Today
Futures are steady this morning as bond yields stabilized, although elevated oil prices and uncertainty over central bank policy continue to keep markets on edge. The U.S. 10-year Treasury yield held around 4.78% as Brent traded above $97 a barrel amid renewed U.S.-Iran tensions, with rising energy costs reinforcing inflation concerns and expectations for tighter monetary policy. Investors are keeping an eye on the yen this morning, which strengthened as much as 1.5% on expectations the Bank of Japan will raise rates by 25 bps later this month and that there will be further currency intervention. With earnings season done, attention is shifting to tomorrow’s U.S. employment report, which could determine whether solid economic conditions mixed with persistent inflation is reason enough for the Fed to hike this month.
No shortage of concerns. Strategists expect geopolitical and policy risks to rise ahead of the November U.S. midterms, with Iran, Canada, Russia and potentially the EU having incentives or opportunities to increase pressure on the Trump administration. Iran represents the most significant near-term market risk, while Canada’s Sept. 8 tariff retaliation and possible further U.S. measures could add to trade uncertainty. At the same time, Xi Jinping’s visit to the U.S. later this month is expected to result in an extension of the U.S.-China trade truce, reducing a major tariff risk and potentially supporting Chinese technology shares, the yuan, U.S. agriculture, and semiconductor companies. Europe is another major concern as governments increase borrowing while the ECB tightens policy, with many cautious on France given its roughly 5% deficit, 117% debt-to-GDP ratio, and growing political uncertainty ahead of the 2027 election, which could drive French sovereign spreads wider.
That’s quite a list, maybe this one too. The global bond selloff may be the start of a longer-term shift toward higher borrowing costs, driven by heavy government issuance, growing inflation pressures, and expectations that central banks will keep policy tighter for longer. Huge AI-related financing needs are adding to the competition for capital and potentially pushing yields higher. Governments with large deficits and debt burdens are especially vulnerable as maturing debt is refinanced at higher rates, with France seen as one of the biggest risks as well as Japan given that government debt is above 200% of GDP. Concerns are growing around companies that are highly leveraged, including small caps, commercial real estate, and private-equity-backed companies. Consumers are also likely to see an uneven impact as higher mortgage and loan rates squeeze lower-income households. This isn’t just a fixed income issue, with rising yields also creating a growing valuation headwind for equities by making bonds more competitive and reducing the present value of future earnings.
Another one? The Bank of Japan is leaning toward raising its policy rate by 25 basis points to 1.25% at its September meeting as policymakers respond to growing inflation risks from services prices, higher energy costs, and yen weakness. A larger 50 bps move seems unlikely because economic conditions remain consistent with the BOJ’s outlook, although officials are leaving open the possibility of accelerating the pace of tightening if inflation proves stronger than expected. Markets are already heavily positioned for a September hike, meaning a decision to hold could trigger more volatility. The BOJ is also facing external pressure after Scott Bessent advocated higher Japanese rates and the U.S. joined Japan in supporting the yen through coordinated intervention in July.
Canada’s new counter-tariffs are designed to protect domestic producers but could also inflict economic and political pressure on U.S. states that depend on Canadian trade. Michigan appears the most exposed because of its integrated automotive supply chain and broader dependence on Canada, which takes 38% of the state’s exports, while Ohio, Indiana, and Pennsylvania face significant exposure through steel, autos, and manufacturing. Agricultural and industrial states are also vulnerable, as Iowa sends 38% of its roughly $2.5 bln in annual farm and construction-equipment exports to Canada, while dairy-producing states like Michigan, Wisconsin, and Vermont are at risk due to high Canadian demand. Appliance tariffs could also impact Tennessee, Kentucky, and Ohio, where Canada accounts for a large share of industry exports.
Old school maps…kinda. MapQuest (it still exists!) has surged in popularity after the mapping service said it would not rename Lake Ontario to “Lake America” after President Trump signed an executive order changing its name. The company has received hundreds of thousands of downloads after it announced last Thursday that the name Lake Ontario would remain on its apps, despite Trump directing the Interior Department to update the lake’s name in the Geographic Names Information System (GNIS). The app is now the top free app in the Apple App Store, with ChatGPT pushed to the second-most downloaded. In Canada, the app reached number two overall over the weekend. The app’s usage also jumped to roughly 50 times its normal level, according to MapQuest.
Diversion: When you missed the chopstick lesson 
