JGBS: Mostly Richer, Offshore Big Sellers Of JGBs Last Week, 10Y Supply Due

The S&P(ESU5) overnight range was 6459.50 - 6485.00, Asia is currently trading around 6468, -0.10%. A quiet night with the US being off on holiday. The S&P remains in a bullish uptrend, and for the moment is ignoring all headwinds. We head into September which traditionally is the worst month for US Equity performance, will stocks continue to ignore seasonality like it did in August? This morning futures have opened a little lower, E-minis -0.10%, NQU5 -0.10%. The market will be eyeing NFP on Friday, hoping for a catalyst to reignite momentum which has been stalling.

• (Bloomberg) - “AI Theme Turns 2-Way Street as China Accelerates. Chinese equities are getting an extra lift from signs that the AI boom there is gathering pace. Coming as that does after the DeepSeek revelations earlier this year, the positives for the theme in China are also threatening to feed some of the burgeoning unease about the possibility that valuations are overstretched for US-centered tech stocks.”
• “The S&P 500 can soar another 20% by the end of next year on the back of an AI-driven tech revolution, according to Evercore ISI strategists, whose 7,750 target for 2026 is the Street’s highest so far.” - BBG
• ISABELNET on X: "S&P 500 - Since 1950, the first half of September has been a seasonally weak period for the S&P 500, ranking as the sixth weakest half-month in the annual cycle." See Chart Below.
• zerohedge on X: “Systematic Demand Has Dried Up': Goldman's Flows Gurus Expect September To Be "Challenging." 
• Daily Chartbook on X: "Analysts expect [Mag 7] earnings growth to stabilize over the next six quarters, but still deliver double-digit growth. The baton is being passed to the S&P 493, whose earnings are expected to accelerate into the mid double-digits by Q3 2026." - @mattcerminaro @callieabost.

Fig 1: Median 2-Week S&P Returns

Source: MNI - Market News/@ISABELNET_SA/Goldman Sachs

TYZ5 is trading 112-10, down 0-06 from its close. 

• The US 2-year yield opens around 3.633%, up 0.02 from its close.
• The US 10-year yield opens around 4.2575%, up 0.3 from its close.
• MNI: Congress returns to Washington, D.C. on Tuesday, after the Labor Day holiday. Lawmakers face a race to reach a deal on a continuing resolution to avoid a federal government shutdown ahead of the 30 September deadline, when funding is set to expire.
• Bloomberg - “Trump’s tariffs will stay in place until at least mid-October amid a legal fight, Capital Economics said. Should the president ultimately lose, Bloomberg Economics estimates the average US effective rate of 16.3% would be cut by at least half.”
• 10-Year Yields continue to find supply toward the 4.20% area, which signals the range might continue to dominate. A break of the recent lows around 4.18% would bring the bottom of the range towards 4.10% back into focus.
• Data/Events: S&P Manf. PMI, ISM Manf., Construction Spending

Gold and silver had another good day on Monday supported by market pricing of a September Fed rate cut approaching 90% after US core PCE prices printed in line with consensus but August consumer sentiment moderated. Friday’s payroll data will be key. Gold rose 0.8% to $3476.07/oz after a high of $3489.85. It is currently around $3480.9. The USD index was little changed.

• Bullion remains in an uptrend with the bull trigger at $3500.1, 22 April record high. Initial firm support is $3371.9, 20-day EMA.
• Silver rose 2.5% to $40.697 after reaching $40.799. It couldn’t hold breaks above initial resistance at $40.798. It is trading around $40.69 today. The metal continues to make higher highs and higher lows confirming the uptrend. Initial support is $38.363, 20-day EMA. Bloomberg reported that in August ETF buying of silver rose for the 7th straight month.
• Silver has also been added to the US list of critical minerals. It is a key component of solar panels.
• European equities were stronger with the Euro stoxx +0.3% and FTSE +0.1%. The S&P e-mini is down 0.1% so far on Tuesday after rising 0.2% on Tuesday. Oil rallied with WTI +0.9% to $64.61/BBL. Copper fell 0.4%.