Wall Street Lunch: Equities Dance To Bonds' Tune

Wall Street Breakfast 5.74M Followers Subscribe Summary Bonds are dictating market direction as rising yields pressure equities, especially growth stocks, with the 10-year yield surpassing 4.8%. Analysts anticipate immediate interventions to contain long-term yields, citing fiscal deficits and unsustainable 10-year rates near 5%. Medtronic (MDT) raised its full-year outlook after strong Q1 results, while Howmet Aerospace (HWM) is seen as a potential buy after a sharp decline. Goldman Sachs, Morgan Stanley, and Citi are pushing law firms for AI-driven cost reductions, signaling shifting compensation models. cagkansayin/iStock via Getty Images Listen below or on the go on Apple Podcasts and Spotify Treasury yields continue to climb . (0:16) GoPro soars on Markiplier report . (1:46) Wall Street tells law firms AI should lower their bills . (2:01) This is an abridged transcript of the podcast: Our top story so far, bonds continue to call the market tune, with rising yields pressuring equities, especially growth stocks. The 10-year yield ( US10Y ) topped 4.8%, its highest level since January 2025, despite the Treasury expanding long-end bond buybacks. The 10-year has seen an 85-basis-point run since the onset of the Iran War. The macro effects are already materializing, with 7% mortgages making a sudden return and traders bracing for a September rate hike. “The US simply cannot afford the 10Y Note Yield at 5% for a sustained period of time,” The Kobeissi Letter wrote, warning that further immediate attempts at intervention are expected. Analysts echo the sentiment. Economist Robin Brooks suggests that “there’s a new Treasury-Fed accord taking shape, where the main goal is to keep longer-term yields contained in the face of out-of-control deficits.” “We expect further attempts at intervention immediately,” Kobeissi said. “But the question becomes: will markets listen?” Among active stocks, Medtronic ( MDT ) is up after it reported better-than-expected Q1 results and boosted its outlook for the full year. CEO Geoff Martha pointed to the “breadth of performance across our businesses and the increasing contributions from newer growth platforms.” Howmet Aerospace’s ( HWM ) sharp decline following SpaceX’s ( SPCX ) plan to manufacture gas-turbine components internally has created a potential buying opportunity, according to Citi Research , which placed the aerospace supplier on a 30-day upside catalyst watch. Citi, however, said SpaceX’s decision demonstrates the strength of demand and scarcity of turbine-manufacturing capacity, rather than signaling a deterioration in Howmet’s competitive position. And GoPro ( GPRO ) continued its volatile trading, swinging 80% higher after rising 46% Monday. The buying was sparked by reports that YouTube creator Mark Fischbach, known online as Markiplier, is now the company's largest single shareholder. In other news of note, what are your chatbot’s billable hours? Goldman Sachs ( GS ), Morgan Stanley ( MS ) and Citi ( C ) have told their law firms that bills should come down because of AI. According to the FT, Goldman asked its lawyers how much AI was saving them and said it expected to share in those benefits. Meanwhile, Citi’s global head of legal told the paper that if lawyers take less time to work on a matter because of AI, Citigroup’s expectation is for “costs to come down significantly per transaction.” And Morgan Stanley’s general counsel told the FT that the compensation model for firms is now “extraordinarily unstable.” I guess this means they’ll be offering discounts for advisory and wealth management fees. And in the Wall Street Research Corner, William Blair updated its Conviction List for September, adding BJ’s Restaurants ( BJRI ), Aehr Test Systems ( AEHR ), MP Materials ( MP ), APi Group ( APG ), BrightSpring Health Services ( BTSG ), Curtiss-Wright ( CW ), James Hardie Industries ( JHX ) and Unity Software ( U ). The list is composed of stocks where analysts have a high degree of conviction in strong near-term performance. You can see the full list of stocks across every sector in our story on Seeking Alpha. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. This article was written by Wall Street Breakfast 5.74M Followers Subscribe Wall Street Breakfast, Seeking Alpha's flagship daily business newsletter, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices) and is published before 7:30 AM ET every market day. Wall Street Breakfast's readership of more than 1 million subscribers includes many from the investment banking and fund management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day.