Yields drop sharply and tech lifts the market

Good morning. Yesterday was a day of relief for the bond market. Treasury yields fell the most since June, and that let tech stocks lift the major indexes. Reports that the Treasury can tap a cash account of nearly 1 trillion dollars to fund bond buybacks helped calm things.

Not everyone welcomes the remedy, though. Investing legend Stanley Druckenmiller, who mentored Treasury Secretary Bessent early in his career, publicly criticized his former protege in a column. His argument is that long-term yields are the last fiscal disciplinarian America has, and that trying to suppress them will fail to lower rates while costing the Treasury its credibility. Options traders have piled into bets on a bond rally, yet the 30-year yield is still elevated at 5.33%.

Something unexpected happened with Iran. Washington announced sanctions aimed at choking Iran's economy, even targeting third countries that trade with it, yet oil fell nearly 3% to a 12-day low. The market had already priced much of it in. China, Iran's largest crude customer, promised retaliation and said it would not back down, so the fuse is still lit.

Consumers cooled a bit. The Conference Board's consumer confidence index slipped to 89.4 in August, and Canada said it would answer America's 50% tariffs with retaliatory tariffs of the same size. Now the market's attention turns to Nvidia's earnings tonight and the Jackson Hole gathering this weekend.