U.S. consumers hit the brakes in July, but the Treasury market did not relax. Retail sales fell 0.6% from the previous month, while the University of Michigan consumer sentiment index dropped from 55.2 to 51.0. The U.S. 10-year Treasury yield, however, rose to 4.68% and Brent climbed to $88.52. Weak consumer data did not translate into relief in Treasury yields.

The reason is not so much conflicting data as several risks operating at once. Spending and confidence fell, but one-year inflation expectations rose to 4.3%; the war with Iran and uncertainty around the Strait of Hormuz lifted oil. Markets priced growth concern and inflation pressure at the same time. The combination weakened technology stocks, while small caps ended the day higher.

Key takeaways

  • U.S. retail and food-services sales fell to $763.6 billion in July. They declined 0.6% from the previous month but rose 5.0% from a year earlier. Because the data are not adjusted for price changes, they do not by themselves measure real consumption volumes.
  • The University of Michigan's preliminary August consumer sentiment index fell to 51.0. One-year inflation expectations rose from 4.2% to 4.3%, while long-term expectations held at 3.3%. Consumers are more pessimistic and are no more comfortable about inflation.
  • On the U.S. Treasury curve, the 10-year yield rose 5 basis points in one day to 4.68%, while the 30-year yield gained 4 basis points to 5.25%. Brent's 1.7% rise kept energy risk alive despite weak demand data. Growth is not the only source of pressure on Treasury yields.

What happened?

  • The S&P 500 fell 0.17% on Friday to close at 7,785.76, while the Nasdaq Composite declined 0.28% to 26,729.16. The Dow Jones lost 0.20%. The Russell 2000, by contrast, rose 0.51% and IWM, which tracks smaller U.S. companies, gained 0.53%. The pullback did not become a broad flight from risk.
  • The damage was more pronounced within technology. QQQ, which tracks the Nasdaq 100, fell 0.15%, the semiconductor ETF SMH lost 0.22%, and the software-company ETF IGV dropped 2.00%. Broadcom ($AVGO) fell 5.92%. Nvidia was flat, while Apple rose 0.21%. Differences in expectations and valuations widened even within technology.
  • Bora Özkent (@boraozkent) argues that the previous session's software rally was accelerated by news about a single company, but that pressure from artificial intelligence on existing software business models has not ended. IGV's 2% fall on Friday supports this cautious view, although one day's reversal is not evidence of a lasting direction for the sector.
  • Yahoo Finance (@YahooFinance) and CNBC (@CNBC) highlighted the divergence within technology and the growth-rate dilemma created by the consumer data.
  • In Turkey, the BIST 100 ended Friday up 0.28% at 14,172.26. USD/TRY was at 47.8820 on Saturday morning. Local equities were positive, but pressure from foreign interest rates and oil remains important with the exchange rate close to the 48.00 threshold.
  • Gold was at $4,376.40 in trading after Friday's close, while the gold ETF GLD stood at $401.45. Bitcoin was near $63,061, Ethereum at $1,883 and XRP at $1.004.

Market levels

Global risk and rates

  • Brent at $88.52: support at $87, first resistance at $90 and the risk threshold at $95. As long as Brent remains below $90, energy pressure stays contained; a break below $87 would bring renewed relief, while a move above $95 would increase inflation and transportation risks.
  • U.S. 10-year Treasury yield at 4.68%: support and the directional pivot at 4.65%, first resistance at 4.70% and the main risk threshold at 4.85%. A move above 4.70% would tighten technology valuations again; a break below 4.65% would reverse Friday's rise.

US indices

  • S&P 500 at 7,785.76: support at 7,750, the first threshold at 7,800 and resistance at 7,850. The structure around record levels remains intact while 7,750 holds; reclaiming 7,800 would strengthen another attempt at the high.
  • Nasdaq 100 ETF QQQ at $731.05: support at $725, first resistance at $734.39 and the next threshold at $740. Technology leadership remains intact above $725; fresh momentum is not confirmed until $734.39 is cleared.
  • Small-cap U.S. ETF IWM at $305.09: a support zone at $302-$303, the directional pivot at $305 and resistance at $310. Holding above $305 would broaden market participation; a break below $302 would erase Friday's positive divergence.

Themes and stocks

  • Semiconductor ETF SMH at $587.78: support at $585, first resistance at $590.15 and the main threshold at $600. Holding above $585 preserves the sector structure; a strong continuation signal does not emerge until $600 is cleared.
  • Software ETF IGV at $104.18: support at $103.70, first resistance at $106.30 and a second threshold at $108. A break below $103.70 would give Friday's selling more room; reclaiming $106.30 would increase the chance that the loss proves temporary.
  • Nvidia at $225.16: a support zone at $224-$225, resistance at $227.47 and lower support at $213. The stock is moving sideways above support; a break above $227.47 would strengthen semiconductor leadership, while a move below $224 would increase the pressure.
  • Broadcom at $393.02: Friday's low and first support at $388.50, the recovery threshold at $400 and a resistance zone at $412-$418. As long as the stock remains below $400, the repair after its sharp decline is not complete.
  • SpaceX at $139.80: support at $135.50 and $134.88, with resistance at $143.92-$145. SPCX is searching for direction around $139.80; a move above $145 would broaden the recovery, while a break below $134.88 would weaken the previous breakout.
  • Rocket Lab at $80.23: support referenced by Tunç Şatıroğlu at roughly $76.74, first resistance at $82.43 and a second threshold at $84.17. RKLB's structure remains intact while it holds above $76.74; clearing $82.43 would bring the upper band back into view.

Crypto and precious metals

  • Bitcoin near $63,061: support at $62,000, with resistance at $64,400 and $65,800. Holding above $62,000 limits the loss; the recovery is not complete until $64,400 is reclaimed.
  • Ethereum near $1,883: support at $1,850 and resistance at $1,925. XRP near $1.004: support at $1.00 and resistance at $1.04-$1.05. Both assets are close to support; the weekend move remains unconfirmed until the upper thresholds are cleared.
  • Spot gold at $4,376.40 and the gold ETF GLD at $401.45: support at $4,350 for spot and at $400 and $398 for the ETF; resistance at $4,400 for spot and at $403.31 and $405 for the ETF. The spot and ETF scales must be kept separate; the recovery remains intact while GLD holds above $400.
  • Silver ETF SLV at $58.47: support at $58, resistance at $59.34 and $60, and an upper threshold at $62. Holding $58 is positive; a stronger continuation signal does not emerge until $60 is cleared.

Turkey

  • BIST 100 at 14,172.26: a support and breakout zone at 14,133-14,200, first resistance at 14,250 and the next threshold at 14,300. Another close above 14,200 would strengthen the advance; a break below 14,133 would reduce confidence in the breakout.
  • USD/TRY at 47.8820: a support zone at 47.70-47.82, with resistance and the risk threshold at 48.00. Remaining below 48.00 preserves the short-term balance; a move above the threshold would increase currency and inflation pressure.

Red flags

  • Retail sales are a nominal measure, and the July figure is also an advance estimate. One weak month does not establish a lasting contraction in consumption; a growth conclusion cannot be confirmed until August data and the employment flow point in the same direction.
  • A decline in consumer confidence alongside a rise in one-year inflation expectations to 4.3% is not a comfortable combination for the Fed. Weak demand could support rate cuts, but elevated expectations and oil could keep Treasury yields high.
  • IGV's 2% decline and Broadcom's nearly 6% drop show the fragility within technology. High AI expectations are making the cash-flow and valuation tests more demanding; news about one company does not remove the risk facing the whole sector.
  • The Associated Press reports that the U.S. blockade of Iranian ports remains in place around the Strait of Hormuz and that there is no verified timetable for ending the war. With Brent approaching $90, new military or sanctions developments could feed directly into inflation expectations.
  • Crypto assets trade through the weekend, while the U.S. cash market is closed. In thin liquidity, moves around support at $62,000 for Bitcoin and $1.00 for XRP should not be treated as lasting without confirmation on Monday.

Calendar

  • Tuesday, August 18, 3:30 p.m. TRT: U.S. July import and export prices and housing starts. Price pressure and rate sensitivity will be tested at the same time.
  • Tuesday, August 18, 4:15 p.m. TRT: U.S. July industrial production. The report will show whether weakness in consumption is spreading into production.
  • Wednesday, August 19, 9:00 p.m. TRT: Minutes from the Fed's July 28-29 meeting. The balance within the committee among inflation, growth and interest rates could influence the market's 4.70% threshold.

My analysis

Friday's message was not only that consumers weakened. More importantly, the soft data were not enough to pull Treasury yields lower. Oil rose, near-term inflation expectations increased and the U.S. Treasury curve shifted higher. As a result, the market missed the opportunity to gain both growth support and valuation relief at the same time.

In the positive scenario, Brent remains below $90 and the U.S. 10-year Treasury yield stays under 4.70%, while the S&P 500 holds 7,750, SMH $585 and IGV $103.70. If strength in the Russell 2000 and IWM continues, the selling will prove limited to large technology companies.

In the negative scenario, Brent moves above $90, the Treasury yield clears 4.70% and software support breaks. Weak consumption would then lower earnings expectations without producing support from lower rates. A 4.85% Treasury yield and Brent at $95 are the thresholds that would show the pressure broadening into a wider regime.

The central test is whether weaker demand can actually pull Treasury yields lower. On Friday, the answer was no. The rise in small caps shows there was no broad panic, but relief for technology depends on oil and Treasury yields falling together.

This is not investment advice; it is a research and monitoring note.

Sources