SPEAKER_00 0:00

You know, usually when the cost of borrowing money skyrockets, the stock market slows down. But today, uh, we're looking at an equity market that seems to be wearing noise-canceling headphones.

SPEAKER_01 0:09

Yeah, they're just blasting the music and ignoring the alarms.

SPEAKER_00 0:12

Exactly. So we are going to figure out why by diving into the Friday, July 10th, 2026, pre-market futures briefing. This is by Eli Levy from Canon Trading Company. And by the way, if you want to reach Eli directly, you know, to see the data for yourself, you can email him at Eli at Canon Trading.com. But before we diagnose this whole market disconnect, I do need to read this mandatory disclaimer. Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_01 1:02

Okay, so the disconnect really jumps off the page when you look at the bond market right now.

SPEAKER_00 1:06

Right. The 30-year auction.

SPEAKER_01 1:08

Yeah, Thursday's 30-year bond auction awarded a massive 5.058% yield. I mean, that's a level we basically haven't seen in nearly two decades. Plus, the CME FedWatch tool is showing exactly 0% chance of a rate cut this July.

SPEAKER_00 1:23

Zero. So the bond market is basically blaring a fire alarm about sticky inflation.

SPEAKER_01 1:29

Yeah, but equities are completely ignoring the smoke.

SPEAKER_00 1:31

Right. They're just blasting this memory chip rally playlist instead. Like SK Heinex makes a $26.5 billion US debut, and tech stocks just keep running. The briefing actually notes this tripled the market's gamma cushion to 94 points. But uh, what does that actually mean under the hood?

SPEAKER_01 1:49

Well, think of that gamma cushion as a massive structural shock absorber. So options market makers are positioned in a way where they're essentially forced to buy dips and sell rips to stay neutral.

SPEAKER_00 1:59

Oh, so they have to trade against the momentum?

SPEAKER_01 2:01

Exactly. So having a cushion at 94 points absorbs massive sell-offs before they can snowball. It gives the market artificial breathing room, you know, despite the astronomical cost of money.

SPEAKER_00 2:12

Okay, so tech stocks have their shock absorbers. But what about the actual driver of those high interest rates? Because the inflation fears keeping bonds so elevated seem entirely tethered to crude oil right now.

SPEAKER_01 2:25

They are. And there's a really intense tug of war happening there. West Texas Intermediate surged earlier this week purely on geopolitical fear. We had the US RN airstrikes and those delays in the Strait of Hormuz.

SPEAKER_00 2:36

Right, but then raw supply fundamentals pulled it right back down.

SPEAKER_01 2:39

Yeah, the EIA reported a bearish three million barrel commercial build. So physical supply on hand simply overpowered the fear of future disruptions.

SPEAKER_00 2:48

Which perfectly explains gold slipping below forty one hundred dollars. I mean, if physical oil supply is keeping inflation just sticky enough to prevent rate cuts, those sustained 5% yields become absolute poison for non-yielding assets like gold.

SPEAKER_01 3:01

Precisely. The market is ultimately bowing to the reality of physical supply.

SPEAKER_00 3:05

Wait, hold on though. It makes complete sense that physical oil supply is overriding geopolitical fear. But that logic completely falls apart when you look at the agricultural markets right now. Specifically cocoa.

SPEAKER_01 3:18

Oh, cocoa is a wild one right now.

SPEAKER_00 3:20

Right. Eline notes cocoa is hitting multi-month highs on West African crop worries, but literally two lines down, he points out Ivory Coast port arrivals are up 18% from last year. So how are traders buying into a shortage panic when there is literally more cocoa arriving at the courts right now?

SPEAKER_01 3:38

Well, it's a fantastic contradiction. In cocoa, the market is completely ignoring today's actual surplus to trade tomorrow's potential shortage. Fear carries a massive premium when weather patterns look unstable.

SPEAKER_00 3:49

Uh, so they're pricing in the weather, not the current shipments.

SPEAKER_01 3:52

Exactly. But you see the exact opposite psychology in grains right now. They aren't trading on phantom fears, they are tightly coiled waiting for the 11 a.m. loss day report.

SPEAKER_00 4:01

Aaron Powell Because they need actual validation. I mean, soybeans already jumped on that massive 472,000 ton flash sale to China. But traders are waiting for the listed crop data to prove if that Chinese demand is part of a structural shift or just a one-off blip.

SPEAKER_01 4:16

Aaron Powell Right. So going into the weekend, we're watching that grain reaction and whether physical oil continues to overpower geopolitical headlines.

SPEAKER_00 4:24

Aaron Powell Yeah. But we also have to watch the ultimate casualty of these high U.S. interest rates, which is the Japanese yen. It's sitting near a four-decade low, around 162.

SPEAKER_01 4:35

Aaron Powell And that is because there's such a massive gap between soaring U.S. treasury yields and Japan's rock bottom rates, capital just flows away from the yen and into the dollar. Aaron Powell Right.

SPEAKER_00 4:45

So it's heavily shorted and incredibly ripe for intervention.

SPEAKER_01 4:48

Aaron Powell Which leaves you with a pretty terrifying thought to carry into next week. If the yen breaks completely and Japan is forced into massive currency intervention to save it, well, do they have to start selling off their U.S. treasuries to fund it?

SPEAKER_00 5:00

Oh wow.

SPEAKER_01 5:00

Yeah, because dumping treasuries onto the open market would send those 30-year yields even higher, which could potentially shred the very gamma cushion, keeping the stock market afloat.

SPEAKER_00 5:11

That would turn the fire alarm into an actual fire. Well, let's see how the board lights up on Monday. Disclaimer Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.