Collectively, the “Magnificent Seven” stocks dropped nearly 5% yesterday, erasing roughly $800 billion in market “value” in one session. Except for the tariff-driven sell-off in April 2025, it was the Mag 7’s largest single-day decline since the term was coined in 2023.
Alphabet (GOOGL) finished the day down 7% after the massive AI spending plan we wrote about yesterday hit the wire. Tesla (TSLA) doubled down. It announced a healthy spending plan… and missed earnings. The stock had tumbled 15% by the close.
AI spending, rather, the question of who’s ultimately going to foot the bill, is just one of the factors driving an uptick in sector rotation.
Yesterday also revealed a new, surprise target for non-AI-related investments. The 10-year U.S. Treasury yield is at 4.70%, its highest since Trump’s second term kicked off:
The 10-year U.S. Treasury yield is paying 4.7%, its highest level since early 2025. (Source: Barchart)
When bonds paid almost nothing, investors were pushed into stocks because there was no alternative. When safe bonds pay 4.7%, and inflation is at 3%, investors ask: “why take stock-market risk if I can beat inflation with a Treasury?”
Bonds are “boring.” That much is true. But when you’re talking about your own money, and compared with expensive AI stocks and the risk of a sell-off, a government bond paying nearly 5% starts to look respectable.
Using some fuzzy logic on that trade yesterday – sell the Mag 7, buy 10-year Treasurys – your swing would have yielded a 10% gain. That’s just an illustration, of course. Your less complicated trade recommendation is below.
The thesis is not simply a failure of domestic politics. Yields are rising in the U.S., Europe, Japan and elsewhere.
Globally, investors are demanding higher compensation to lend to governments. If the trend holds, higher yields make fixed income more attractive and will exert further pressure on stock valuations, especially for long-duration growth stocks like the Mag 7 names we mentioned above.
Even ultra-short Treasurys are getting in on the act. The 2-month Treasury yield jumped 13 basis points yesterday, rising to 3.95%. That’s a big move for such a short-term Treasury bill, signaling traders are preparing for the Federal Reserve, under Chairman Kevin Warsh, to get more aggressive.
“This is a new era at the Fed. Warsh has scuttled forward guidance,” writes Martin Wolf on WolfStreet. Bond investors “are now left to their own devices. They have to dig through the data on their own and draw their own conclusions as to the yield they want to be paid” for owning government debt.
Rather than waiting for a rate hike, bond investors said in unison yesterday, “We’ll take our higher yields today, thank you very much.”
Today’s Grey Swan Pro looks at one opportunity in the bond market with low duration risk, allowing investors to grab an inflation-beating yield today, and unlikely to sell off if yields soar even higher — details here.
~ Addison
P.S. On Monday, July 27, at exactly 1:00 P.M. ET — we’ll reveal a staggering opportunity we discovered after poring through President Trump’s financial disclosure released June 30th, 2026.
The President, it turns out, has 114,750,000 shares of one stock tucked away in a private trust. A single company on the Nasdaq that could make him the richest man on the planet. And from our vantage point now, he’s steering national policy directly toward those very shares.
No sitting president, in 250 years of the American presidency, has ever – so transparently – piloted the West Wing into positive investment gains. Until now.
You’ve already RSVP’d to attend my emergency briefing on Monday, July 27 at 1:00 P.M. ET.
During the briefing, we’ll address three critical topics…
FIRST, the mind-blowing technology behind Trump’s $1.1 billion investment, and why it could make him the richest man on the planet.
SECOND, why Trump built a mysterious “financial bunker” to protect his 114 + million shares. No sitting president has ever done anything so transparently before, and…
THIRD, the exact date that Trump’s shares could start booming. (Hint: we expect the share-price explosion to happen within a few hours of Monday’s briefing.)
Pay attention, more details to follow…
