Little Rambo.

After a news-light long weekend, markets woke up on Tuesday to Canada announcing its promised like-for-like retaliatory tariffs on many US goods while at the same time plotting a massive trade deal with Europe, oil prices hurtling back towards $100 with a further escalation of hostilities in the Middle East and Trump nonsensically barking that the Fed should somehow immediately cut its interest rate from 3.625% to 0.50%, in an environment where the central bank may well need to raise it later this week to combat sticky inflation. With a busy week ahead of new inflation data, a European Central Bank (ECB) meeting with interest rates spiking around the world to multi-decade highs in some cases, Apple’s launch event, increasing war and tariff tensions and goodness knows what else coming from an increasingly erratic US president, the stock indexes dropped with Amgen and Novartis leading the charge lower after disappointing drug trial results. Qualcomm, however, surged after signing a data center partnership with Amazon. Clearly under orders from his master who is looking to bend financial markets to his will with the midterms in mind, Treasury Secretary Bessent declared war on the bond market on Wednesday, giving his nasal, nerdy version of a “Bring It On, Motherf**ker” speech squarely aimed at the Wall Street bond vigilantes who have pushed interest rates higher lately, telling them “I am the house now. Bet against me if you want”. Bond traders (or “Bloomberg terminal bros” as Bessent dismissively called them) may well take him up on that suggestion since governments have had a historically close to zero win rate whenever they have taken on the bond market. Indeed, their initial reaction to the Treasury Secretary’s Little Rambo-style challenge was to stare him down by taking interest rates to new three-year highs. After the dismal failure of his first attempt at intimidation and market manipulation last month, Bessent tried again; this time announcing a Treasury buy-back of $6 billion of longer-dated government debt. Yet again, bond traders called his bluff, shrugged off the gimmick and kept on raising rates like crazy (see INTEREST RATES below). Continued US attacks on Iran drove the oil price back up through $100 again and the odds of an imminent Fed Funds Rate increase continued to move higher. Stocks reacted accordingly by registering a third straight day of losses. As is common on new product launch days, Apple’s stock price dropped in response to this year’s rather underwhelming event which was completely dominated by the splashy new foldable iPhone release. While Bessent was desperately waving a stick at the bond market in order to try to help Republicans at the midterms, Trump dangled a carrot in front of the electorate on Thursday, floating a probably illegal $5k payment to every US voter if the party retains control of both houses of Congress, a measure that would cost the US taxpayer an estimated $1-$2 trillion and send inflation skyrocketing. Just like his promises of a $5k per person DOGE dividend and $2k per person tariff dividend, Trump’s latest idea is obviously a total non-starter and won’t ever happen of course, but there is a group of voters out there who are dumb enough to believe it might and that’s what the president is counting on. PPI came out pre-market and showed wholesale inflation running at an annualized rate of 5.4%, higher than forecast. Citing enhanced global inflation risk, the ECB raised European interest rates by a quarter of a point. Americans remain miserable about their economic prospects with consumer sentiment readings continuing to plummet. Stocks and bonds fell meaningfully as energy prices continued to explode higher. After the closing bell, Oracle released a blowout earnings report and the stock shot higher in the after-market but Adobe disappointed and its stock price fell. But Friday’s big event was the pre-market July CPI release which showed annualized retail inflation stuck at a still-hot 3.4%, well above the Fed’s official target of 2.0%. This was deemed to make a Fed Funds Rate increase this week much more likely (see INTEREST RATE EXPECTATIONS below) to the extent that if the central bank doesn’t raise rates on Wednesday, its entire credibility and the perception of its freedom from political interference will be in question. Expected rate hikes are pretty much already priced into stocks and bonds by now, however, and the indexes surged to close higher after four straight days of losses as oil prices eased back from their recent spike. Over the course of the holiday-shortened week, however, the S&P 500 and NASDAQ-100 large cap indexes, US small caps and international stocks all lost ground. Some other things I’m thinking about .. * The average 30-year mortgage interest rate in the US rocketed last week to smash through 7.00% (see AVERAGE 30-YEAR FIXED MORTGAGE RATE below) as a result of new multi-year highs in the impactful 10-year Treasury rate. * At an average of $4.30 gas (with reports of up to $10 gas in parts of California) and $6.00 diesel at the pump, American consumers and businesses have never in history paid this much for fuel in the month of September. Anglia Advisors clients are now able to access customized model portfolios in managed investment accounts which exclusively use ETFs, many of which carry no management fee - contact me for more details. If you are not yet a financial planning or investment management client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me. ARTICLE OF THE WEEK: Worried about the bonds in your portfolio? You’re missing the point. .. AND I QUOTE: “It’s going to get funky. Running through it all is Trump and oil, so volatility is probably the only certainty.” Charlie Jamieson of Jamieson Coote on the outlook for the bond market LAST WEEK BY THE NUMBERS: * SPY is a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. * Down by 1.1% last week * Down by 1.0% over the past month * Up by 3.6% over the last three months * Up by 12.1% so far this year * QQQ is a US Large Cap ETF, tracks the NASDAQ-100 index, made up of the largest 100 non-financial companies listed on the tech-heavy NASDAQ exchange. * Down by 0.8% last week * Down by 1.2% over the last month * Down by 0.3% over the last three months * Up by 16.4% so far this year * IWM is a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. * Down by 1.9% last week * Down by 4.6% over the last month * Down by 0.5% over the last three months * Up by 17.4% so far this year * VXUS is an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. * Down by 1.0% last week * Down by 0.5% over the past month * Up by 2.1% over the last three months * Up by 15.5% so far this year * BRENT CRUDE OIL .. $104.54 (up by 7.6% last week) * GOLD .. $4,390 (down by 1.3% last week) * BITCOIN .. $ 77,430 (down by 3.0% last week) Data courtesy of finviz.com as of Friday’s close. AVERAGE 30-YEAR FIXED MORTGAGE RATE: * 7.12% Data courtesy of Mortgage News Daily. INTEREST RATES: * FED FUNDS RATE * 3.625% (unchanged from a week ago) * PRIME RATE ** 6.75% (unchanged from a week ago) * 3 MONTH TREASURY 4.00% (3.91% a week ago) * 2 YEAR TREASURY 4.56% (4.37% a week ago) * 5 YEAR TREASURY 4.75% (4.54% a week ago) * 10 YEAR TREASURY *** 4.95% (4.78% a week ago) * 20 YEAR TREASURY 5.39% (5.25% a week ago) * 30 YEAR TREASURY 5.37% (5.24% a week ago) Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close. * Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates. ** Wall Street Journal Prime Rate as of Friday’s close. Moving in lockstep with the Fed Funds interest rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending. *** Used as a basis for determining mortgage interest rates. INTEREST RATE EXPECTATIONS: Where will the Fed Funds interest rate be after the next rate-setting meeting on September 16th? * 0.25% higher than now .. 87% probability (40% a week ago) * Unchanged from now .. 13% probability (60% a week ago) * 0.25% lower than now .. 0% probability (0% a week ago) With three more rate-setting meetings this year, what is the most commonly-expected number of remaining Fed Funds interest rate changes in 2026? * Two increases, 48% probability (a week ago: two increases, 40% probability) Data courtesy of the CME FedWatch Tool and is derived from futures market pricing as of Friday’s market close based on the current Fed Funds interest rate of 3.625%. FEAR & GREED INDEX: “Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett. Data courtesy of CNN Business as of Friday’s market close. The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand. Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment. Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal. 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