Closing Levels:
Oil is the reason for the day. The US and Iran exchanged fire over the weekend for the first time in more than a month. US forces struck Iranian military assets after detecting preparations to lay mines in the Strait of Hormuz; Iran answered with missile and drone attacks on American facilities in Jordan. Brent went through $95 and crude added 5.7%.
Now hold gold next to it. A geopolitical shock in the Gulf, and gold fell 2.7%. Silver fell 3.7%. That is not what a fear trade looks like.
That single pairing is the most useful thing on today’s board. When oil spikes on war headlines and gold rallies, the market is buying safety. When oil spikes and gold falls, the market is repricing inflation and interest rates, and gold is losing to a higher discount rate faster than it gains from fear. Today was the second kind. This wasn’t a risk-off day. It was a rates day with a war headline attached.
The Sector Board
Energy on top, and then the three defensives — utilities, health care, staples. Everything cyclical and everything growth is red, with discretionary and technology at the bottom.
That’s a textbook energy-shock board. The sectors that benefit from a higher oil price go up, the ones that pay it go down, and money hides in the businesses people can’t stop buying from.
Credit Finally Moved
We have written “credit did not move” in five consecutive letters. Today it moved. High yield down 0.9%, high grade down 0.9%, convertibles down 1.3%.
These are not large numbers. But the point of watching credit is that it stays still through equity noise and only moves when something real changes. After a week of shrugging at rotation, single-name blowups and a Fed chair’s first speech, it took an oil shock to get its attention. That’s worth more than the size of the move.
Yields went with it: the 5-year at 4.56%, the 10-year at 4.80%, the 30-year at 5.27%. The UK 10-year moved further, up 16 basis points to 5.22%.
And this is the part that should hold your attention: markets are now increasingly pricing a possible September Fed hike. Not a pause. A hike. Two weeks ago the argument was about the pace of cuts.
Technical Breakdown — The US Dollar
The dollar sits underneath gold, oil, rates and every commodity on the board, so it's worth a proper look on a day like this.
The structural change is the 200-day. The dollar spent 2025 in a long decline, from about 110 in January 2025 down to the mid-90s by early this year, and the 200-day sloped down the whole way. That line has now flattened and turned up, and it sits at 99.14 with price above it at 99.70. After a year of every rally failing under a falling average, the average stopped falling. That’s the first thing on this chart that’s genuinely different.
The second thing is how quiet it is. RSI at 50.25 is the middle of the range — no momentum in either direction. Price is sitting between the middle Bollinger band at 99.47 and the upper at 100.26, well inside a band that’s only about 1.6% wide. A flat RSI and narrow bands after a multi-month base is a coiled chart, not a trending one.
The levels that matter. Below, the 200-day at 99.14 and the lower band at 98.67 — losing both would say the base failed and the 2025 downtrend is resuming. Above, 100.26 is the upper band and the round number sits just past it. A close through 100 with the 200-day rising underneath would be the cleanest technical signal this chart has offered in a year.
Now the part that matters for everything else in this letter.
Gold. Gold is priced in dollars, so a firmer dollar is a headwind, and gold fell 2.7% today with the dollar up 0.27%. The dollar isn’t the whole reason — a 0.27% move can’t cause a 2.7% one — but it’s pushing the same direction as the higher real yield, and the two together explain what a war headline could not.
Oil. Here’s the interesting one. A rising dollar normally caps the oil price, because oil gets more expensive for everyone who doesn’t earn dollars. Today the dollar rose and oil went up 5.7% anyway. When crude climbs into a dollar headwind, you’re not looking at a currency effect or a demand story — you’re looking at supply. That’s a useful confirmation that today’s oil move is about the Strait of Hormuz and nothing else.
Rates. The dollar firming while yields rise is the ordinary relationship — higher yields attract capital. What’s notable is that the dollar is doing it quietly, 0.27%, on a day the 10-year moved four basis points. Neither is panicking.
What we’d watch. If the dollar breaks 100 while oil holds above $90, that’s a genuine squeeze on every commodity importer and on emerging markets — and note that South Korea fell 2.8% today and Germany 1.8%, the two biggest energy importers on our board. If instead the dollar rolls back under the 200-day at 99.14, the more likely read is that today’s move was a one-day risk reaction rather than the start of something.
Global Yields — Where America Actually Ranks
Read the 10-year column top to bottom. The United States pays 4.800% to borrow for ten years. Italy pays 4.206%. Spain pays 3.827%. Germany pays 3.369%.
America now borrows 59 basis points more expensively than Italy, 97 more than Spain and 143 more than Germany. For most of the last two decades Italy was the country whose bond yields people watched for signs of a crisis. Today it funds itself more cheaply than the United States does.
We’re not going to dress that up as a prediction. It’s a fact on a screen, it’s the same fact Charlie Bilello was pointing at with his $715 billion of new debt since July 1, and it’s the same fact David Solomon put plainly yesterday when he said the country will have to drive higher growth “given our levels of spending and debt.”
The United Kingdom is worse off than anyone here. A 5.883% thirty-year is the highest long yield on the board, 61 basis points above the US. Its ten-year at 5.254% sits 45 basis points above the American one, and it moved 16 basis points today alone — four times the US move. Whatever is happening to sovereign borrowing costs, Britain is getting it first and hardest.
And then the other direction entirely. China’s ten-year is 1.684%, more than three full percentage points below America’s. That isn’t a rate cycle, it’s a deflation signal. Japan’s thirty-year at 4.188% against a ten-year of 2.996% is the steepest long end here — the Bank of Japan’s normalisation, still working through.
What it means for a premium seller. Curves this steep and this dispersed are not the backdrop equities have been priced against for a decade. The US curve is positively sloped by 112 basis points from one year to thirty, and the long end is rising because of supply and inflation rather than growth. That’s the Sonders regime again, seen from the bond side, and it’s the thing that will keep pressing on equity multiples regardless of what Dell books in AI orders.
Around The World
South Korea was the worst market on the board at −2.8%, and Germany followed at −1.8% — the two most export-dependent economies on the list, both of which import their energy. Mexico and South Africa fell 1.4%.
Brazil was the only market up, at +1.5%. An oil exporter on a day oil jumped 5.7%. The board is telling one story in every language.
Bitcoin fell 1.9% to $77,375, and IBIT lost 2.1%. The dollar firmed slightly, the yen weakened to 160.22.
The Single Names
Look at the gold line. GLD is down 2.86% today and its year-to-date is now +0.11%. After a run that took it up more than 17% off the July low, gold has given back essentially the entire year in a fortnight. It is 22% below its 52-week high.
Apple was the strongest large cap on the board, up 2.6% and 19.6% on the year — the best year-to-date of any mega-cap we track. On a day the market sold growth, it bought the one with the most cash and the least AI capital expenditure attached to it.
Trusted Voices
Two of the people we read most are now flatly opposed on the only question that matters, and both published today. We’re printing both, because the disagreement is more useful than either view alone.
Charlie Bilello, Creative Planning — the hawk. He isn’t hedging. “The Fed cut rates by 50 bps in September 2024, declaring victory against inflation. That was a policy mistake, and they compounded the mistake by cutting another 125 bps.” His prescription: hike 50 basis points this month, then 50 more in October and 50 more in December. He’d also end quantitative easing immediately and start selling the mortgage book.
He brought two numbers with him, and the second one lands hard on today’s oil print. US national debt has risen $715 billion since July 1 while the 10-year has gone from 4.48% to 4.75%. And: for the first time in history, the national average gasoline price was above $4.00 a gallon every single day of August. That was before crude added 5.7%.
Danielle DiMartino Booth, QI Research — the other side. She argues the inflation the hawks are reacting to isn’t there. Applying Truflation’s 0.03% month-over-month reading to July’s official core PCE, the two-month average falls to 1.66% and the three-month to 1.79% — below target. Her defence of the source: the correlation between Truflation core PCE and the official BLS series since 2011 is 0.89.
She also went at Warsh directly: he is “purportedly in search of alternative data resources” yet “threw his weight last Friday around the lagged, imputed, and distorted Core PCE.” And separately, a number that argues her case from the real economy: business closings have been above the critical 200 level for three consecutive months, with August running 214 closings and more than 7,000 layoffs.
So: one says hike 150 basis points before Christmas. The other says core inflation is already at 1.79% and the Fed is reading broken data. We aren’t going to pretend to settle that. What we’d point out is that today’s tape voted with Bilello — oil up, yields up, equities down, and the market pricing a possible September hike — while DiMartino Booth’s business-closings number is the sort of thing that shows up in the data long after the argument has moved on.
Liz Ann Sonders, Schwab. The mechanism behind the whole session. The 10-year closed August at its highest since January 2025, and the rolling one-year correlation between yields and stocks has moved further into negative territory. Her framing: in the Temperamental Era of the 1960s to 1990s, yields keyed off inflation and moved inversely to stocks; through the Great Moderation from the late 1990s to 2022, they keyed off growth and moved with them. We’re back in the first regime, which is precisely why an oil-driven rise in yields took equities down today rather than up.
Bespoke Investment Group. Where the damage sat: software (IGV) down 3.5%, semiconductors (SOXX) down 2%. Neither is working as September begins. Software took it worse than chips — the reverse of most of last week.
Amit. Two things. The seasonal note, which is unwelcome and true: September is historically the worst month of the year, down 0.6% on average, higher only about 45% of the time, the worst month of the last ten years and the third worst in a midterm year. And on the day’s one genuinely good corporate number — Dell — see below.
Keith McCullough, Hedgeye, and Doug Kass, Seabreeze. Both chose a down afternoon to talk about being wrong in public. McCullough: “Unlike most on X, I post my Long Only portfolio daily, so subs know we lost real money today,” and “I’m good at math and I can’t count how many days I’ve lost money in the last 27 years of doing this.” Kass, the same hour: “Unlike others I am often wrong and always in doubt.”
That’s the part of this business worth copying, and it’s the same reason this morning’s alert published a six-month TLT loss with every ticket shown.
The One Good Number: Dell
On a day when almost everything fell, Dell reported and it was a monster.
They raised full-year revenue guidance by more than $23 billion in one step and lifted the AI server outlook from about $60 billion to $74 billion. Amit’s note adds the order figure: $60.9 billion of AI server orders booked.
Set that against what the market did today. The AI buildout produced its cleanest number in weeks, and technology still finished as the second-worst sector on the board. That’s the regime Sonders described doing its work — in a market pricing off inflation and rates, a good earnings number is simply not the input that matters.
Bottom Line
The market went down because oil went up, and gold falling is how you know that’s the right explanation.
If today were a fear trade, gold would have caught a bid. It fell 2.7% and silver fell 3.7%. What actually happened is that a Gulf escalation pushed the oil price up 5.7%, that pushed the inflation expectation up, that pushed yields up — 10-year at 4.80%, 30-year at 5.27% — and in the regime we are now in, rising yields take equities down with them. Sonders named the mechanism this morning. The tape spent the afternoon demonstrating it.
Three things follow for anyone selling premium.
The VIX rose 9.6% to 16.35, and that’s the first time in two weeks it has paid attention. Volatility has been persistently cheap through a Fed chair’s first speech, an Nvidia print and a week of violent single-name rotation. It is still not expensive at 16. But the direction changed today, and short premium is a business where the direction of volatility matters more than its level.
Credit moved for the first time in five sessions. We have written “credit did not blink” so often lately that it became furniture. Today high yield fell 0.9%. It is a small move and it may mean nothing. It is also the one instrument on the board that had refused to react to anything, and it reacted to this.
And the ladders now carry an oil price. Every short put we hold is on an equity index, and equity indices are now being priced off an inflation input that moved 5.7% in a session. That is not a reason to close anything — nothing has gapped, and the strikes we sold today were chosen with room. It is a reason to know that the thing driving your positions this week is not earnings, not the AI trade, and not the Fed’s next meeting. It is a waterway in the Persian Gulf.
Tony Rihan and Tony Battista Grow Your Pile
Every options trade in all three portfolios is published, win or lose, with entry, exit and running P&L at growyourpile.com.