Treasury Debt Purchases Weigh on US Equities Ahead of Key Earnings Report

US equities closed lower for the week despite strong PMI data showing US business activity expanding at its fastest pace in over four years. The move was driven by higher energy prices and rising bond yields, which attracted attention from the US Treasury Department.

The Treasury announced plans to 'at least double' purchases of outstanding 10-year-30-year debt, effectively drawing a line in the sand on long-end yields. This has generated credibility concerns among investors and sparked a return to the debasement trade, with flows out of the US dollar (USD) into gold, silver, and Bitcoin.

NVIDIA's upcoming earnings report is also on the horizon, with expectations around $2.08 earnings per share (EPS) and revenue of $92 billion. The real focus will be on guidance, data-centre demand, and how soaring memory costs might impact margins expected to be around 75%.

Additionally, this week's core PCE price index release will carry weight ahead of the September Federal Open Market Committee (FOMC) meeting. A hotter-than-expected print would lift the probability of a September rate hike from the Fed, while a softer reading would temper expectations and support the view that the Fed can remain patient.