Key Takeaways
1. Oil Prices & Treasury Yields Pull Back
Two of last week’s biggest sources of market pressure moved in the opposite direction. Brent crude fell from the mid-$90s to ~$88 as concerns around the Strait of Hormuz eased. Treasury yields also declined, with the 30-year yield falling from about 5.27% to roughly 5.17%. The moves provided some relief after rising energy prices and borrowing costs weighed on stocks last week.
Why it matters: The reversal eased some of the near-term pressure on inflation expectations and financial conditions, although both oil prices and long-term interest rates remain elevated.
2. Underlying Private Demand Remained Strong in Q2 Even as Headline GDP Growth Slowed
The second Q2 estimate showed the U.S. economy grew at a +1.5% annualized rate, unchanged from the initial estimate and down from +2.1% in Q1. However, real final sales to private domestic purchasers, which measure consumer spending and private fixed investment, were revised higher to +4.2% from +3.9%. The gap reflects several drags on headline GDP, including declining government spending and increased imports, that don’t necessarily indicate weak private demand.
Why it matters: The headline growth rate understated the strength of underlying private demand, making the Q2 slowdown less broad than the +1.5% figure suggests.
3. Business Investment & Equipment Orders Remain Strong
Durable goods orders rose +1.1%, while orders excluding the volatile transportation category increased +0.4%. Nondefense capital-goods orders excluding aircraft, a closely watched proxy for business investment, also rose and remained near recent highs. The monthly increase was modest, but the broader trend has strengthened since the spring, extending the underlying resilience visible in Q2 GDP.
Why it matters: Business investment continues to stand out as a relatively strong part of an otherwise uneven economic backdrop.
4. New Home Sales Remain Near Pre-Pandemic Trend as High Mortgage Rates Weigh on Demand
Sales of new single-family homes fell -10.5% in July to a 607,000 annualized rate, down from 678,000 in June and -6.3% from a year earlier. The pace of sales is now roughly in line with the years immediately before the pandemic, when sales averaged around 600,000 to 680,000 annually. The supply of new homes rose to 9.6 months at the current sales pace as mortgage rates remained in the mid-6% range, keeping monthly payments elevated even as builders cut prices or offered incentives.
Why it matters: Housing is one of the clearest areas where higher long-term interest rates are translating into weaker real economic activity.
5. Nvidia’s Earning Results Signal Strong Demand for AI Infrastructure
Nvidia reported quarterly revenue of $96.2 billion, more than double a year earlier, with data-center revenue climbing to $89.0 billion. The company projected $108 billion of revenue for the current quarter even without assuming any China data-center sales. The results reinforce an important distinction: investors continue to debate whether the enormous sums being spent on artificial intelligence will generate adequate returns, but demand for the infrastructure supporting that investment has shown little sign of slowing.
Why it matters: The AI buildout continues to expand rapidly even as the market debates whether the growth will eventually justify the cost.
