STRAIGHT FROM THE TRADING FLOOR
by Eric Criscuolo - Market Strategist
August 20, 2026 a/o 9:15am EST
Good morning,
Yesterday the S&P 500 booked a modest 0.2% gain while the equal-weight jumped 1% and Russell 2000 rose 0.5%. The Treasury announced an expansion of its repurchase program for 10/30y notes. That triggered a drop in long-end rate and curve flattening, easing upside pressure on 10/30y yields while the Dollar weakened, and leading to stocks moving broadly higher. Momentum sold off for the second straight day however as AI themes were hit (ICE Semis -2%). A positive cancer trial update from Moderna and Merck sent biotech flying and drove sector-wide strength in Healthcare. Crypto popped as the Dollar weakened and the “debasement” narrative re-emerged.
Last night President Trump said the US would launch an “economic D-Day” against Iran, along with any country that aides Iran, without providing any details on the potential actions. Ahead of tomorrow’s options expiration, US equity futures were trading modestly lower earlier this morning. Treasuries began to fade yesterday’s move, pushing yields higher and reversing much of the decline at the long-end. Futures weakened, then took another leg lower as Walmart earnings came out, though they are bouncing off their lows as we approach the open.
Walmart is down over 7% in the pre-market Same-store-sales missed expectations though there seems to be a lot of moving parts in the numbers. Advanced Autoparts is down ~20% after EPS ex-tariff refunds and same store comps fell short of expectations. Management called out “tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter.” Deere is trading higher, reporting “stable U.S. market conditions” while managing “softer conditions in Brazil and Europe” and continuing to expect this year will “mark the bottom of the current ag equipment cycle.” Alibaba is down ~5%. Margins and EPS disappointed on high investment spending and capex jumped 75% to ~$10B to support AI Cloud and Compute growth of 45% y.y.
Treasury yields are higher but have come off their peaks following this morning’s modest econ data and as SF Fred President Daly speaks. She noted she sees no signs of weakness in the labor market nor worrying signs of inflation, and the Fed will stick to its job regardless of Treasury action. Jobless claims remained in their low trajectory and the Philly Fed manufacturing survey was better than expected and improved from last month. A 30y TIPS auction later today will be interesting after yesterday’s news.
Brent crude continues to move higher, up another 2% currently. US natural gas is down but continues to trade in a tight $2.70-$2.80 range this month. European gas is higher. Gold is pulling back slightly from yesterday’s sharp gain though silver is higher again and cooper is lower too. Bitcoin is adding to yesterday’s rally, trading above $70K after reclaiming its 200d ma. ETH has pulled back modestly. Ag is modestly higher with drought conditions a concern in the US.
Economic Data:
US:
Yesterday the S&P 500 booked a modest 0.2% gain while the equal-weight jumped 1% and Russell 2000 rose 0.5%. The Treasury announced an expansion of its repurchase program for 10/30y notes. That triggered a drop in long-end rate and curve flattening, easing upside pressure on 10/30y yields while the Dollar weakened, and leading to stocks moving broadly higher. Momentum sold off for the second straight day however as AI themes were hit (ICE Semis -2%). A positive cancer trial update from Moderna and Merck sent biotech flying and drove sector-wide strength in Healthcare. Crypto popped as the Dollar weakened and the “debasement” narrative re-emerged.
Last night President Trump said the US would launch an “economic D-Day” against Iran, along with any country that aides Iran, without providing any details on the potential actions. Ahead of tomorrow’s options expiration, US equity futures were trading modestly lower earlier this morning. Treasuries began to fade yesterday’s move, pushing yields higher and reversing much of the decline at the long-end. Futures weakened, then took another leg lower as Walmart earnings came out, though they are bouncing off their lows as we approach the open.
Walmart is down over 7% in the pre-market Same-store-sales missed expectations though there seems to be a lot of moving parts in the numbers. Advanced Autoparts is down ~20% after EPS ex-tariff refunds and same store comps fell short of expectations. Management called out “tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter.” Deere is trading higher, reporting “stable U.S. market conditions” while managing “softer conditions in Brazil and Europe” and continuing to expect this year will “mark the bottom of the current ag equipment cycle.” Alibaba is down ~5%. Margins and EPS disappointed on high investment spending and capex jumped 75% to ~$10B to support AI Cloud and Compute growth of 45% y.y.
Treasury yields are higher but have come off their peaks following this morning’s modest econ data and as SF Fred President Daly speaks. She noted she sees no signs of weakness in the labor market nor worrying signs of inflation, and the Fed will stick to its job regardless of Treasury action. Jobless claims remained in their low trajectory and the Philly Fed manufacturing survey was better than expected and improved from last month. A 30y TIPS auction later today will be interesting after yesterday’s news.
- US 2yr +2bps to 4.19%, 5yr +3bps to 4.38%, 10yr +4bps to 4.69%, 30yr +4bps to 5.24%
- USD index: -$0.07 to $98.67
Brent crude continues to move higher, up another 2% currently. US natural gas is down but continues to trade in a tight $2.70-$2.80 range this month. European gas is higher. Gold is pulling back slightly from yesterday’s sharp gain though silver is higher again and cooper is lower too. Bitcoin is adding to yesterday’s rally, trading above $70K after reclaiming its 200d ma. ETH has pulled back modestly. Ag is modestly higher with drought conditions a concern in the US.
Economic Data:
US:
- Initial claims: 206K vs 210K cons, prior 212K
- Continuing claims: 1799K vs 1790K cons, prior 1781K
- Philly Fed Manuf Index: 47.4 vs 25 cons, prior 41.4
- 10:30am EAI Natural Gas inventories
- 1:00pm 30y TIPS auction
- 4:30pm Fed Balance Sheet
- Japan Imports/Exports y.y: 27.8% / 23.2% vs 25.1% / 20.1% cons, prior 25.4% / 19.3%
- Sweden rate decision: Unchanged at 1.75% as expected
- China 1/5y LPRs: unchanged
- German PPI y.y: 3.0% vs 2.7% cons, prior 1.8%
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