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TRADING DAY-Dow record, yen vibrations
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TRADING DAY-Dow record, yen vibrations
Aug 3, 2026 2:29 PM

ORLANDO, Florida, Aug 3 (Reuters) - U.S. stocks rallied

strongly and the Dow notched a record-high close on Monday,

boosted by solid manufacturing data and optimism around earnings

and U.S.-Iran peace hopes, while the yen slumped to a

three-month low after a historic bout of coordinated

U.S.-Japanese intervention.

In my column today, I look at the U.S. Treasury's activity

in the FX market buying Japanese yen. Treasury's goals may have

been conventional, but its methods weren't, and the timing may

also speak to deeper concerns about the U.S. bond market.

If you have more time to read, here are a few articles I

recommend to help you make sense of what happened in markets

today.

1. How a US-Japan pact to hit yen speculators came together

2. US manufacturing activity hits more than four-year high;

input prices elevated

3. EXCLUSIVE-Fed's Williams expects inflation to ease, says

Fed will act if it doesn't

4. Iran war ushers in oil refining golden era. It won't

last: Bousso

5. AstraZeneca investors balk at prospect of $400 billion

Bristol Myers pharma deal

Today's Key Market Moves

* STOCKS: South Korea -5%, Japan -1%. Big 3 U.S. indices all

+1% or more, Dow hits new high.

* SECTORS/SHARES: Eight sectors on the S&P 500 rise, three

fall. Comms services +4%, consumer discretionaries +2.7%. Amazon

hits $3 trillion market cap. Oracle +9%, Boeing +8%, Microsoft

and Alphabet +5%, eBay -6%.

* FX: Dollar/yen tumbles as low as 155.20, euro/yen below

180.00 for first time since November.

* BONDS: 2-year JGB yield 1.56%, highest in 31 years; 5-year

JGB yield 2.09%, highest in 30 years. U.S. yields fall 4-7 bps

on oil slide.

* COMMODITIES/METALS: Oil -7% to 3-week low. Gold little

changed, hovering above $4,000/oz.

Today's Talking Points:

Spend to defend

Japan is estimated to have spent almost $100 billion over a

48-hour period last week in FX intervention to support the yen -

$36.6 billion on Friday, and $59 billion on Thursday. This

follows a $73 billion spree in April-May this year, $36.8

billion in July 2024, $62.2 billion in April-May 2024, and $42.8

billion in October 2022.

Added together, Japan has spent around $310 billion over the

past four years defending its currency. Has it worked? That's

subjective. Absent that demand, the yen may well have sunk a lot

lower than the 40-year low 164 per dollar recently. But we'll

never know. That's a lot of dollars, and a chunk of it will have

come from repo and other funding routes. But if it has prevented

a much weaker and more volatile currency, Tokyo may see it as

money well spent.

Bouncebackability

The word "bouncebackability," popularized in British

football parlance, describes a player or team's powers of

resilience and penchant for overcoming often multiple setbacks.

Wall Street is showing those characteristics, in spades, with

the S&P 500 on Monday rebounding to within 0.5% of its record

high and the Dow notching a fresh record-high close.

Investors are putting the recent chip rout to one side, and

are taking their cue from the earnings picture, which could

hardly be more bullish. The LSEG I/B/E/S Q2 annual consensus

U.S. earnings growth forecast is now running at an astonishing

47.7%, virtually double what it was only a month ago.

Factory Whirl

Investors have had a few financial market wobbles to worry

about recently: South Korean stocks, the global chip sector more

broadly, the yen, and long-dated bonds, to name a few. But when

it comes to the real economy, things have been much less

volatile. If there's any background noise, it's the sound of

global factories purring along rather nicely.

The latest purchasing managers index data show U.S. factory

activity expanded in July at its fastest pace in over four

years, euro zone output was the highest in four and a half

years, and Japan's manufacturing PMI leaped to a 12-year high.

There are weak spots, of course - China, India, UK - but

overall, the AI capex boom is helping to keep the world's

manufacturers and producers busy.

What could move markets tomorrow?

* South Korea inflation (July)

* Canada manufacturing PMI (July)

* U.S. trade (June)

* U.S. 'JOLTS' job openings (July)

* U.S. earnings, including SpaceX, AMD, Caterpillar,

McDonald's

Want to receive Trading Day in your inbox every weekday

morning? Sign up for my newsletter here.

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

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