10AM Hour: Global Bond Yields Spike, Evercore’s Roger Altman, Meta Goes to Trial 8/18/26

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Carl Quintanilla (0:42)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker and Mike Santoli. Live at post nine to the New York Stock Exchange, Sara Eisen, David Faber are off. Tech stocks getting hit hard today, but the big focus is on the bond market as yields around the world some multi-decade highs. We're going to talk to Newburger's global head of fixed income and Evercore's Roger Altman about what exactly is driving those moves. Social media facing what some are calling a big tobacco moment as a major trial gets underway in California, alleging that Meta caused addictive behavior in teens and children. Former assistant AG Jonathan Kanter is with us to discuss. And we'll get to this move in Depot this morning, what it means for the other major retailers that are waiting to report earnings later in the week.

Leslie Picker (1:25)

But first, pending home sales just crossing the tape, let's get to Diana Oleg with those numbers.

Diana Olick (1:31)

Hey, Leslie, pending home sales in July dropped 2.3% month to month, according to the realtors, with declines in all regions. Now, that's a miss. The street was looking for a slight gain. Sales were down 2.2% year over year, and that is the lowest level since January of this year. This count is based on signed contracts, so its deals inked in July when mortgage rates were really at the highest they've been in a year. The Realtors' Chief Economist, Lawrence Yun, noted in the report that home prices are at record highs, so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago. Now, regionally, sales fell hardest in the west, which is, of course, where home prices are highest. Also in the south, where the markets had been busiest lately, but affordability is now being stretched. Now, compared with a year ago, sales were down everywhere, except in the Midwest, where housing is cheapest. Now, we saw a big drop in single-family housing starts for July as well today. The market still needs more supply to get prices down, but so far, that's just not in the picture. Carl?

Carl Quintanilla (2:34)

Yeah, Diana, between that and starts this morning, tough times for housing, especially single-family construction. Thank you, Diana. Olek, meantime, markets here trying to absorb all of these crosswinds, including the global bond sell-off and some of the tech weakness which we did see in Korea, for example, overnight. Mike, what strikes your fancy at the open here?

Mike Santoli (2:54)

Yeah, that's the main pressure point, really, is the whole semiconductor complex memory. We're back in this market where it's kind of semis relative to everything else is the kind of seesaw. Yesterday, you had memory up, majority of stocks down, and here you have the reverse. Yields definitely have, I think, a lot of folks' attention. We're sort of asking a lot of questions about why. Here you see the semiconductor index also just bumped to its 50-day moving average. This rebound we had after those washout conditions into July may be at a logical point where it would take a pause anyway. S&P 500 testing this 7,700 level, which in a way is where the breakout really solidified to all-time highs last week. So you'd like, if you're a bull, to have it hold around here. I think 7,600 is a little more important because if you lose that, as you can see by that chart, you're going back into that range we were in four months. So, so far, it's okay. It's still very rotational. You're seeing a lot of healthcare, a lot of defensives work today. We are, though, at a moment where you had the VIX at a one-year low, coming into this week under 15 You had corporate bond spreads also at a one-year low, at a time when the world is saying, through all this action in the bond market, that we have this voracious appetite for capital and maybe we're at risk of overconsuming capital. Governments, companies, everybody demanding too much of the bond market, if not demanding too much, then the capital is going to be rationed by higher yields. That's just the way it works. It's real yields on the long end that are doing the real lifting. It's not inflation expectations shooting to the moon. I did want to take a look at corporate borrowing costs relative to not relative to treasuries, but just absolute yields for corporate borrowing. This is US investment grade corporate debt yields. It goes back five years. We're not at the highs because spreads are compressed more than they were in 2022 and 2023, even though treasuries are at their highs. So this is pushing 6%.