Good Morning Investors,
I hope you enjoyed the long weekend and took a moment to reflect. As we reopen the markets this Tuesday, we return to a landscape shaped by volatility, bond market nerves, and macro policy tension.
The rebound in stocks showed signs of pausing last week, dragged down by a sharp rise in Treasury yields. Investors largely shrugged off Moody’s downgrade of U.S. debt early in the week, but they couldn’t ignore a weak 20-year Treasury auction midweek that triggered a heavy selloff. That was followed by Thursday’s narrow House passage of President Trump’s “one big, beautiful bill”—a sweeping tax-and-spending package. The concern? More tax cuts than spending offsets, threatening to deepen the fiscal deficit by nearly $3 trillion through 2034.
The 30-year yield surged past 5.04%, up from 4.58% a year ago, while the 10-year climbed to 4.52%. These levels are uncomfortable for equities. Higher yields compress valuations by reducing the present value of future earnings—and that’s exactly what played out last week. The S&P 500 fell 2.6%, while the Nasdaq dropped 2.5%. The dominant narrative is shifting back to concern over the U.S. fiscal outlook.
Before the Bell
Futures are sharply higher heading into Tuesday’s open, staging a broad relief rally. S&P 500 futures are up 1.4%, Nasdaq 100 futures are up 1.5%, and Dow futures have jumped 1.3%. Markets are responding positively to President Trump’s announcement over the weekend that he would delay the proposed 50% EU tariffs until July 9, following a request from European Commission President Ursula von der Leyen.
European stocks extended Monday’s gains, led by defense and industrial names. In Asia, the Nikkei reversed early losses to close higher, lifted by a weaker yen and easing long bond yields. The dollar is stronger, pushing gold modestly lower, while oil prices are ticking up ahead of the upcoming OPEC+ meeting where production policy could be adjusted.
Bond Market Watch
The bond market reasserted its influence last week. As I wrote previously, Treasury auctions—and investor appetite—are now critical catalysts for risk assets. The weak 20-year sale and House passage of Trump’s deficit-expanding tax bill sent yields surging. We’re now firmly back in “deficit watch” mode, and markets are reacting accordingly.
The 30-year yield above 5% is no longer a shock; it’s the new pressure point. Fiscal credibility is in focus, and that’s putting duration-sensitive sectors under pressure. The key level remains the 200-day moving average on the QQQ (around 493). I continue to see this as the likely landing zone for a short-term pullback. If we hold that level, I expect renewed upside.
Tariff Watch
Just when investors had started to breathe again, trade rhetoric flared up. President Trump reignited tariff fears Friday, threatening 50% duties on EU goods starting next month and singling out Apple. That sent shockwaves across tech stocks.
But over the weekend, Trump walked back the immediacy of those threats, announcing a negotiation window with the EU until July 9th. European markets rebounded, and U.S. futures are off their lows. Still, we’re firmly back in “Trump Pattern” mode: a sharp threat, followed by partial retreat, and market churn in between. Volatility won’t disappear until there’s clarity.
For now, July 9 becomes a major date for the market. Any framework deal with the EU—even one that lands with 10% tariffs instead of 50%—would be a positive. But uncertainty remains high.
Bitcoin Breakout
While equities paused, Bitcoin surged to fresh highs last week—crossing above $111,000. This is a trend I’ve been highlighting for months. Bitcoin has become a key macro signal: it sold off before stocks in April and rallied ahead of equities this month. That’s no coincidence.
The crypto market continues to benefit from fiat instability and global liquidity growth. Bitcoin’s tight correlation with global M2 money supply reinforces its role as a hedge. In a world of ballooning deficits, hard-capped assets are back in vogue.
My long-standing target of $150,000 remains intact. Institutional participation is growing, regulation is becoming clearer, and investor behavior is shifting. We are no longer in the speculative cycle—this is structural demand.
Positioning and Market Outlook
Despite last week’s selloff, we’re only about 5.5% off all-time highs. Breadth has improved, tech is regaining leadership, and sentiment—while shaky—isn’t broken. Hedge funds remain heavily short the U.S. market, which could provide fuel for sharp upside moves if those positions unwind.
I maintain my base case: short-term choppiness, a test of the 200-day moving average, and a potential rally toward new highs into year-end. A resolution on tariffs and a stabilization in long-end yields would be key catalysts. Until then, expect volatility—but don’t confuse noise with trend.
Stock to Watch: Nvidia (NVDA)
All eyes are on Nvidia as it reports fiscal Q1 earnings Wednesday. It’s the most anticipated event of the week—and for good reason. Consensus estimates call for $0.88 in EPS on $43.3 billion in revenue, up from $26 billion a year ago. Data center sales are expected to surge 74% year-on-year to $39.2 billion, with gaming revenue expected to grow modestly.
Yet this report carries more weight than just numbers. Nvidia is navigating a tricky policy backdrop. The Trump administration’s export ban on its H20 chip to China forced a $5.5 billion write-down, even though the chip was built to comply with earlier Biden-era restrictions. Trump’s newer rules rendered even that insufficient.
Still, Nvidia is adapting. It’s working on a revised H20 model and just came off a strong showing at Computex, unveiling new cloud offerings through CoreWeave and Foxconn. At the same time, Trump’s Middle East tour brought big wins for Nvidia—hundreds of thousands of GPUs for Humain, backed by Saudi Arabia’s sovereign wealth fund, and a second Project Stargate in the UAE.
Nvidia’s reach now extends far beyond gaming. Its GPUs are critical to AI infrastructure across sectors, from cloud computing to healthcare, automotive to telecom. Its software and developer ecosystem creates a moat that competitors find hard to match.
This week’s earnings aren’t just about revenue—they’re about maintaining momentum in AI capex, navigating geopolitical risk, and defending market share. Nvidia’s reaction will likely set the tone for broader tech sentiment heading into June.
Closing Thoughts
The tariff delay gives markets breathing room, and the bounce in futures suggests investors are still looking to buy dips rather than run for the exits. But this market remains headline-driven—and that means volatility will persist.
I continue to believe the broader structure is constructive. The economy is holding up, inflation is cooling, and corporate earnings have beaten expectations. If Nvidia can deliver this week, and if the Fed’s preferred inflation metric comes in tame on Friday, the market could regain its footing quickly.
Also worth noting—equity futures are rising even with bond yields still elevated. That suggests equity bulls aren’t capitulating; they’re recalibrating. Keep watching the 200-day, but stay alert to reversals.
Until then, stay flexible, watch yields, and don’t let the noise drown out the trend.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.