Markets Comeback as Cheaper Crude Sparks Equity, Treasury Rebounds — 2026-07-24
What moved & why: Markets rebounded following yesterday's selloff as cheaper crude oil triggered broad equity and Treasury gains. Fixed-income traders scaled back excessive Fed hike expectations after realizing they had gotten ahead of themselves on a potential rate increase at next week's decision.
Cross-asset:
- Equities: Dow Jones leading domestic benchmarks; Nasdaq 100 slightly lower on sharp semiconductor losses amid concerns about AI capex sensitivity to elevated compute costs. All sectors in green; rotation away from Mag7 (Google, Tesla punished) toward cyclical firms.
- Rates/Treasuries: Yields and duration descending as Fed hike odds fell to 36% for next week's decision. Author views longer-term Treasuries as significantly undervalued with multiple paths to capital gains.
- Dollar: Greenback declining alongside yield descent as financial conditions loosen.
- Commodities: Crude sinking; precious metals rallying on relaxed Fed hike wagers.
- Crypto: Tanking amid risk-on sentiment.
Econ / Fed angle: July services PMI surged to 53.6 (vs. 51.2 prior, 51.5 est.) on World Cup and USA 250th birthday spending; manufacturing PMI slipped to 53.8 (vs. 54.5 est.). New home sales beat at 628k annualized units (+1.6% m/m), though builders relied on discounts/concessions—median price fell to $475k from $525k. July CPI running 3.3%, down from 4.2% (May) and 3.5% (June). Disinflationary trajectory intact but worsened; author sees hike odds as excessive given subdued gasoline costs and housing rent momentum.
Watch next: Fed rate decision next week; Middle East geopolitical developments and Trump's peace efforts (could ease oil/energy inflation); August–September seasonally weak period; AI capex appetite sustainability; US-Iran war impact on energy prices (flagged by Japanese business sentiment).