Bottom Line: 10yr and Fundamental Factors
The 10yr yield is back above 4.5%, the level at which factors become more sensitive to movements in yields. We suspect the 4.5% level may shift higher over time as the market discounts a higher neutral rate (the rate that is neither stimulative nor restrictive to economic growth), but it’s holding for now. Hedging remains in focus. Over the medium term, the case for fundamental factor leadership remains intact because a higher neutral rate + a mild degree of restrictiveness doesn’t change the economic backdrop. If yields were only increasing because of more restrictive policy, it would be a scene changer, and risk-off factors and Defensive sectors would be more attractive.
Relevant News: Momentum Factors
Momentum factors, including both EPS and Price Momentum, have surged since last September, with Price Mo accelerating this year (HERE) until the past few weeks. Price Mo has struggled as winners in AI and Semis have pulled back, leaving a -17.4% drawdown for the unconstrained Price Mo basket. In contrast, EPS Momentum remains resilient and slipped just -1.8% from its peak.
Things to Watch [Consensus, Results]:
Strategy:
Iran Risks Adding to Existing Upward Pressure on Treasury Yields – (HERE)
Peter Williams estimates 10yr fair value is moving toward 4.5% (from 4.5% being the high end of the range). This estimate is based on the rebound of demand indicators, not Iran. How internals react to the 10yr depends on the reasons for the move. Peter raised his estimated based on a higher neutral rate + a mild degree of restrictiveness. Yields had diverged from oil as nominal demand seems to have bounced.
Data Infrastructure/ Commodities:
SPCX: A Post-IPO Update; Navigating a Catalyst-Rich Road to 2027– (HERE)
SPCX remains one of Dauvin Peterson, 22V’s Data Infrastructure/ Commodities anlaysts, preferred ways to gain exposure to both the emerging space economy and AI infrastructure, with the stock entering a catalyst-rich second half of 2026 after the IPO, Nasdaq inclusion, and initial analyst coverage. Near-term trading is likely to be driven by lockup expirations, Nasdaq rebalances, and the company’s first public earnings reports, creating volatility and position-building opportunities. Beyond these technical factors, investors should focus on key catalysts including Starship 3 testing, AI compute commercialization, Starlink metrics, potential Terafab developments, and the durability of major compute contracts, while monitoring the August Clean Air Act litigation tied to Colossus 2. Despite expected volatility, we continue to view SPCX as well positioned heading into 2027–28, with multiple long-term growth drivers still in their early stages.
Source: Bloomberg, SPCX S-1
Derivatives:
Great Time to Hedge Apple (AAPL) if it’s a “Core” Holding – (HERE)
After AAPL’s 15% rally from its June 25 lows back to prior highs, 22V’s Jeff Jacobson sees an attractive opportunity to add downside hedges. The setup is supported by a negative RSI divergence, implied volatility trading at a steep discount to realized volatility, a valuation near record P/E multiples, and AAPL trading at the top of its five-year relative range versus the S&P 500. With earnings on July 30 serving as a potential catalyst, Jeff favors owning August put spreads targeting a pullback toward the 200-day moving average, offering an attractive risk/reward profile for hedging existing long positions or expressing a limited-risk bearish view.
