Reading · RiskReversal Recap

Stocks edged slightly higher after a CPI report that came in as expected. The gains were driven primarily by strength across AI-related names following some strong earnings reactions.

Oil: Crude was unchanged near $83. There was little new news out of the Iran situation and there tends to be a bid when “deal imminent” headlines quiet.

Yields: The CPI report initially pushed yields lower, but much of that move faded throughout the session. The US10YY finished near 4.68%, essentially back where it started the day. As we’ve mentioned yesterday, traders often view CPI and PPI as a package, so an overall reaction may not be fully resolved until tomorrow’s data. Shorter duration yields were lower on the day with the 2YY now 4.20%.

Dollar: The dollar was higher with DXY now back to $100

Gold: Gold continued its grind higher and is now closing in on the 4500 level. It has gained more than +10% over the past few weeks, and is closing higher on days where DXY is higher the past few days.

Volatility: The VIX is now at its lowest levels of 2026. Much of the dispersion that defined the past few months has now normalized as leadership has broadened and the market has become less dependent on a handful of highly volatile chip names.

Technology led with semiconductor names like NVDA, AMAT, MU helped by the AI-related names moving higher on earnings. AMAT reports tomorrow.

At the same time, MAGS was lower, dragged down by weakness in META, MSFT, AAPL, and AMZN.

CSCO -2% and CBRS -13% after their releases.

Guy - XRT made its all time high 5 years ago… you’ve had winners and losers, but very quietly TGT is rallying, I think WMT has another leg higher, but you cannot talk retail as a monolith.

Dan - I wanna watch this gap in CRWV, if it holds this gap I think that means new money is coming into these things.

Articles Mentioned:

S&P 500 rises after tame inflation data; AI-related shares jump (CNBC)
S&P 500 Earnings Are So Good Investors Are Starting to Worry (Bloomberg)
U.S. budget deficit surged in July to highest level since March 2021 (CNBC)
Poorer Americans are struggling to make ‘ends meet’, top Fed official says (FT)
Quantifying the AI boom crowding-out effect (Axios)
DeepSeek Publicizes Efforts to Challenge Anthropic’s Claude Code (Bloomberg)
SpaceX short sellers are running out of bullets as stock rebounds more than 40% off low (CNBC)
Josh Kushner, Bob Iger Buy LA Lakers for $12.5 Billion (Bloomberg)
Apollo Inks $2.6 Billion Financing Deal With NY Yankees (Bloomberg)

Thursday, August 13th

PPI before the open. Tomorrow’s reaction in yields may provide a clearer signal than today’s initial post-CPI move. One notable development is how rate expectations have shifted over the past few weeks and again today:

Shorter-duration yields moved more strongly lower following today’s CPI.
Fed Funds Futures now imply roughly a 60% probability that the Fed holds rates steady in September. Just a few weeks ago, it was 60% for a hike.