This is a short article about the K-shaped economy, driven by persistently high inflation and exacerbated by the errant "One, Big Beautiful Bill".

The FOMC fell in line and served up an expected "hawkish rate cut". However, both Oracle and Broadcom – key players in the A.I. boom – saw their shares sink for different reasons, with the common denominator being A.I. valuation concerns. Yields were higher and gold rallied.

US Treasury yields are stuck, with the 10y UST yielding just north of 4%, What might be coming next? This article presents the factors that will influence the next gap up or down in UST yields.

Stocks liked the economic data that was released this week, even though it was still light on official data as the US government recovers from its recent closure. Bond investors less happy, as yields gapped higher across the curve. All eyes are now on next week's FOMC meeting, where a 25bps reduction in the Fed Funds rate looks fully priced in.

A.I. featured large again last week, mainly because it was the key talking point as five of the Mag 7 companies released earnings with mixed results. The FOMC decision also went as expected, although Mr Powell threw some caution into the wind. Global stock markets took it in stride, but the US Treasury market was less happy as yields rose across the curve. Gold was weaker again, and the US Dollar strengthened.

After drifting lower much of the week, US stocks and bonds got a significant uplift on Friday from Fed Chairman Powell's comments at the Jackson Hole Economic Symposium.

It is fashionable to espouse the end of the US dollar as the leading global reserve currency, but this will not occur anytime soon.

Don't look to fundamentals to explain equity prices today – look to attitudes embedded in acronyms. And don't forget the super-easy Fed!

The bond market looks to be doing the Fed's dirty work, sending short term yields to post-pandemic highs. Is the Fed being too methodical?