Markets Brace for Nvidia Earnings as Oil Prices and Bond Yields Surge

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Breakdown.

S&P 500 companies beating expectations by more than 17%.

Still, investors are shifting their focus back to macro, and oil does remain stubbornly above the $100 a barrel level, and this does come amid mixed signals on a US and Iran peace deal.

While global bond yields are hovering near multi-year highs after hot inflation readings and add in a historic average market drawdown following the installation of a new Feter and the risk of a pullback.

Growing.

Meanwhile, Wall Street is bracing for a video set to report earnings on Wednesday.

Well joining me on this Tuesday morning is Michael Reinking, Senior Market Strategist at the New York Stock Exchange.

Well, Michael, good morning.

Thank you so much for joining me.

Morning, Remmy.

Thanks for having me.

Well, we are counting down to the holiday weekend here in the US, but of course we have a lot of earnings and Fed speeches as well as minutes to get through.

So what are you paying attention to now?

Yes, well, I mean we have the hot weather outside.

We have ringing the bell.

This morning here at the opening bell, so that gives me a good lunch idea and then we got the Knicks game coming this evening.

So exciting, exciting days down here in New York, but from a market perspective, we've had a couple of days where markets have kind of pulled back, kind of primarily coming in the way of kind of the semiconductors, the memory stocks that have had just kind of this parabolic move higher over the last.

Couple weeks during coming out of that earnings season, we have in video, which is kind of the next big hurdle from that perspective tomorrow night after the close, you know, and then the bigger concern that has been brewing, as you just kind of mentioned you know over the last couple of days is really the move higher that we've seen in Treasury yields and actually I mean it's actually global yields, right?

It's not, it's not just kind of a US centric. and that in many ways it feels like you know we're kind of being pulled higher by yields around the globe, right?

So we've broken some kind of pretty key you know kind of technical levels in terms of you know kind of the recent highs where you had the 10 year kind of move through 4, 45 through 54, you know, 4.5 and now you kind of around 460, you know, and that kind of sits at. a longer term down trend line, so it will be interesting to see if we get rejected there if we actually start to push a little bit higher, but that seemed to be kind of the straw that broke the camel's back, so to speak, in terms of equity markets being able to shrug off the geopolitical situation, the move higher in oil prices and then just kind of as we finally saw yields kind of give way equity markets started to. and as you mentioned, we've been watching the bond markets not just in the US but across the globe and right now G7 finance ministers in Paris are gathered and they are addressing this, but what is both the short and the long end of the curve telling you right now and why should we be concerned?

I mean so you are seeing kind of some of that term premium starts to kind of build up what markets are doing is kind of repricing the idea.

That you have inflation that's going to be with us for some period of time.

We've had to kind of reprice of Fed expectations from markets that were looking for a couple of cuts coming into this year.

We kind of priced that out and now we're starting to kind of start to price in the prospect of a potential rate hike before the end of the year into next year, look, I think you know.

The geopolitical situation is going to everything kind of revolves around that at the moment yesterday you had President Trump suggest that we had kind of postponed kind of immediate strikes with the hopes that we could see some sort of diplomatic resolution.

I think markets are still kind of holding on to that idea that we are going to see some sort of de-escalation.

Even with that, just given how long this has gone on for, not only are we going to see kind of rates that are higher for longer, but you're probably going to see oil prices are higher for longer because it's going to take some time for for those markets to kind of normalize again.

I think last week you heard Aramco saying that even if we this.

Conflict lasts for another couple of weeks and it will take until 2027 until you start to see oil prices start to normalize, right?

So the idea that we're going to be in for kind of a higher rate environment is going to be with us here for a little bit of time.

Yes, and that is concerning not just for the US but also economies around the globe.

So finally, as we head into Wednesday's session, all eyes will be on Nvidia.

What are your expectations and what will you be listening out for?

Yes, I mean, look, It's widely expected that they are going to put up very solid numbers.

There's some speculation that you could start to see kind of a bigger increase in their buyback just given the strong earnings and revenues that they are going to see.

I think what it comes down to really is kind of the stock reaction on the back end.

The stock had underperformed, really has really started to kind of break out over previous highs.

Over the last couple of weeks and had really caught some momentum and now we need to see kind of if when they put up the results that are going to be strong and they're going to likely beat street expectations.

Can the stock hold on to those gains or do you actually see kind of markets kind of start to price some of that?

Well, Michael, as always great to have you on the show.

Thank you so much for weighing in as we count down to the Nvidia earnings tomorrow.

Thank you so much for joining me.