The stock gained more than 1% on Tuesday and was marginally higher in out of hours trading early on Wednesday. S&P500 and Nasdaq futures held steady.
The stakes are higher than ever, given the recent creeping doubts about AI overspend and the lack of end product so far for the new tech. Apple’s planned announcement on Sept. 9 of a new iPhone with new AI functionality, however, may ease some of those concerns.
And it’s a big earnings day more broadly for Big Tech – with Salesforce also reporting and CrowdStrike updating following a July flub that sparked a worldwide computer outage.
But while the S&P500 has stopped short of new record highs awaiting the Nvidia results, the market remains buoyant with the Federal Reserve now finally set to cut interest rates in three weeks’ time.
Nowhere has that been clearer than in the ease with which Treasury sold another $69 billion of two-year notes on Tuesday. Demand was stronger than forecast and, at 3.86% early on Wednesday, 2-year yields are eyeing 15-month lows.
Another $70 billion of 5-year paper hits the street later today, with the total of bills and coupons up for grabs this week alone surpassing half a trillion dollars.
Treasury is frontloading the new debt in short maturities and almost three quarters of that huge total this week is in bills with tenors of less than 12 months – a move that will see some benefit to debt servicing costs as Fed rates tumble.
But the good reception for the new two-year notes and with one eye on how all those bills eventually get refinanced over the years ahead, the inverted yield curve between two and 10 years narrowed to just 3 basis points – its smallest in three weeks.
The latest U.S. economic releases provide little bar to those souped-up easing expectations – now running at as much as 104 basis points over the remainder of the year.
