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US stocks are bouncing back.

Stocks rebound | US stocks had their best day since 2022. Equities staged a solid rebound, and bonds fell after the latest US labor market reading, which helped ease fears about a more pronounced slowdown in the world’s largest economy. All major groups in the S&P 500 advanced, as data showed US initial jobless claims tumbled the most in nearly a year. As economic angst subsided, Treasuries dropped across the curve — with the selloff led by shorter maturities.

Bumps ahead | Daniel Ivascyn, the world’s biggest active bond fund manager, says he’s just about ready to start adding to Treasury positions again. Ivascyn, who manages the $158.3 billion Pimco Income Fund, trimmed some holdings as US bonds rallied sharply in recent weeks — while remaining long the market — and is now looking for opportunities to buy some back after yields ground higher the last few days. Renewed market turbulence combined with the softer economic data and crowded trades — all against a hotter political backdrop — make bonds a good defensive play heading into the rest of the year, Ivascyn said.

Up & coming | Chinese price data will likely be a reflection of sluggish demand, according to Bloomberg Economics. Consumer prices probably rose just 0.3% from a year ago, according to the median estimate of economists surveyed by Bloomberg. Producer prices, on the other hand, probably fell 1% from a year earlier. That deeper deflation in factory-gate prices is a reversal of the previous trend. Producer prices have been falling for almost two years, but recently, the declines have been slowing. The deflation is partly a reflection of lower commodity prices, including coal, oil, and iron ore.

Illustration: Patrick Leger | Bloomberg

Private credit fund's troubled debt spook analysis

At a little-known New York firm that helped pioneer the private credit boom, a surge in troubled borrowers is a stark reminder of risks to investors in Wall Street’s hottest industry when money is no longer cheap. Concerns about its finances are mounting and add to worries that private credit’s “golden age” has come and gone. (Bloomberg | Jul 7)

A ‘Textbook Turnaround Tuesday’ doesn't mean meltdown is over

It’s an old cliché, but the phenomenon known as Turnaround Tuesday — when markets rebound from a selloff at the start of the week — is an opportunity that shows up time and again in the data. The bad news is that such recoveries don’t guarantee a bottom has been reached. Investor psychology during a rout tends to begin with jitters on Thursday, hedging on Friday, and all-out selling on Monday. (Bloomberg via Yahoo!)

Treasury rally ignites debate on how fast Fed needs to cut

A major rally in the $27 trillion Treasury market is laying bare anxiety that the US economy is sliding into recession and the Federal Reserve will need to start aggressively cutting interest rates. US government debt surged Monday, pushing two-year yields — which are sensitive to monetary policy — below that of the 10-year note for the first time in two years. That brief normalization offered a vivid indication that growth concerns are fueling expectations for super-sized rate reductions starting in September or sooner. (Bloomberg Markets | Aug 6)

Goldman CEO Solomon says Fed will forgo emergency cut despite weak jobs data

Goldman Sachs Group Inc. Chief Executive Officer David Solomon predicted the Federal Reserve will avoid taking emergency steps to lower borrowing costs as he sees the US economy skirting a recession. “I don’t expect that you’ll see anything before September,” Solomon said in an interview for an upcoming episode of The David Rubenstein Show: Peer to Peer Conversations. “The economy will chug along and we probably won’t see a recession.” (Bloomberg Wealth - Finance | Aug 6)

Asset leaders fret over lost gains as investor cash piles up on sidelines

Top asset managers are struggling with investor reluctance to embrace risk and put money into the markets, as interest rates and yields on cash savings remain at their highest level in more than a decade. Investors have been stubbornly sitting in cash, hurting bottom lines for asset managers and forgoing gains on more than $1.5tn during a record bull run that until recently pushed markets to all-time highs. Several factors are driving the caution. (Financial Times - free link | Aug 5) see also Black Swan hedging breaks out on Wall Street after Manic Monday (Reuters | Aug 5) and Aftershocks of carry trade at heart of market rout could still have reverberations (Reuters | Aug 5)

Easterly: Potential Chinese cyberattack could unfold like CrowdStrike error

The faulty CrowdStrike Falcon update that caused millions of computers around the world to malfunction was “a useful exercise” for understanding what Chinese-linked cyber operations focused on sensitive US networks could accomplish, a top US cybersecurity official said Wednesday. Jen Easterly, the director of the Cybersecurity and Infrastructure Security Agency, told a large crowd at the annual Black Hat cybersecurity conference that the fallout of the CrowdStrike situation — which disrupted medical care, canceled flights, and shuttered retailers — showed what effects Chinese-linked activity tracked as Volt Typhoon could generate. 

— Cyberscoop

Ransomware is multiplying

So far this year, 21 new ransomware groups have surfaced, according to research from cybersecurity company Rapid7. That brings to 68 the number of such gangs active since January, the company said. One to watch out for is FSociety, which attacks the healthcare industry. These gangs operate alongside seasoned gangs like LockBit, which continues to operate despite law enforcement takedown Operation Cronos.

— InfoSecurity

Malware undoes security patches on Microsoft Windows systems

Hackers can exploit two zero-day bugs by using malware that rolls back patches that have been applied to Windows 10, Windows 11, and Windows Server systems, according to a cyber researcher who presented findings at the BlackHat security conference in Las Vegas this week. Microsoft has advised steps to take to guard against such "downgrade attacks."

— Bleeping Computer

Spectators view the Eiffel Tower, and Olympic rings along the Seine River in Paris. Photo: Christian Petersen | Getty Images

Paris Olympics is Summer Davos for Wall Street executives

Forget the Hamptons, Nantucket, or Capri — Wall Street is spending part of the summer at the Paris Olympics.

— Bloomberg Wealth

Exactly how much to tip in your everyday life

These days in the US, tipping is more in-your-face than it’s ever been. Thanks to the prevalence of checkout screens, you might even find yourself presented with gratuity prompts when checking out at a mini-mart or paying a locksmith. But etiquette experts say that doesn’t mean you must throw extra cash at everyone you transact with. For example, you probably don’t need to tip at a fast-food restaurant, and that drip coffee that takes a few seconds to pour doesn’t require any gratuity.

— The Wall Street Journal

Google loses massive antitrust case over search, will appeal ruling

Google will appeal a US District Court judge’s opinion on Monday, which found that the technology giant acted illegally to maintain a monopoly in online search. The decision is a major defeat for Google that could alter how it does business and even change the structure of the internet as we know it, should the decision stand.

— The Verge