WS #7723

The dominant market narrative remains the surge in bond yields, with the 30-year Treasury yield hitting a 19-year high of 5.18%, pressuring technology and growth stocks. This is corroborated by multiple sources (Seeking Alpha, Alpaca News) and is driving a selloff in data center and AI-related names. The Iran conflict continues to fuel inflation fears, with oil prices elevated and geopolitical tensions escalating—Israeli attacks on Lebanon killed 22 in 24 hours, and Russia conducted nuclear drills amid Ukraine drone strikes. However, a potential counter-signal emerged: Trump suggested he will let incoming Fed chair Kevin Warsh 'do what he wants to do' on interest rates, which could ease rate hike fears. Additionally, Anthropic hired OpenAI co-founder Andrej Karpathy, signaling intensifying AI talent wars. The Trump endorsement of Ken Paxton in the Texas Senate runoff is a political development with limited direct market impact but could affect defense/energy policy expectations. The bond yield surge is the primary signal, with second-order effects on tech (bearish), financials (bullish for banks), and REITs (bearish). The narrative is ESCALATING on bond yields and Iran conflict, but the Fed comment is a potential DE-ESCALATION signal for rate fears.