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London Quick Take - 15 Sep - Stocks fall as US 10yr yield hits highest since 2007 and Trump calls AI fears a 'hoax'
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
TL/DR: Semis -5% on AI slowdown risks, oil > $105 and 10yr Treasury >5% ...stocks are down but not yet disorderly. Financials and miners are bearing the brunt in Europe, while AI stocks are down across Asia and the US.
Key meeting: The Fed kicks off its two-day meeting with everyone expecting it to raise rates. That won't please President Trump, but will it placate markets? US 10yr yields touched their highest since 2007 on Tuesday as a brutal bond selloff continues. The worsening picture for bonds makes like difficult for the Fed, and particularly its new chairman, Kevin Warsh. The US Treasury 10yr yield broke 5% for first time since 2023 on Monday and advanced to a 19-year high as it touched 5.03% this morning...is this the point at which markets break? 5.25% is really when it gets dicey. Markets are pricing in a 93% chance the Fed hikes rates this week. While there are lots of reasons behind the bond rout, BMO says Treasury yields and oil prices haven't been this closely correlated for seven years.
The pressure on bonds remains strong and the path of least resistance is for yields to climb. UK gilts are facing fresh selling with the 10yr +5bps and breaking out past 5.42% and the 30yr approaching 6%. What would Liz Truss say about this? Higher yields + a firmer dollar with DXY trading above 99 is pressuring gold bugs with spot holding south of $4,300 but holding at its 50-day moving average support at $4,274, which broke yesterday briefly.
On Wall Street it was a story of AI and Anthropic CEO Dario Amodei's call for a "pacing" of frontier development. I had a good look at this here. Semis –5%, Nasdaq –0.8% as stocks related to the AI boom slumped, but indices finished well off the lows of the day as the S&P 500 finished -0.5% lower at 7,620 but crucially held its 50-day moving average at 7,610. NDX slipped beneath its 50-day line. Futures this morning are down. Among the movers, Nvidia slipped -3%, Broadcom and AMD –4% and Intel was more than –7% lower. Cybersecurity stocks and software rose, as did Microsoft, Google and Meta. At the index level this is contained and there was some reassessment, following an initial kneejerk response, to what "pacing" of frontier AI actually means and whether it's even practical. Softbank shares - a good proxy for the wider ecosystem - rebounded +8% overnight Tuesday after Monday's 10% drop.
That might because there seems to be no appetite in the White House to rein in the AI buildout. President Trump called it all a "hoax". In a bizarre moment Trump called Nvidia CEO Jensen Huang while on stage at the All-In Summit to call out the AI execs wanting a slowdown in development like Amodei and OpenAI's Sam Altman. "It's all a hoax," he barked down the line to Huang, referring to fears that AI could wipe out humans. Data centres are "great" and are the "oil of the next 20, 25 years".
Oil prices advanced again after a volatile session Monday saw Brent trade a $105-$110 range amid fresh Houthi strikes on Saudi Arabia. The crucial East-West pipeline is set to be closed for some weeks, removing around 4% of global supply from the market. After prices swung that $5 range yesterday Brent has rallied nearly 2% today to $107.50. There is now a clear level of support at $105 and resistance at $110 so we're just splitting the difference for now. A break either side could be chased by technical/momentum moves.
Banks led European indices lower after Bank of America CEO Brian Moynihan said investment banking fees fell 10% in the third quarter. Barclays, Deutsche Bank, UniCredit and UBS shares were down 2-4% after the comments, which sent BofA shares down –5%. Miners were also nursing losses as copper prices extended their decline below the 50-day moving average. The FTSE 100, CAC and DAX were all chasing losses of about –1% with oil prices firmer and yields blowing out further.
Deja vu: Payrolls down, vacancies down, pay growth slowing...UK labour market data retained a soft tone with employers cutting payrolled employees and wage growth slipping. Despite resilient economic growth payrolls in the three months to July were down by 0.1% (39,000) from the previous quarter and 0.3% (84,000) from the same period in 2025. Total wage growth declined from +4.2% in the previous three-month period to +3.9%, but private sector pay growth was just +2.9%. This means the pension triple lock will rise by at least 3.9%. The slowdown in pay growth and decline in payrolled employees will take the pressure off the Bank of England this week to raise rates, providing enough evidence for the doves that policy rates do not need to be more restrictive. Today's labour market data answers at least one of the questions facing the Bank of England ahead of Thursday's rate decision. Markets are pricing about a 35% chance the BoE raises rates by a quarter of a percentage point this week, and a hike is fully priced by November.
Get this - pensioners will get +3.9%, public sector pay growth is running at +6.3% and private sector pay growth is just +2.9%...which poses a question for the Chancellor ahead of the Budget: where do taxes come from? And where do they go? An increasingly narrow taxable payroll base is bearing an increasingly heavy burden. Given the precarious fiscal position and the continued rise in gilt yields, the obvious solution for some is to sacrifice the sacred cow that is the triple lock.
Key meeting: The Fed kicks off its two-day meeting with everyone expecting it to raise rates. That won't please President Trump, but will it placate markets? US 10yr yields touched their highest since 2007 on Tuesday as a brutal bond selloff continues. The worsening picture for bonds makes like difficult for the Fed, and particularly its new chairman, Kevin Warsh. The US Treasury 10yr yield broke 5% for first time since 2023 on Monday and advanced to a 19-year high as it touched 5.03% this morning...is this the point at which markets break? 5.25% is really when it gets dicey. Markets are pricing in a 93% chance the Fed hikes rates this week. While there are lots of reasons behind the bond rout, BMO says Treasury yields and oil prices haven't been this closely correlated for seven years.
The pressure on bonds remains strong and the path of least resistance is for yields to climb. UK gilts are facing fresh selling with the 10yr +5bps and breaking out past 5.42% and the 30yr approaching 6%. What would Liz Truss say about this? Higher yields + a firmer dollar with DXY trading above 99 is pressuring gold bugs with spot holding south of $4,300 but holding at its 50-day moving average support at $4,274, which broke yesterday briefly.
On Wall Street it was a story of AI and Anthropic CEO Dario Amodei's call for a "pacing" of frontier development. I had a good look at this here. Semis –5%, Nasdaq –0.8% as stocks related to the AI boom slumped, but indices finished well off the lows of the day as the S&P 500 finished -0.5% lower at 7,620 but crucially held its 50-day moving average at 7,610. NDX slipped beneath its 50-day line. Futures this morning are down. Among the movers, Nvidia slipped -3%, Broadcom and AMD –4% and Intel was more than –7% lower. Cybersecurity stocks and software rose, as did Microsoft, Google and Meta. At the index level this is contained and there was some reassessment, following an initial kneejerk response, to what "pacing" of frontier AI actually means and whether it's even practical. Softbank shares - a good proxy for the wider ecosystem - rebounded +8% overnight Tuesday after Monday's 10% drop.
That might because there seems to be no appetite in the White House to rein in the AI buildout. President Trump called it all a "hoax". In a bizarre moment Trump called Nvidia CEO Jensen Huang while on stage at the All-In Summit to call out the AI execs wanting a slowdown in development like Amodei and OpenAI's Sam Altman. "It's all a hoax," he barked down the line to Huang, referring to fears that AI could wipe out humans. Data centres are "great" and are the "oil of the next 20, 25 years".
Oil prices advanced again after a volatile session Monday saw Brent trade a $105-$110 range amid fresh Houthi strikes on Saudi Arabia. The crucial East-West pipeline is set to be closed for some weeks, removing around 4% of global supply from the market. After prices swung that $5 range yesterday Brent has rallied nearly 2% today to $107.50. There is now a clear level of support at $105 and resistance at $110 so we're just splitting the difference for now. A break either side could be chased by technical/momentum moves.
Banks led European indices lower after Bank of America CEO Brian Moynihan said investment banking fees fell 10% in the third quarter. Barclays, Deutsche Bank, UniCredit and UBS shares were down 2-4% after the comments, which sent BofA shares down –5%. Miners were also nursing losses as copper prices extended their decline below the 50-day moving average. The FTSE 100, CAC and DAX were all chasing losses of about –1% with oil prices firmer and yields blowing out further.
Deja vu: Payrolls down, vacancies down, pay growth slowing...UK labour market data retained a soft tone with employers cutting payrolled employees and wage growth slipping. Despite resilient economic growth payrolls in the three months to July were down by 0.1% (39,000) from the previous quarter and 0.3% (84,000) from the same period in 2025. Total wage growth declined from +4.2% in the previous three-month period to +3.9%, but private sector pay growth was just +2.9%. This means the pension triple lock will rise by at least 3.9%. The slowdown in pay growth and decline in payrolled employees will take the pressure off the Bank of England this week to raise rates, providing enough evidence for the doves that policy rates do not need to be more restrictive. Today's labour market data answers at least one of the questions facing the Bank of England ahead of Thursday's rate decision. Markets are pricing about a 35% chance the BoE raises rates by a quarter of a percentage point this week, and a hike is fully priced by November.
Get this - pensioners will get +3.9%, public sector pay growth is running at +6.3% and private sector pay growth is just +2.9%...which poses a question for the Chancellor ahead of the Budget: where do taxes come from? And where do they go? An increasingly narrow taxable payroll base is bearing an increasingly heavy burden. Given the precarious fiscal position and the continued rise in gilt yields, the obvious solution for some is to sacrifice the sacred cow that is the triple lock.
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