Bond Market Weakness, Diverging Equities, and Crypto Boosted by Policy Tailwinds

Market Overview

The U.S. Treasury market struggled on Thursday as the 30-year bond auction posted disappointing results, with weak demand driving long-term yields broadly higher. The benchmark 10-year yield climbed 2.43 basis points, adding pressure to equities.

On the stock side, sentiment was lifted by reports that perceived dovish policymaker Milan is set to join the Federal Reserve Board. Tech stocks responded positively, allowing the Nasdaq to eke out a gain. Apple extended its strong momentum, advancing another 3% and nearly erasing all losses since April 2.

In other assets, the U.S. Dollar Index hovered near 98, while gold rose 0.76% before retreating from resistance at the $3,400 level. Crude oil fell nearly 2% from intraday highs after news that the U.S. and Russia will hold talks weighed on prices.

Hot Topics Ahead

• Trump Signs Executive Order Favoring Crypto Assets

• On Thursday, President Donald Trump signed an executive order allowing alternative assets—such as private equity, real estate, and cryptocurrencies—to be included in 401(k) retirement savings plans. This opens access to roughly $12.5 trillion in retirement account capital for these sectors. Bitcoin rose 2%, while Ethereum surged 5.6% following the news. The order directs the SEC to amend relevant regulations to make it easier for participant-directed defined-contribution plans to invest in alternative assets. Traditionally, such plans have focused on relatively safe stocks and bonds.

• Labor Market Weakness Emerges

• Continuing jobless claims climbed to 1.974 million, the highest since November 2021, signaling cooling in the U.S. labor market and bolstering expectations for a September rate cut. Initial claims for the week ending August 2 inched up to 226,000, holding relatively steady. Analysts noted that while companies are hesitant to hire, they are not rushing to lay off workers either.

Key Events to Watch (GMT+8)

• 22:20 FOMC voter and St. Louis Fed President Musalem speaks

• Overnight U.S. Baker Hughes oil rig count (week ending August 8)