Hormuz stalls and the 30-year yield hits a 19-year high

Good morning. US markets were rattled from two directions yesterday: bonds and the Middle East. The 30-year Treasury yield rose to 5.31%, its highest since 2007, and the memorandum between the US and Iran expired, leaving traffic through the Strait of Hormuz almost at a standstill. Just five ships passed through on Saturday.

The two stories look separate but are linked. Pricier oil stokes inflation worries, and inflation worries push long-term yields up. On top of that, US government debt has passed 40 trillion dollars and more bonds will have to be sold. Iran has refused to extend talks and President Trump says he is in no hurry, so there is no obvious way out.

The Dow closed down about 0.5%. AI stocks went their own way, though: memory chipmakers such as Micron and Sandisk jumped. The fear gauge, meanwhile, sank to its lowest level this year, which analysts read less as reassurance and more as a sign that investors have grown complacent.

The consumer report cards start today, with Home Depot reporting first and the Fed minutes due tomorrow. The AI bubble debate is heating up as well. The European Central Bank published a blog post warning that a correction in US tech stocks is likely, and Nvidia's earnings this week could be the turning point.