CWS Market Review – August 18, 2026

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Is the Bond Market Reaching Its Breaking Point?

The stock markets got roughed up today. The S&P 500 closed below 7,700 for the first time in two weeks, and the Nasdaq was down nearly twice as much as the S&P 500.

But the drama wasn’t so much in the stock market as it was in the bond market. At one point today, the yield on the 30-year got to 5.3%. That’s the highest it’s been in 19 years. The 10-year yield is at its highest since 2025.

What appears to be happening is that bonds are falling so yields are rising, but the Fed is backing away from higher rates. There’s a disconnect, or maybe the market is challenging the Fed to reverse course.

It’s not just here – this appears to be a global bond market rout. Yields are higher in Europe and Japan. Germany floated some 30-year bonds today at the highest yield in 15 years.

Countries around the world are shifting their borrowing to the short end of the yield curve on hopes that rates will soon come down. One issue is that yields may not come down.

What’s driving all this? One key culprit is the tech sector. The AI companies have been turning to the bond market to raise tons of cash to finance their new projects. There’s a point in any bubble where a company has to wonder if it should work to build out new facilities or just write a check and buy out some emerging company.

As is often the case, most investment bubbles aren’t bubbles in the actual sector. Instead, they’re credit bubbles. How long will the bubble last? That’s easy. It will last as long as banks are willing to fund it. Right now, the AI sector borrowing has to compete with heavy government borrowing from … well, almost everywhere.

My friend Gary Alexander has some remarkable stats. Consider that in July 2026, Uncle Sam ran up a larger monthly deficit that any yearly deficit before 2008. Last month, the government took in $1,000 per person in tax revenue, but it spent $2,300 per person.

The day before the U.S. bombed Iran, the 10-year Treasury yield was at 3.95%. Now it’s at 4.75%. The Congressional Budget Office now projects that the deficit for this year will be $2.1 trillion. It would be rude of me to point out that 25 years ago, the CBO thought the entire debt would be wiped out by 2011. Now the CBO sees the debt reaching $40 trillion sometime next month.

A 60-day truce between the United States and Iran ended yesterday but we don’t seem to be any closer to a diplomatic resolution. President Trump posted an image of the Strait of Hormuz and called it a “New U.S. Territory.” There’s a saying in the field on national security that “the enemy gets a vote.” The same can be said for the bond market.

Today’s market drop is weighing heavily on many tech stocks, especially semiconductor stocks. For example, Micron (MU) and Intel (INTC) were both down over 7%.

This is a continuation of the trend that started nearly three months ago of conservative stocks outperforming more aggressive stocks. The Nasdaq was down more than 1% today, nearly twice the loss of the S&P 500.

I’m glad to see that many of our Buy List stocks are holding up well. In fact, we own the two top-performing stocks in the S&P 100 today, Adobe (ADBE) and Intuit (INTU). This is an interesting time for us because Intuit is scheduled to report its fiscal Q4 earnings on August 25. The stock has been rallying back over the last few weeks.

Intuit is the company behind TurboTax and QuickBooks and Credit Karma. In its last earnings report in May, Intuit said its global revenues rose 10% to $8.6 billion, and its earnings rose 10% to $12.80 per share. Wall Street had been expecting earnings of $12.57 per share. Inuit also increased its dividend by 15% to $1.20 per share.

For its Q4, which ended on July 31, Inuit expects earnings between $3.56 and $3.62 per share. They should easily beat that. For the full year, Intuit sees earnings coming in between $23.80 and $23.85 per share. That’s an increase from the previous range of $22.98 to $23.18 per share. I’m expecting a good report from Intuit.

The economy has had a run of sub-par news recently. This month’s jobs report wasn’t so hot. The inflation report came in low. Last Friday’s retail sales report was a big miss. Wall Street had been expecting a gain of 0.1%. Instead, it was a loss of 0.6%. If we look at the numbers excluding autos, then it’s still negative. The “core” retail sales number was expected to be up by 0.3%. Instead, it was down by 0.4%.

This morning, the Federal Reserve said that industrial production rose by 0.2% in July. That followed a 0.3% increase for June. For Q2, manufacturing rose at the fastest pace in five years.

I wouldn’t say that a Fed rate hike next month is off the table, but it’s getting there. Futures traders now place the odds of a September rate hike at 35%. As a reminder, in late July, the odds for a hike in September were close to 100%. Not anymore. For October, it’s at 47%. In fact, there’s a reasonable chance that the Fed won’t touch rates for the rest of this year.

Soon You’ll Be Able to Trade the Nasdaq 23 Hours a Day

Good news for investors. This week, the Nasdaq said that in December it will inaugurate overnight trading. Beginning on December 6, the Nasdaq will trade 23 hours a day.

This move still needs approval from the SEC, but if it works, that means that the market will be open almost nonstop from Sunday evening to Friday evening. The Nasdaq already has trading in after-hours markets but that’s limited to institutional investors. With the new proposal, everyone gets a chance.

I think the other exchanges will follow suit. The issue with market hours is that if some big event breaks out when markets are closed, that adds huge pressure on the markets once we reach the opening bell. Nonstop trading should hopefully reduce some of those fears.

The new schedule will look like this:

• Night Session: 9:00 pm – 4:00 am ET (Sunday – Thursday nights)
• Pre-Market & Regular Hours: Existing sessions from 4:00 am to 8:00 pm ET remain unchanged.
• Daily Maintenance Break: A one-hour pause from 8:00 p.m. to 9:00 p.m. ET for system upkeep and trade clearing.
• Weekly Span: From 9:00 p.m. ET Sunday to 8:00 p.m. ET Friday.

There will be other restrictions. For example, certain order types (like market orders and specific opening/closing instructions) will not be supported overnight. Also, any unexecuted overnight orders left over at 4:00 am will be canceled. Static price bands will reject orders submitted outside specified boundaries.

This is very good news for investors, and it probably should have come a long time ago.

That’s all for now. Tomorrow, the Fed will release the minutes from its last meeting. This could be interesting. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on August 18th, 2026 at 6:16 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.