The Long End Isn't Arguing About September

A cargo ship took a projectile crossing Hormuz. Brent is back above $90 and the long end went with it. The 30-year printed 5.33% this morning, its highest since 2002, and long government yields sit at multi-decade highs globally, not only here. SPX closed 7,745 yesterday, off 0.5%. Premarket 7,710, another 35 lower. That puts the index roughly 90 points below the record close it set five sessions ago.

Friday that divergence read like noise. Rates pricing out September while yields climbed anyway. It isn't noise. The 10-year is 4.73% and moved a single basis point. The 30-year is at a 24-year high. When the front end sits still and the back end runs, the bond market has stopped arguing about the next meeting and started repricing what inflation looks like with a strait that has been shut for five months. Hold or hike in September is not the question getting priced this morning.

Home Depot beat before the bell and reaffirmed the year. Comps up 1.7% against about 1% expected, adjusted EPS $4.92 versus $4.73, stock up 2% premarket. That is the first hard read on the consumer since July retail sales fell the most in over a year, and it came back fine. Two sessions ago the consumer was the problem. This morning it's a barrel of oil.

Positioning changed, and that matters more than the gap. Every session this month opened above the gamma flip with a thin shelf beneath it. Today we're 50 points under it. The flip is 7,760 with prior resistance just above it, the call wall is 7,780, and everything above that is small — the entire positive block from the flip through 7,850 sums to less than a tenth of the negative gamma between 7,640 and the flip. Dealers are not damping anything down here. They amplify. The put wall at 7,635 is the largest single node in the profile, 75 points below, with prior demand at 7,631 on it, and the negatives between here and there run continuous, heaviest at 7,700 and 7,725. Fuel, not cushion. Beneath 7,635 the profile thins out quickly.

Price is under the 8 EMA at 7,735 for the first time in this advance. I lean short into strength while 7,736 holds and want nothing long until 7,760 is back. Housing starts and import prices at 8:30, industrial production at 9:15, FOMC minutes tomorrow at 2:00. Target and Lowe's report tomorrow, Walmart Thursday.