Overnight US stocks | Global bond yields soar, S&P 500 index declines for three consecutive days, and SanDisk (SNDK.US) falls 9%.

On Tuesday, the three major indices fell. U.S. President Trump stated that the U.S. has not engaged in any negotiations with Iran and has no plans to initiate new talks. Trump's statement on social media suddenly contradicted his earlier claims that the U.S. and Iran were engaged in active negotiations, despite repeated assertions from Iran that no such negotiations were taking place. The yield on U.S. 30-year treasuries reached a 19-year high on Tuesday. Additionally, Japan's 10-year treasury yield hit a 30-year high. Germany's 30-year treasury yield reached its highest level since 2011, while France's 30-year treasury yield hit its highest point since 2008. U.S. StocksAt the close, the Dow fell 116.38 points, a decline of 0.22%, to 53343.39; the S&P 500 dropped 53.30 points, a decrease of 0.69%, to 7691.76, marking a third consecutive day of losses; the Nasdaq fell 355.20 points, down 1.33%, to 26289.71. SanDisk (SNDK.US) dropped 9%, Western Digital Corporation (WDC.US) fell 7%, Micron Technology, Inc. (MU.US) declined 7%, SK Hynix (SKHY.US) plummeted over 9%, and NVIDIA Corporation (NVDA.US) was down 2%. The Nasdaq Golden Dragon China Index closed down 1%, while Alibaba Group Holding Limited Sponsored ADR (BABA.US) rose 2.8%. European StocksThe German DAX30 index fell 238.91 points, a decline of 0.91%, to 26130.75; the UK FTSE 100 index rose 5.09 points, an increase of 0.05%, to 10725.39; the French CAC40 index fell 70.24 points, a drop of 0.82%, to 8509.36; the Euro Stoxx 50 index dropped 61.60 points, declining by 0.94%, to 6468.85; Spains IBEX35 index fell 52.08 points, a decline of 0.26%, to 19929.82; and Italys FTSE MIB index dropped 554.98 points, a decrease of 1.04%, to 53032.00. Asian MarketsThe Nikkei 225 index fell by 2.54%, and South Korea's KOSPI index fell by 1.55%. Dollar IndexThe dollar index, which measures the dollar against six major currencies, rose 0.02%, closing at 99.657. As of the New York market close, 1 euro traded at 1.1576 dollars, up from 1.1572 dollars the previous trading day; 1 pound exchanged for 1.3534 dollars, down from 1.3538 dollars the previous day. 1 dollar was worth 159.60 yen, up from 159.59 yen the previous day; 1 dollar equaled 0.8125 Swiss francs, up from 0.8115 francs; 1 dollar exchanged for 1.3906 Canadian dollars, up from 1.3877 dollars; and 1 dollar was worth 9.5395 Swedish kronor, up from 9.5193 kronor the previous day. CryptocurrencyBitcoin briefly surpassed $65,000 and was trading at $64,573.28 at the time of publication; Ethereum rose 0.43% to $1,912.66. Crude OilOil prices reached a three-week high. The WTI for September delivery rose by 0.5%, settling at $84.94 per barrel; Brent for October delivery rose by 0.2%, settling at $91.02 per barrel. Precious MetalsSpot gold fell to $4,334.81; spot silver was quoted at $63.343. Macroeconomic News Traders are hedging against the risk of the Federal Reserve turning to rate cuts in 2027. Bond traders are adjusting their strategies again. Following a series of data indicating that the Fed is unlikely to raise rates for the remainder of the year, the options market is attempting to hedge against the risk of a Fed pivot to rate cuts in 2027. This dovish bet contradicts recent trends in the U.S. treasury market: long-term bond yields have risen to multi-year highs as the Fed's stance may allow inflation rates to stay above target for a longer time. Options traders, closely tied to the Feds policy path, are turning their focus to signs of economic weakness in the U.S., suggesting this could trigger a market reversal. This movement seems to coincide with last weeks data indicating a slowdown in inflation and consumer demand in July, cooling market expectations for a rate hike at the Fed's September meeting. Participants in the options market quickly began adjusting positions, reducing the amount of rate hikes priced into the swap market for the coming months. Some are even considering hedging against the potential for rate cuts mid-next year. Concerns about rate hikes have eased, said Jeff Shur, head of interest rates at Constitution Capital, noting that recent positions betting on this outcome are being unwound. Mizuho expects the Bank of Japan to accelerate its rate hikes. Mizuho Global Markets co-head Ken Usui also stated that the BOJ could potentially hike rates again as early as September, and may increase the frequency of policy adjustments from the current roughly every six months to once every three months. Usui indicated that the weak yen and inflationary pressures are prompting the BOJ to act more rapidly, and two hikes before the end of the year to raise the policy rate to 1.5% cannot be ruled out. Currently, the market sees a 78% probability of a rate hike by the BOJ on September 18. He stated that Mizuho will continue to take a conservative approach to Japanese government bond investments, focusing only on inflation-linked bonds and short-term treasuries. Despite the 10-year Japanese bond yield having risen to a 30-year high, it remains below Japans nominal economic growth rate of about 4%. Usui believes that global structural changes and investment growth may further push Japan's neutral interest rate higher, while inflation risks still tilt upward. Regarding the yen, he believes the joint intervention by the U.S. and Japan reflects both sides' desire to prevent further depreciation of the yen; however, the yen's weakness partly stems from Japan's loose monetary policy. He predicts that Japan's economy is undergoing a significant transformation not seen in decades, that Japanese stocks remain attractive, but financial market volatility may increase. Several U.S. states tighten restrictions on data center construction amid regulatory pressure on AI expansion. Pennsylvania Governor Josh Shapiro issued an executive order imposing strict limits on the construction of data centers, requiring projects to obtain local government approval before applying for state-level permits, and to comply with water conservation standards while covering additional power costs and addressing their own power supply issues. Shapiro noted an influx of data center projects into Pennsylvania, some of which developers are ignoring local community interests. With rapid AI investment growth, several U.S. states are beginning to restrict the expansion of data centers to address concerns over electricity, environmental impact, and community pressures. New York State has pushed for a moratorium on environmental permits for large data centers for up to a year; even Texas Governor Greg Abbott, a long-time supporter of data centers, has paused the approval of certain new projects and initiated reviews. U.S.-Canada tariff negotiations have reached an impasse, and hopes for an agreement are gradually diminishing. According to informed sources, as a new round of tariffs is set to take effect on Wednesday, the Trump administration is lowering public expectations for a last-minute agreement between the U.S. and Canada to avoid new tariffs. The sources indicated that the private signals being conveyed from the U.S. suggest that the likelihood of reaching an agreement on Tuesday is 50-50 or lower. Both parties are facing a midnight deadline, at which point billions of dollars' worth of Canadian goods would be subject to a 50% tariff. It remains unclear whether these signals accurately reflect the progress of negotiations or if the U.S. is attempting to gain leverage in the talks. Trump is known for making last-minute demands of trade partners. The sources said Trump is expected to speak again with Canadian Prime Minister Carney on Tuesday, having already had a telephone conversation on Monday. AI holdings have become too crowded, and JPMorgan warns that both the stock and bond markets face concentrated risks. Gabriela Santos of JPMorgan Asset Management warned that the concentration risk of the AI factor has spread from the stock market to the fixed income market. While the investment logic for the AI supercycle still holds, investors need to remain increasingly cautious. Santos stated, You can be very optimistic about all things related to AI, but at the same time, you need to be very careful in constructing your portfolio. She noted that the adjustment in tech stocks in July highlighted the risks of overcrowded positions. During that month, the Philadelphia Semiconductor Index plummeted by 21%, marking its largest monthly decline since 2008; the Kospi Index also fell 22%. Santos remarked that this market turmoil underscores the importance of controlling position sizes, using leverage judiciously, and diversifying beyond AI. She added, The issue becomes complicated here. Because you can no longer consider only traditional risk factors, sectors, or regions, or even just asset classes, as the AI tentacles are now reaching everywhere. Stock News 29 U.S. states accuse Meta of profiting from minors, trial officially begins. An attorney from the California Attorney Generals office told the jury in court that for years, Meta Platforms (META.US) has deceived the public, using its technology to target child users on Facebook and Instagram with the goal of turning them into addicted users to increase ad revenue. In this landmark trial held in a federal court in Oakland, California, the attorney stated in the opening arguments that the 29 states suing Meta are seeking to hold the company accountable for misleading children and their parents about safety risks and privacy violations. Apple Inc. reduces App Store fees in Europe to resolve disputes with the EU. Apple Inc. (AAPL.US) announced on Tuesday that it will adjust fees charged to app developers based on installation numbers, changing to a 5% commission on digital transactions for apps distributed through channels other than the App Store, in compliance with the EU's Digital Markets Act (DMA). Apple Inc. emphasized, These adjustments address disparities between Apple Inc. and the European Commission regarding business terms and alternative distribution methods. Additionally, applying a single set of business terms for all developers distributing apps in the EU also simplifies the rules. Developers can sign the new terms starting today, with related adjustments taking effect on October 1. Furthermore, Apple Inc. stated that apps using alternative payment methods will incur a commission of 20%, although under its small business program, the commission rate can be as low as 10%. Major Ratings UBS Group AG: Raised the target price for Snowflake (SNOW.US) from $370 to $425.