In 30 seconds: Hyperscaler AI capex forecasts for 2026 have surged from $500B to over $700B, driving a narrow tech-led equity melt-up that has pushed the Nasdaq 100 to dot-com-era extremes even as broad market breadth deteriorates sharply. UK 10-year gilt yields broke above 5.10% and 30-year yields hit levels not seen since 1998, with the pound under simultaneous pressure, reflecting deep market concern over British fiscal sustainability and political instability. The closure of the Strait of Hormuz following US military action against Iran has pushed WTI crude above $100 and Brent toward $110, while Qatari LNG tankers are navigating the strait under uncertainty with AIS beacons being switched off.
The index is fine. The index's constituents are not. The S&P 500 closed at another all-time high, sitting nearly 8% above its 50-day moving average, which sounds like the kind of number that should make everyone feel good about their portfolios. But only 48.6% of the stocks in the S&P 500 are above their own 50-day moving averages. New 52-week lows in the S&P 500: 42, vs. new 52-week highs: 39. The S&P 500 closed higher on negative breadth, which is a sentence that tells you everything about how narrow this rally has become. AI stocks have hit a technical level seen only twice in 30 years, which is the kind of historical comparison that is either very exciting or very ominous depending on which of the two prior instances you think rhymes with today. This marks the third time this year that the SOX fell 3%+ after closing at an all-time high the prior day. The index keeps hitting all-time highs while fewer than half its stocks trade above their 50-DMAs — the record is in the index, not in the median stock. You get a market where the benchmark is 7.8% above its moving average and more than half its members are below theirs. The market is doing great. Most of the market is not.
UK 10-year Gilt yield hit 5.10% this morning in what observers called a sizeable selloff. The British Pound is under pressure today, failing to find support despite a dramatic surge in yields. The bond market of 2022 wanted Liz Truss out; this bond market wants Keir Starmer to stay. The long view is genuinely unsettling: a 2012 investment in a UK long-duration government bond ETF left investors with a 5% loss after nearly 15 years of lending money to the UK government. UK long-duration government bond ETF (maturities 15 years and over) — 2012 investment: 5%. That is, to use a technical term, mindboggling. One argument holds that the roots run deeper: it started with the 'sound money' policies of the 2010s — do austerity at the wrong time, discredit fiscal tightening forever. Debt sustainability issues are a chronic characteristic of all aging major economies facing increased polarization. France, for instance, has cycled through 10 prime ministers in ten years. UK 10-year Gilt yield: 5.10%.
WTI crude has reclaimed the $100 level, and Brent crude is moving closer to $110. If you had told anyone a month ago that energy markets would be pricing a live closure of the Strait of Hormuz, they would have asked which thriller you were reading. Now it is the ticker. The physical story is playing out in real time on vessel-tracking screens, or rather not playing out, because the vessels keep disappearing. After a U-turn and coming to a stop yesterday, the Qatari LNG tanker switched off her beacon; she has since re-started broadcasting her position, having exited the Strait of Hormuz and now nearing Pakistan. The first Qatari crossing clearly used Iranian shipping lanes. With the beacon dark on the second transit, nobody could confirm whether the tanker took the same route. You are watching a global energy chokepoint through the absence of data points, which is an unsettling way to price risk.
Here is where the labor market stands for your paycheck.
Initial jobless claims: 200,000, up 5.26% on the week
Continuing claims: 1,766,000, down 0.56% on the week
Job openings (JOLTS): 6,866.00, down 0.81% on the month
Quits rate: 2.00, up 5.26% on the month
Unemployment rate: 4.30, flat 0.00% on the month