What in the FOMC just happened… or was it something else?

Microsoft found the sweet spot… Meta found a sore spot.

I’ll defend the AAPL that fell far from the tree.

Careful what you wish for.

It was the bond market. Markets actually rallied coming out of the press conference. It was only as the 30Y Treasury pushed above a 20-year high that stocks reversed.

Whenever yields get out of control, it is a sign that something is seriously wrong.

Hold on. What is "out of control"? What is "seriously wrong"?

Out of control refers to the speed of the move more than the absolute level.

What's wrong depends on the context. In this case, it appears to be that the Federal Reserve isn't doing enough to address the upside risk to inflation.

The last time long-yields were this high was the GFC. Any time that acronym is invoked, it causes a bit of a panic. However, I do not see this as a harbinger of the next financial crisis. Sure, a rapid move in yields can break something in the real economy, but I don't think that is a concern at the moment.

Rather, it's another "be careful what you wish for" moment. Remember Powell's "higher for longer." While it was in reference to short-term rates (Fed Funds), it appears it may be coming to fruition on the long end. In today's market, there are two potential material ramifications:

For years, the path of yields was known: down or flat. That made investing in stocks much easier. No legitimate competition for investable capital from the bond market meant more money for stocks. This backdrop is a big reason stocks have gotten more expensive over time (valuation). If yields continue on their current trajectory, then the paradigm of TINA - there is no alternative (to stocks) - is in jeopardy.

We have reached the stage of the AI build-out where many of the hyperscalers have decided they need to tap the debt market (sell bonds) to continue building.

With yields this high, borrowing money is much more expensive — a major limiting factor on the amount of bonds a hyperscaler is willing to sell. Another way of putting it: yields this high destroy demand. It is the same logic behind hiking rates on the short end (Fed Funds). If this thesis picks up steam, it has the power to send the leadership groups – semiconductors, select industrials, and financials – another leg lower.

The market is in a weird place.

It's grappling with a major shift in Fed communication, one that has left it with less information on the most important financial institution on the planet. This could be the market testing the new Fed Chair — it has a nasty track record of doing that… as you can see from the above.

There's also a war going on, putting a put (a floor) on oil prices, which is clearly contributing to what we’re experiencing in yields. 

If that wasn’t enough, private companies are now spending at unprecedented levels: increased risk requires higher yields to compensate for that risk. 

These influences are likely all contributing to the velocity of yields. 

There is a very real world – I hope it is this one – where any of these negative factors are neutralized, and we don't even remember this small yield scare. As such, I feel it premature to call the TINA paradigm over or declare this an enduring issue for equity leadership.

Speaking of weird places to be, stocks and bonds near historic highs at the same time are the definition of it. The absolute level isn't as important as the velocity. That is true… but in this case, both aren't great.

One needs to give. It begets caution.

Traders and investors, this is your new favorite chart. I know the 30Y Treasury was the catalyst — and deserves attention — but the US10Y is truly the benchmark.

Traders: The algorithms and hedgies trading against you are most likely referencing the 10Y.

Investors: If this yield breaks down or cools off, the market becomes a lot safer to put money into.

Don't trust headlines or stock price movement; trust the yields. Until this backdrop changes — and it will change (hopefully for the better) — I have managed this risk by cutting size in half: new trades and any long-term purchases are half the typical size.

They delivered growth on par with Alphabet (relative to expectations) but with the restraint the market has been screaming for.

They answered a lot of questions.

On the growth side, Azure — their cloud business, the most important segment — handily beat the whisper with a strong guide to match. Copilot has been a major point of skepticism over the past 2-3 quarters. In fact, I have long called it "no-pilot." But after a 50% increase in paid seats… that term — and those concerns — may need to be put to rest.

However, it was the cost side that set MSFT apart from Alphabet, which put up growth just as — if not more — impressive. MSFT heard the stock market scream — through the falling knife stock chart — to get some religion on AI spending. MSFT offered to hold steady for the rest of the year, re-evaluate in 2027, and alleviate concerns that MSFT would go free-cash-flow negative. This appears to have been the perfect remedy, catalyzing a 15%+ move in the two days following the report.

Not every hyperscaler can afford to take the risk associated with spending less — like Amazon with AWS, who salvaged their quarter by providing a very comprehensive path to profitability — but I think Meta certainly can.

They're a Mark Zuckerberg away from reversing course, but it is a falling knife until further notice. If $525 fails, the next major point of support is the 200W SMA at $475. And… I would expect that retest. The quarter itself wasn't good and the commentary that followed offered no reason to get excited. The CEO may need to see the stock get killed the way it did from 2021 through most of 2022 before finding the religion that MSFT did.

Going long in this Insight Edge. Apple's quarter was fine. The Q3 guidance – which is the reason everyone is citing for the decline – was weak for the right reason: can't get enough chips to make enough phones. The demand is there, which means consumers – and the telecoms subsidizing them – have decided to eat the price. If I had to bet on any company finding additional supply, it would be Apple. Personally, I view this as the new CEO setting up a UPOD: underpromise, overdeliver.

From a technical perspective, you can remain constructive. Broadly speaking, I wouldn't trust any rally until the 50d SMA (blue line) is recaptured for a few sessions.

As an investor, the first place I would look is after a successful retest of the 100d SMA (purple line), which coincides with a previous high made in December '25 at ~$290. This level also aligns roughly with the 20-week SMA (red dotted).

As a trader, especially given the yield market, I see an opportunity for an extremely short-term trade. In this case, I would buy above the 50d SMA – and use it as a stop loss – then close at a retest of the 5d EMA (black line). That 5d EMA is going to be moving down quickly. To execute this, you need to be able to reference it each day.