Treasury Secretary Scott Bessent: 'K-Shaped Economy is Over' — Market Talk

1245 ET - Treasury Secretary Scott Bessent proclaims "the K-shaped economy is over," in an interview with CNBC. The term describes higher-income earners thriving in the economy while lower-income earners struggle. Bessent says we are now seeing a more "C-shaped economy where the lower-end of wage earners are finally clawing it back." Bessent adds that the bottom quartile of wage earners have had, year-over-year, a 5.5% wage gain which is three times more than the top quartile. Last month, some economists also noted improvements in the K-shaped economy. "The gap between lower- and upper-income spending narrowed further in June, with lower-income households showing the strongest improvement in spending trends since 2021," a note from PNC Economics says.([email protected])1222 ET - A streak of monthly outflows seen in bitcoin ETFs was broken in July, according to data from 21shares. The firm reports that in July bitcoin ETFs saw a net inflow of roughly $400 million. This comes after two straight negative months for ETFs, with $4.56 billion in net outflows in June, says 21shares. The firm says that the return of capital to bitcoin ETFs may be a factor that pushes bitcoin prices up in August. "Bitcoin is knocking on a key resistance level, $66,000, which it hasn't broken in 50 days," says the firm. Bitcoin is up 0.3% to $63,981. ([email protected])1220 ET - Park Slope in Brooklyn, N.Y., is the hottest luxury neighborhood of 2026, according to Redfin. Highland Park, Ill., is close behind, with Overland Park, Kan., ranking third. This is according to a Redfin analysis ranking U.S. zip codes in the 100 most populous metro areas--with median home sale prices within the 65th percentile and above for their parent metro--by year-over-year growth in listing views on Redfin.com and Redfin Compete Score. "Unfazed by high mortgage rates and an uncertain global economy, luxury homebuyers are having an outsized impact on the otherwise tepid spring 2026 housing market," Asad Khan, Redfin Senior Economist says. "These high-end neighborhoods on this list are hot because there's not enough supply to meet the high demand," Khan adds. ([email protected])1206 ET - The further widening of Canada's merchandise-trade surplus in June suggests trade momentum continued to hold up at the end of 2Q, with monthly exports up 0.4% to a fresh record and imports rising more modestly, KPMG Canada's Daniel Hyun says. Nominal trade figures continue to be heavily influenced by volatility in commodity prices, though real volumes of energy and metals exports remain robust, the economist notes. And he adds the most tariff-exposed sectors held up well in June, with strong growth in motor vehicle and parts exports and in steel and iron products. Aluminum exports contracted, but this was a reversal of strong May exports to European countries. ([email protected]; @RobbMStewart)1201 ET - Users of the Coldcard hardware wallet are fleeing, looking for a safer place to store their bitcoin. Since last week, users of Coldcard have been reporting their bitcoin stored on the hardware wallets have been siphoned, stoking fear among users that they may lose their holdings. In a note, analysts with CryptoQuant say that small holders of bitcoin are moving coins "at a scale not seen since the FTX collapse," with many Coldcard users opting to move their holdings to centralized exchanges like Coinbase and Binance. In a post on X, Galaxy Research says that as of last night, the hack has stolen roughly $130 million-worth of bitcoin. Bitcoin is down 0.2% to $63,675 today. ([email protected])1115 ET - A jump in Canadian gold exports offset a drop in oil prices and surge in imports of IT equipment from the U.S. to keep Canada's international trade surplus rising in June, Capital Economics' Bradley Saunders says. The goods-trade balance widened to about C$3.9 billion, in part thanks to a roughly C$500,000 downward revision to May's surplus to C$3.7 billion. Saunders says the trade balance's flip into a sizeable surplus in the second quarter implies net trade made a healthy contribution to overall GDP growth for the period. That could mean upside risk to the preliminary 3.4% annualized GDP Statistics Canada estimated for 2Q, though Saunders says it still doesn't change the expectation the Bank of Canada will leave interest rates increases until 2027. ([email protected]; @RobbMStewart)1102 ET - Continued buoyant new orders points to a robust recovery across German manufacturing, Deutsche Bank economists Felicitas Henze and Robin Winkler say. While initial improvement was driven by large defense-related contracts, the recovery has recently become increasingly broad-based, they say in a note. In some sectors demand is expanding faster than capacity but that gap should be closed by the current defense and AI-investment cycles that largely transcend the usual competitive forces in global goods markets. Still, German companies remain concerned about their international competitiveness, according to business surveys, the economist say. "The dissonance between accelerating cyclical momentum and persistent structural concerns is reported by companies across all major sectors," they say. ([email protected])1059 ET - Markets lower their expectations of the Bank of England raising interest rates in 2026 as U.S.-Iran talks look to be progressing. The U.S. Treasury Secretary Scott Bessent said a deal could be reached by Wednesday and a Qatari official said that the negotiations are advancing. Investors currently price in 23 basis points of BOE rate increases in 2026, down from around 26 basis points earlier in the day, LSEG data show. ([email protected])1052 ET - Geopolitical uncertainty is expected to weigh on Middle East sustainable bond issuance this year despite resilient long-term demand, S&P Global Ratings says. The ratings agency lowered its 2026 issuance forecast to $15 billion-$20 billion from $20 billion-$25 billion after first-half issuance totaled $7 billion, down from $10 billion a year earlier. Renewed hostilities could continue to dampen energy exports, investor confidence and issuance volumes. However, S&P expects demand to remain supported over the medium term by national energy-transition strategies, new bond structures and about $50 billion of sustainable bond maturities due in 2027-2030, which could drive refinancing activity. ([email protected])1051 ET - Yields on U.K. 10-year government bonds, or gilts, fall to their lowest in three weeks as oil prices drop on optimism about prospects of a resolution to the U.S.-Iran conflict. U.S. Treasury Secretary Scott Bessent said an agreement with Iran could be reached by Wednesday, while a Qatari official talked about the possibility of a U.S.-Iran deal soon. Ten-year gilt yields drop around four basis points to a low of 4.910%, Tradeweb data show. ([email protected])1034 ET - An improved Japanese economic growth outlook is likely needed to trigger a durable yen rally as opposed to further currency interventions, Societe Generale's Kit Juckes says in a note. "More, or faster Bank of Japan rate hikes won't solve the problem either, unless the Japanese growth outlook makes them appear realistic." Japan's growth gap with the eurozone is expected to widen next year given Japan's higher debt to gross domestic product burden and narrower yield differentials. If Japan's growth remains weak, higher Japanese government bond yields will increasingly weigh on the yen, he says. The dollar rises 0.2% to 157.48 yen. It reached a three-month low of 155.21 Monday, according to LSEG, after the U.S. and Japan confirmed joint intervention. ([email protected])1012 ET - Investors are gradually returning to trading cryptocurrencies, after a big wind-down seen in June. It appears to be a sign of investor appetite for cryptocurrencies slowly returning, says Colin Basco of Coinbase Institutional in a note. "Positioning looks rebuilt rather than flushed, with open interest expanding even as turnover contracted," says Basco. CoinGlass data shows that bitcoin is exhibiting higher levels of liquidation of short positions over the past 24 hours, with $164 million in shorts liquidated in that time. Major cryptocurrencies are mixed in morning trade, with bitcoin up 0.1%, ethereum flat, XRP down 0.8% to $1.07, and solana down 0.1% to $73.73. ([email protected])