China Sets the Tone for Risk Appetite 24/08/2026
Market Wrap
US stocks rebounded on Friday as investors stepped back into risk assets following a sharp selloff driven by rising Treasury yields.
The S&P 500 gained 0.4% to 7,674.37, while the Nasdaq Composite advanced 0.4% to 26,180.45. The Dow Jones Industrial Average outperformed, climbing 518 points, or 1%, to 53,277.01, supported by strength in healthcare names including Merck (MRK) and Johnson & Johnson (JNJ).
Financials and crypto-linked stocks provided additional support as bitcoin capped a 22% weekly advance. Robinhood (HOOD) surged nearly 14% and Coinbase (COIN) gained 8%, while materials rose about 2%.
The rebound came despite continued pressure in the bond market. The 10-year Treasury yield climbed more than 3 basis points to 4.73%, while the 30-year yield rose to 5.27%, extending a selloff fueled by concerns that elevated oil prices could keep inflation persistent. Treasury Secretary Scott Bessent’s efforts to stabilize the long end of the curve have so far provided only temporary relief.
Geopolitical risk remains another key overhang. Investors are increasingly concerned that the US-Iran conflict could persist, keeping energy prices elevated and complicating the inflation outlook. The pressure has extended beyond Wall Street, with the MSCI All Country World Index falling nearly 1% for the week.
Attention now turns to a catalyst-heavy week. July PCE inflation data on Wednesday will provide another important read on price pressures, while Fed Chair Kevin Warsh’s Jackson Hole speech could offer fresh signals on the path for monetary policy.
AI will also return to center stage, with Nvidia (NVDA) reporting Wednesday and Marvell Technology (MRVL) on Thursday. The results come amid reports that Nvidia has informed customers of price increases of more than 15% for servers using its Vera Rubin and Blackwell chips.
Treasury Intervention Fails to Calm Bond Market
The Treasury Department’s effort to stabilize long-term US government bonds has delivered only temporary relief, leaving investors focused on a much larger problem: how Washington plans to finance a $40 trillion national debt.
The 30-year Treasury yield remained near a 19-year high around 5.28% on Friday, while the 10-year yield hovered near 4.74%. Treasury Secretary Scott Bessent’s expanded buyback program briefly pushed yields lower, but the move quickly reversed as investors continued to demand higher compensation for inflation, fiscal risk and heavy debt issuance.
Buybacks can improve liquidity, but they do little to address the underlying imbalance. The federal budget deficit has already reached nearly $1.8 trillion this fiscal year, while annual interest payments are expected to exceed $1 trillion. Financing long-dated bond purchases with additional short-term Treasury issuance would simply shift rather than eliminate the government’s borrowing needs.
Higher oil prices and additional military spending linked to the Iran conflict are adding to inflation concerns, while uncertainty over Federal Reserve policy under Chair Kevin Warsh is keeping pressure on longer maturities.
The tension between Treasury and the Fed is also becoming increasingly important. Bessent is openly seeking lower long-term borrowing costs, while Warsh has emphasized allowing market signals to influence monetary policy. That divergence could become a key theme at this week’s Jackson Hole symposium.
For investors, the message from the bond market remains uncomfortable: liquidity measures may calm volatility temporarily, but without meaningful improvement in the US fiscal outlook, sustained relief in long-term yields could be difficult to achieve.
Stocks on the Move
- Moderna (MRNA): Shares jumped more than 10%, resuming their rally after Thursday’s sharp pullback. The stock had surged nearly 177% on Wednesday following positive late-stage results for a cancer vaccine developed with Merck (MRK). Merck shares added about 2%.
- BJ’s Wholesale Club (BJ): Shares gained 4% after second-quarter earnings and revenue beat expectations. The retailer also raised its full-year earnings guidance to $4.60-$4.80 per share from $4.40-$4.60.
- Ross Stores (ROST): Shares rose more than 4% after second-quarter results topped Wall Street estimates and third-quarter earnings guidance also came in ahead of expectations.
- Crypto-related stocks — Robinhood (HOOD), Coinbase (COIN), Strategy (MSTR): Shares rallied as bitcoin headed for a weekly gain of more than 20%. Robinhood surged 12%, Coinbase gained more than 8% and Strategy rose 6% amid renewed optimism over US crypto legislation.
- Broadcom (AVGO): Shares edged nearly 1% higher after Bloomberg reported that the chipmaker is looking to raise more than $60 billion in debt to support a deal involving Anthropic.
Watchlist: MRNA, HOOD, COIN, MSTR, AVGO, MU, PDD, XPEV, AAPL
Key Economic Events Today
Economic Data (EST)
- 2:00 PM — USD Treasury Sec Bessent Speaks
Earnings
Before Market Open: PDD Holdings (PDD), XPeng Inc. (XPEV)
After Market Close: PicS N.V. (PICS), Tuya Inc. (TUYA)
