to IRNA.
• Sources told Asharq that Trump and Aoun are discussing a security agreement between Washington and Beirut.
• UK PM Burnham and Saudi Crown Prince MBS discussed regional developments in a telephone conversation, according to IRNA.
• An oil tanker exploded in the Strait of Hormuz after hitting a naval mine when it deviated from a navigation route designated by Iran, Mehr News reported.
• Iranian media reported of explosions in Jordan.
• Jordan Army said it downed two drones.
• Israel PM Netanyahu is travelling to Washington for a White House meeting with President Trump tomorrow, I24 reporter said.

Geopolitics: Other

• Israeli official said PM Netanyahu’s planned visit to Washington has been postponed; no reason cited, and no new date has been set.
• CPC’s Black Sea terminal expected to resume oil loadings today following a one week suspension after drone attacks, sources say.

US Event Calendar

• 8:30 am: Jun P Durable Goods Orders, est. 1.8%, prior -4.5%
• 8:30 am: Jun P Durables Ex Transportation, est. 0.8%, prior 1.4%
• 10:30 am: Jul Dallas Fed Manf. Activity, est. 2, prior 0

DB's Jim Reid concludes the overnight wrap

Thankfully, in light of my weekend golf-a-thon, the escalating conflict in Iran has paused somewhat. After 13 consecutive nights of US strikes aimed at degrading Iran’s ability to threaten commercial shipping, Washington has refrained from further attacks since late Friday, while Tehran has publicly stated that it has also suspended retaliatory operations. The pause falls short of a formal ceasefire, but both sides are presenting it as an opportunity for diplomacy, with Omani-mediated talks continuing over the weekend focused on navigation through the Strait of Hormuz. US officials, including UN Ambassador Mike Waltz, have stressed that all military options remain on the table and that President Trump is simply giving negotiations more space. However, reports from the New York Times and Axios suggest an active debate within the administration over both the effectiveness and costs of further strikes, with some military officials reportedly arguing that key objectives have largely been achieved. For now, the market is treating the lull as a positive development, although the situation remains highly fluid.

The main market risk remains the energy and shipping front. Traffic through Hormuz remains severely disrupted, while the conflict has broadened into the Red Sea, where Iran-backed Houthi forces reportedly launched missile and drone attacks against Saudi energy infrastructure around Jizan and Yanbu over the weekend, prompting retaliatory Saudi strikes. This raises the prospect of simultaneous disruption to both Gulf and Red Sea export routes. So a welcome pausefrom the main actors but a fragile one, especially with side battles still ongoing.

However there is no doubt the weekend news is positive and this morning Brent crude prices are around -4.5% lower to $92.42  and 10yr USTs are down -4.5bps. S&P 500 futures are up +0.71% with Nasdaq futures gaining +1.17%.

Also on the positive side, the S&P/ASX 200 (+1.14%) is leading regional gains, while the Hang Seng (+0.81%), CSI 300 (+0.25%), and Shanghai Composite (+0.40%) are all higher. However the KOSPI (-0.28%) and Nikkei (-0.14%) are lagging with their tech stocks on the weaker side.  

Looking forward, and as more and more of the financial world steps off the ever-turning carousel of market news and disappears towards sunnier shores, a busy global week lies ahead, with central bank decisions, major economic releases and a heavy slate of corporate earnings all competing for investors’ attention. The Federal Reserve meeting concluding on Wednesday remains the standout event, but investors will also hear from the Bank of England (Thursday) and the Bank of Japan (Friday). Meanwhile, key economic releases include US Q2 GDP and June core PCE inflation (both Thursday), Euro Area Q2 GDP and July inflation data (Thursday/Friday), Japan’s Tokyo CPI (Friday) and China’s official PMIs (Friday). Adding to the significance of the week, four of the world’s most influential companies—Microsoft, Meta, Apple and Amazon, which together account for 17% of the S&P 500—will report earnings, with the first two on Wednesday and the latter two a day later.

The headline event of course comes with the FOMC meeting (Wednesday), where our economists continue to expect the Fed to leave rates unchanged. However, the decision appears unusually finely balanced. The renewed escalation in the Middle East and the sharp rise in energy prices have complicated the inflation outlook, while recent market-based measures of inflation compensation have moved higher as concerns around energy supply disruptions have intensified. Against that backdrop, policymakers face a difficult trade-off between evidence that inflation had been moderating and growing signs that higher oil prices could create a more persistent inflation shock.

It’s rare for a Fed meeting to be this finely balanced so close to the decision. Futures are still assigning a 34% probability to a rate hike this week (-4pps overnight in Asia), a level of uncertainty we seldom see at such a late stage. During the post-Covid hiking cycle, markets did receive a steer via the financial press during the blackout period if the Fed was considering a surprise move. Under the current regime, that appears far less likely.

The Fed decision will sit in the middle of several important data releases. Durable goods orders (today) and the advance goods trade balance (tomorrow) will help shape expectations for the first estimate of Q2 GDP (Thursday). Our economists expect annualised GDP growth of 1.9% in Q2. Although this would mark a downgrade from earlier estimates, much of the weakness reflects a drag from net exports linked to strong AI-related imports. Beneath the surface, domestic demand remains considerably healthier. Indeed, our economists expect final sales to private domestic purchasers, their preferred measure of underlying demand, to rise by a robust 3.3%, which would be the strongest reading since Q3 2024.

Attention will then turn to inflation. The June personal income and spending report (Thursday) includes the latest reading of core PCE, the Fed's preferred inflation gauge. Our economists expect core PCE to increase by 0.19% month-on-month, which would leave the annual rate at 3.3% assuming no significant revisions. That will be followed by the Employment Cost Index (Friday), one of the Fed's preferred measures of labour cost pressures. Our economists expect the annual growth rate to remain at 3.4%, a level many policymakers would still view as broadly consistent with returning inflation towards target over time.
Alongside the macro data, earnings season moves into a critical phase. Around 35% of the S&P 500's market capitalisation is scheduled to report this week. Technology will dominate attention, with Microsoft and Meta releasing results (Wednesday), followed by Apple and Amazon (Thursday). Together, those companies account for 17% of the S&P 500 and will help determine whether investor enthusiasm around AI-related spending remains intact. Elsewhere, notable US earnings releases include Visa and Mastercard in financials, ExxonMobil and Chevron in energy, and Coca-Cola and Procter & Gamble in consumer staples.

In Europe, attention will be split between monetary policy and inflation. The Bank of England announces its latest policy decision (Thursday), and our UK economists expect Bank Rate to remain unchanged at 3.75%, accompanied by a 7-2 vote split. See more in their full preview here.

On the data side, Germany and Spain release flash July CPI figures (Thursday), before France, Italy and the Euro Area publish their inflation readings (Friday). Our European economists expect Euro Area headline HICP inflation to rise to 3.0% from 2.8%, while core HICP is forecast to edge higher to 2.52% from 2.36%. The Euro Area's preliminary Q2 GDP estimate is also due (Thursday), while Germany's Ifo survey (today) should provide an updated read on business sentiment.

In Asia, the Bank of Japan decision (Friday) will be the key event. Our economists expect policymakers to keep their current policy settings unchanged. See the preview here. Japan will also release Tokyo CPI, retail sales, industrial production, labour market data and housing starts (all Friday), offering a comprehensive snapshot of the economy at the start of the third quarter. In China, the official manufacturing and non-manufacturing PMIs (Friday) will provide the latest evidence on growth momentum. Elsewhere, Australia's June CPI report (Wednesday) will be closely watched for indications about the Reserve Bank's policy path. See the day-by-day calendar at the end for the fuller slate of events this week.

Recapping last week now and oil prices continued to surge as the US-Iran conflict escalated further, with Brent crude up another +9.85% last week (-3.88% Friday) to $96.78/bbl, and peaking above $100. So that added to fears that the global economy was facing a prolonged inflation shock, and that the Fed might need to hike rates more aggressively in response. Indeed, market expectations for a Fed rate hike on Wednesday moved up from 14% to 38% over the course of the week.  

The prospect of more inflation and faster rate hikes meant that sovereign bond yields rose sharply around the world. For instance, the US 10yr Treasury yield was up +12.9bps last week (-1.6bps Friday) to 4.68%, and on Thursday it closed at its highest level since January 2025, at 4.69%. There were also some big milestones for real yields, with the US 30yr real yield up +7.9bps last week (+0.3bps Friday) to a post-2008 high of 2.97%. It was a similar story elsewhere, with Germany’s 10yr bund yield up +4.7bps last week (-3.1bps Friday) to 3.17%, and on Thursday it closed at a post-2011 high of 3.20%.   

Against that backdrop, equities put in a mixed performance around the world. In the US, the S&P 500 fell -0.61% (+0.05% Friday), marking back-to-back weekly declines for the first time since March. That happened despite a recovery in chip stocks, with the Philly semiconductor index up +1.24% last week (-4.25% Friday). And outside the US, equities put in a stronger performance, with the STOXX 600 up +0.46% last week thanks to a +0.82% recovery on Friday as hopes for new US-Iran talks rekindled. The Nikkei was up +0.73% (-2.73% Friday).

Finally in other asset classes, geopolitical fears offered support to the US dollar, with the dollar index +0.70% last week, whilst gold rose +0.88%. Meanwhile, credit spreads widened in the US, with IG spreads (+2bps) and HY spreads (+12bps) both moving higher. And in Europe, IG spreads were flat, while HY spreads widened by +5bps.

Tyler Durden Mon, 07/27/2026 - 08:22

Nvidia Weighs $250 Billion Backstop For OpenAI's Gargantuan Ohio Data Center Campus

Nvidia is in early talks to provide up to $250 billion in financing guarantees to help OpenAI lease computing capacity from a planned $500 billion, 10-gigawatt data center facility in Ohio, according to Bloomberg, citing people familiar with the matter. The proposed deal highlights investor concerns that the AI bubble has been fueled by circular financing.

The SoftBank-led project is located in southern Ohio and, when fully built, would support 10 gigawatts of computing capacity, or roughly equivalent to the output of 10 large nuclear reactors. The first 800-megawatt phase is targeted for 2028. This would rank the facility among the world's largest AI infrastructure hubs.

The potential backstop would help SoftBank secure financing while supporting future demand for Nvidia's chips, further highlighting the circular nature of the AI boom. Sources said Nvidia-OpenAI negotiations are still ongoing and could change at any time.

"While Nvidia's investments and partnerships reinforce confidence in long-term AI buildouts, investors remain concerned about circular financing," said Gary Tan, a portfolio manager at Allspring Global Investments, as quoted by the media outlet.

Last week we noted ...

The problem with the $2 trillion in circular AI financing is that it is all contingent on the frontiers (Anthropic/ OpenAI) being money good on their $1.5+TN in unfunded commitments. Which they won't be if Chinese open LLMs grab market share

Hence the push against Chinese LLMs

— zerohedge (@zerohedge) July 23, 2026

The Bank for International Settlements warned last month (read report) that a "disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions." It added that a "major equity-market correction could have larger macroeconomic consequences today than in the past."

Against that backdrop, traders will be laser-focused on this week's Big Tech earnings for signals regarding the trajectory of AI capital spending and, more importantly, whether those investments are beginning to generate adequate returns (read report). Given the high concentration of AI stocks powering major equity indexes higher, the results could determine the market's next big move.

Ed Dowd, writing on the Beyond the Narrative Substack, previously warned that the AI-capex rocket fuel propelling markets may be starting to fade. He identified four factors behind the potential inflection point. Read more here.

Tyler Durden Mon, 07/27/2026 - 07:20