Morning Bid: Who’s the boss?

On July 29, 2026, Wall Street witnessed record highs as earnings optimism drove indexes to new peaks. However, the euphoria quickly faded amid rising oil prices triggered by Houthi attacks on Saudi Arabia, a conflict that has plagued the energy markets and contributed to inflation for eight months.

US Vice President JD Vance called for Iran to significantly reduce its nuclear enrichment capacity to end this ordeal, but the responsibility of leading the country falls into question as leaders in Tehran have fallen one after another. US President Donald Trump questioned who was currently steering the ship.

Far-right candidate Marine Le Pen, initially seen as unlikely to win France's presidential election next spring, surprised the nation with plans to cut government spending, which led to a rally in French government bonds. These bonds had been trading at multi-decade highs due to surging yields, much to the relief of investors concerned about inflation, central bank tightening, and fiscal challenges.

The US Treasuries experienced a rebound, buoyed by a successful 3-year auction. Market demand will be tested again when the government conducts a $39 billion sale of 10-year notes later on Wednesday. The anticipation now shifts towards the Federal Reserve's upcoming minutes and speeches by policymakers. The expectation of another rate increase this month, following the September hike, has softened, but markets remain on high alert for more tightening measures later in the year and next year.

San Francisco Fed President Mary Daly and Kansas City Fed President Jeff Schmid's speeches on Tuesday painted a mixed picture regarding the timing of future rate hikes. Fed officials Christopher Waller, Neel Kashkari, and Alberto Musalem are scheduled to address the market later on Wednesday. The probability of a rate increase of at least 25 basis points in October has dropped to 20.5%, down from nearly 51% a week ago, according to CME FedWatch. However, there is an 84.5% chance of an increase at the December meeting.

Euro Stoxx 50 futures declined by 0.62%, German DAX futures fell by 0.55%, and FTSE futures slipped by 0.25%. US stock futures, the S&P 500 e-minis, edged up by 0.08%. Key market-moving events on Wednesday include the US Treasury's sale of $39 billion in 10-year notes, Germany reopening the sale of 7-year government debt, the UK's offering of 1-year and 5-year government debt, and the Federal Reserve's publication of the minutes from the September 15-16 meeting.