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5% yields are back. The Fed decides Wednesday.

A rough Monday set up the week’s main event. The S&P 500 fell 0.5% to 7,619.98, the Dow 0.3% to 52,421.20, the Nasdaq 0.6% to 26,186.41, and the Russell 2000 0.4%. Three linked pressures drove the move. Oil surged. Brent crude briefly neared $110 before settling at $105.68 (+1%). Drone attacks forced Saudi Arabia to shut a key pipeline and fresh attacks hit shipping in the Strait of Hormuz. Higher energy costs feed straight into inflation expectations. The 10-year yield touched 5%. It hit 5.012% intraday — the first print above 5% since October 2023 — then settled at 4.96% as buyers stepped in. The 10-year still sets the borrowing-cost benchmark across the economy. AI stocks sold off. Anthropic CEO Dario Amodei published a weekend essay arguing the industry “must slow the pace” of development for safety reasons; other AI leaders echoed him. Semiconductors took the brunt: SOXX –5.5%, Marvell –7.5%, Intel –5.5%, Nvidia nearly –3.5%. President Trump pushed back on Truth Social, calling it a “SICK conspiracy going on against AI and Data Centers.”

Not all of tech suffered. While chips sank, software ripped higher. IGV rose about 5%. CrowdStrike jumped 14% and Palo Alto Networks 13% to lead the S&P 500; Salesforce added 4.5% and helped limit the Dow’s losses. In our view the AI debate is hitting the “picks and shovels” (chips, memory) while software — especially security — caught a bid. That divergence is worth monitoring for follow-through.

A few setups stand out for the calendar this week. These are simply items we are tracking; they are not advice to act. Lennar (LEN) — Reports after the close Wednesday (~4 PM ET), roughly two hours after the Fed decision. Consensus sits around $1.29–$1.31 EPS on ~$8.3–8.4B revenue for the fiscal third quarter. The stock is down ~22% year-to-date. With the 10-year back near 5%, mortgage rates remain elevated; guidance on buyer incentives, margins, and order trends will matter more than the headline numbers in our view. Housing sensitivity to rates makes the post-Fed timing notable. Trip.com Group (TCOM) — Reports after the close Tuesday. One of the clearer read-throughs on global travel demand. Worth watching for any commentary on international bookings and China recovery signals. Software security names that led Monday (CRWD, PANW) — No earnings this week, but the sharp relative strength versus semis is a setup we are watching for continuation or fade once the Fed is out of the way. AI safety headlines created the divergence; any further industry comments could keep the tape active. Broader AI-infrastructure and power-related names remain in focus given the energy demand narrative, but this week’s calendar is light outside the names above. Light week overall as earnings season winds down. Other stragglers (Take-Two, Emerson Electric, Cardinal Health) are secondary.

The FOMC meeting starts today. Decision comes Wednesday at 2:00 PM ET. Markets price roughly a 90% chance of a quarter-point hike to 3.75%–4.00% — the first increase since July 2023. Friday’s hotter-than-expected August CPI (core +0.3% vs. +0.2% expected) sealed the near-certainty. Fed Chair Kevin Warsh has said inflation needs to move toward 2% “clearly and at sufficient speed.” The data is not cooperating, and oil is pushing the wrong way.

Also on the calendar: retail sales, Empire State manufacturing, and industrial production today; Bank of England Thursday; Bank of Japan Friday (hike expected). Friday brings monthly options expiration.

• Wednesday’s implied move: Options price a ±0.95% S&P 500 swing on Fed day — the widest Fed-day expectation since 2023 (Citi).
• Rate bets: Fed funds futures imply ~90% odds of the 25 bp hike, with roughly four hikes priced through July 2027.
• Technicals: S&P sits ~3% below its all-time high. Volatility has compressed to its tightest since June 2021 — historically that kind of coiling precedes a larger move. 7,500 is the level technicians are watching.
• Futures board: Brent $105.68, gold ~$4,335, 10-year 4.96%.

Bitcoin ~$77,900 (+1.5%), still holding below the psychological $80,000 level. It is up ~23% over the past month after the short squeeze from ~$63,000 and largely sat out Monday’s AI-stock selloff. Ether ~$2,515 (+1.2%). Positioning looks constructive in our view: BTC futures run a 5.5–8.5% annualized premium to spot (healthy bullish carry), funding rates are positive, and spot bitcoin ETFs took in $1.01B over three days last week. Additional coins and catalysts we are tracking (again, opinions only):

• Solana (SOL) — Relative strength over the past month. The Alpenglow consensus upgrade is targeted for late September (mainnet activation discussions around the 28th), aiming for faster finality. Network upgrade progress and any governance outcomes remain the near-term items to watch.
• XRP — Regulatory sensitivity is elevated. The Senate faces a procedural cloture vote on the CLARITY Act (market-structure legislation) as early as Tuesday. Outcome is binary for sentiment around classification and broader digital-asset rules; Bitcoin is less affected by the same text.
• Other flow and event notes: Solana and Ethereum ETF products have seen continued institutional interest; scheduled token unlocks (including Hyperliquid/HYPE later this month) can create short-term supply overhangs. Overall crypto remains macro-sensitive to the Fed path and any regulatory clarity.

The decision itself matters less than the signal. Warsh gives almost no forward guidance, so Wednesday’s statement and press conference will be parsed for whether this is one-and-done or the start of a cycle — especially with oil working against the 2% path. Until 2 PM Wednesday, expect positioning, not conviction. Key levels still in play: S&P 7,500 and the 10-year’s ability to hold below (or break above) 5%. On the micro side, Lennar’s post-Fed guidance and any Solana upgrade updates are secondary items on our list.

Tuesday: Empire State manufacturing, import/export prices, industrial production. Warm-up acts. Wednesday: August retail sales 8:30 AM ET (consensus +0.8% after July’s –0.6%) — then FOMC decision 2:00 PM, Warsh press conference 2:30. Thursday: Bank of England rate decision + weekly jobless claims. Friday: Bank of Japan decision (hike expected; yen at a seven-month high) + monthly options expiration (can add chop).

Tuesday: Trip.com Group (TCOM) after the close. Wednesday: Lennar (LEN) after the close. Rest of the week: mostly stragglers.

Until Wednesday’s 2 PM print, the tape will stay reactive. Stay dull.

— The Dull Investor

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This newsletter is for informational purposes only and does not constitute investment advice. The Dull Investor is not a financial professional providing personalized recommendations. Always conduct your own due diligence.