Morning Bid: "The house" visits the House

• Brent crude oil reached $107 per barrel as Middle East tensions escalated, compounding pressure on government bonds globally, with Japanese 10-year yields rising back above 3%
• Bessent will face questions on failed attempts to cap Treasury yields, joint yen intervention with Japan, and President Trump's proposed $1.3 trillion cash injection including $5,000 checks to Americans
• Semiconductor stocks fell over 5% for the first time since July amid AI development concerns, dragging down the S&P 500 and Nasdaq, while Trump dismissed calls for AI restrictions

Market Summary: Treasury Yields Surge as Fed Meeting Begins

Key Developments

U.S. 10-year Treasury yields hit their highest level in 19 years, matching levels last seen before the 2007 global banking crisis. This comes as the Federal Reserve begins its critical two-day policy meeting, with markets pricing in a quarter-point rate hike on Wednesday and up to four rate increases over the next year.

Treasury Secretary's Congressional Appearance

Treasury Secretary Scott Bessent will testify before the House Financial Services Committee today, addressing multiple pressing issues:

• Failed attempts to cap Treasury yields through bond buybacks
• Joint currency intervention with Japan to support the yen
• Economic measures against Iran
• President Trump's proposed $1.3 trillion stimulus package, including $5,000 checks for Americans

Energy and Global Markets

Brent crude prices reached $107 per barrel amid Middle East tensions, briefly retreating Monday following Trump's suggestion of a Russia-Ukraine energy infrastructure agreement. Japanese 10-year yields also climbed above 3%, reflecting global bond market pressure from rising interest rates and energy costs.

Technology Sector Decline

The SOX semiconductor index plummeted over 5%, its worst performance since July, driven by concerns over AI regulation. Trump downplayed calls for AI development restrictions, claiming existing guardrails are sufficient. The selloff dragged the S&P 500 and Nasdaq lower.

Chinese Economic Data

China released mixed economic indicators for August: industrial production beat expectations, while retail sales disappointed and housing prices continued declining.

Market Outlook

Global stocks and Wall Street futures remained subdued heading into Tuesday's session as investors await the Fed decision and Bessent's testimony, with bond markets continuing to reprice interest rate expectations higher.