Morning Bid: Bonds out, robots in

• The term premium on long bonds reached its highest level in a decade as investors demand compensation for uncertainties around borrowing costs and debt sustainability, beyond just inflation concerns
• Diesel and heating fuel markets face severe pressure as the 'crack spread' between crude and diesel futures hit record highs due to strained global refining capacity, threatening higher winter fuel costs
• Chinese robotics maker Unitree's stock surged on debut, valuing the company at around $50 billion, backed by Tencent, Alibaba and DeepSeek, with at least six other Chinese humanoid robotics firms preparing IPOs

Market Summary: Bond Storm and Chinese Robotics Surge

Key Market Developments

Bond Markets: U.S. Treasury yields remain elevated despite some relief following weaker-than-expected industrial production data. Markets now anticipate less Fed tightening than weeks ago, yet borrowing costs stay high. Analysts attribute this to rising "term premiums" — compensation demanded by investors for long-term uncertainty around interest rates and debt sustainability — now at decade highs. A crucial 20-year Treasury auction is scheduled for Wednesday at 1 p.m. EDT.

FOMC Minutes: July Federal Reserve meeting minutes will be released Wednesday at 2 p.m. EDT, potentially clarifying the central bank's stance on persistent inflation concerns.

Energy Markets: Crude oil prices edged higher amid supply concerns. More significantly, refining capacity strains pushed the diesel-crude "crack spread" to record highs, signaling higher fuel costs for households and businesses heading into winter.

Trade Relations: President Trump postponed a planned 50% tariff increase on Canadian goods for at least three days as negotiations show progress.

China's AI/Robotics Boom

Chinese humanoid robot maker Unitree surged dramatically on its STAR Market debut, reaching a peak valuation around $50 billion. The company competes with Boston Dynamics and Tesla, gaining attention for advanced robots capable of running, dancing, and martial arts. Backed by tech giants including Tencent, Alibaba, and DeepSeek, Unitree represents intensifying AI stock market frenzy in China. At least six other Chinese robotics firms are preparing IPOs.

Upcoming Events

• U.S. corporate earnings: Target, Lowe's, TJX
• 20-year bond auction and FOMC minutes both Wednesday afternoon