Week 34: Bond Yields Steal the Show as Markets Pull Back

Weekly Summary

Week 34 (17–21 August) was centered on an issue that had been brewing for a while: the relentless rise in long-term US Treasury yields. The 30-year bond yield touched new 19-year highs above 5.33%, driving a broad equity sell-off through most of the week before a partial recovery on Friday. The S&P 500 fell 1.43% on the week, closing at 7,674.37, and is now -1.4% below its all-time high set just the week before. The Dow and Nasdaq each also posted weekly losses. What made the move in yields particularly striking was its context: inflation data has been cooling, September rate hike expectations have been falling, and yet long-term bond yields pushed higher anyway — a disconnect that caught policymakers' attention and prompted emergency action from the US Treasury mid-week.

For the Rivativ model portfolios, the week was challenging for the theta-positive strategies, which absorbed mark-to-market pressure from the equity sell-off. The Predictive Gamma Strategy, however, delivered a positive result in a down week. Combined weekly result: -$5,053.41 (-1.21%), versus SPX -1.43% — outperforming the index by 22 basis points.