US STOCKS: Midday Equities Roundup - Off Early Highs, Tech Stocks Weighing

• OAT-Bunds spreads have been hovering around 82bps for a couple hours now after a further large widening today, +4.5bp on the day for +11bp since Monday’s Bayrou’s confidence vote call.
• It’s been a volatile session for outright yield moves, with the 10Y yield currently at 3.517% (+2.1bp) off an earlier high of 3.544% for new recent highs.
• Meanwhile, 30s have pared earlier losses which saw a fresh fourteen-year high with a 5bp increase to 4.45% (currently 4.422%, +3.2bp).
• In futures space, OATU5 trades at 121.74 (-0.18) after a short-lived pop to 121.98 on little sign of headlines, off an earlier (and new recent) low of 121.48. 3.55% yields equate to ~121.44.
• One point of interest will be ~120.66, the equivalent to a 3.631% yield from the ytd high in March which marked its highest since Nov 2011.
• ING: “We still see the balance of risk tilted to further widening [in OAT-Bund spreads]. The current 10Y spread is at a similar level to that seen in July 2024, when French President Emmanuel Macron called snap elections and OATs sold off significantly in response. However, spreads remain tighter than they were during the political turmoil following the collapse of Prime Minister Michel Barnier’s government last December. A key difference now is that parliamentary elections are allowed again, which in our view adds to the uncertainty from both a political and fiscal perspective.”
• “We do have to keep in mind that the ECB has a lot of firepower to limit excessive widening of EGB spreads, and markets are well aware of this. In theory, the ECB could resort to the Transmission Protection Instrument (TPI) if too-high interest rates on OATs negatively impact the steering of monetary policy. The conditions require a country to comply with EU fiscal rules. At the same time, however, the ECB has the ability to deviate from this requirement, an option it would likely exercise if spillover effects threaten financial stability. As such, the mere existence of this tool may be enough to prevent spreads from spiralling upwards.”
• See this morning’s MNI exclusive for more color on fiscal matters: French Austerity Plan To Largely Survive Crisis-Officials (1121BST) 

• RES 4: 113-00   Round number resistance 
• RES 3: 112-28+ 1.764 proj of the Jul 15 - 22 - 28 price swing  
• RES 2: 112-19   1.764 proj of the Jul 15 - 22 - 28 price swing  
• RES 1: 112-15+ High Aug 5 and the bull trigger
• PRICE:‌‌ 112-07+ @ 16:52 BST Aug 27
• SUP 1: 111-25   20-day EMA
• SUP 2: 111-14+ 50-day EMA
• SUP 3: 111-13+ Low Aug 18  
• SUP 4: 110-25   Low Aug 1 

The trend outlook in Treasury futures remains bullish and the contract continues to trade above support at the 50-day EMA, at 111-14+. A clear break of this average would expose support at 110-25, the Aug 1 low. For bulls, attention is on 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-19 initially, a Fibonacci projection.(Z5) Bullish Outlook 

• Stocks continue to drift near or above last Friday's record highs Wednesday. Reminder: Nvidia earnings expected to be announced after today's close.
• Uncertainty over an independent Federal Reserve aside (following Trump's "firing" of Fed Gov Cook late Monday) Trump seeking a majority of like minded Fed boardmen in the aftermath of Chairman Powell's dovish Jackson Hole speech appears to be emboldening risk takers.
• Currently, the DJIA trades up 97.03 points (0.21%) at 45512.04 (off Friday's 45727 record high), S&P E-Mini Future up 10 points (0.15%) at 6492.5 (off Friday's 6401.25 high), Nasdaq up 33.1 points (0.2%) at 21573.14 vs. 21591.23 record high this morning.
• Energy and Financial sector shares led first half gainers, oil and gas stocks rising with a modest rebound in crude this morning (WTI +0.33 at 63.58): Valero Energy +1.64%, Marathon Petroleum +1.36%, Occidental Petroleum +1.30% and Phillips 66 +1.29%.
• Financials buoyed by: Wells Fargo +1.73%, Citigroup +1.48%, Huntington Bancshares +1.43% and M&T Bank +1.32%.
• On the flipside, Communication Services and Consumer Staples sector shares underperformed ahead midday: Paramount Skydance -5.71% on downgrade at from Morgan Stanley, Meta Platforms -0.73% and Live Nation Entertainment -0.47%.
• Consumer Staples weighed by: J M Smucker -4.64% after announcing profit pressure at the latest earnings call, Kroger Co -1.26% and Philip Morris International -1.16%.