“You tend to have greater concentration and more of a winner-takes-all type of environment when you have these technological advances,” Daco said in an interview with Fortune’s Eva Roytburg. In almost every technological revolution—the railroad boom of the late 19th century, or the 90s dot-com revolution—large, vertically-integrated firms initially capture the gains, while smaller ones face “persistent cost pressures, persistent policy uncertainty, higher interest rates,” Daco noted. 

In 2026, economic output grew 1.7% in the second quarter, just based on 0.3% more hours. Compensation rose 2.6%, which, set against a spring and summer of oil-driven inflation, comes out to “flat to slight contraction” in real terms, added Daco. 

Meanwhile, margins hit a record 14.9% of GDP, while the labor share fell to 52.8%, the lowest since the government started counting in 1947. Daco said that 50% isn’t a floor and that labor’s share could fall even further.

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• As U.S. Treasury intervened in the bond market, the Netherlands rushed 86 tons of gold out of America because of ‘geopolitical unrest’ by Eleanor Pringle

IT’S NOT THE FED ANYMORE

The upward march in bond yields no longer stems from uncertainty around Federal Reserve policy, writes JPMorgan’s Kriti Gupta and Nick Roberts in a note shared with Fortune. 

While the initial move for bonds stemmed from a disconnect between a hawkish Fed and softer data, “the logic has shifted.” 

“It’s a combination of worries around global fiscal deficits, an increase in hyperscaler issuance, and the rise of refined product prices,” the pair wrote. “That’s on top of economic growth in the U.S. economy.”

Trouble is also brewing “under the hood” of the economy, the note adds. While on the surface, oil prices haven’t spooked markets in the same way they did when the Middle East conflict began earlier this year, American refineries, largely built to convert heavy crude into those refined products, are nearing their maximum capacity. 

“So, even though light crude is readily available, it doesn’t necessarily alleviate the rising prices of those refined products, or the potential readthrough into more consumer-facing products, like airfares. The relationship has created a synergy between refining margins and bond yields. 

“As investors measure the impact of the conflict, the building relationship shows pressure in that part of the commodities market is starting to align with the move in bond yields,” the note adds.

THE MARKETS

Waiting on key jobs report

The U.S. jobs report is released today to more scrutiny than usual. Investors and analysts have been waiting to see whether the Federal Open Market Committee (FOMC) follows through on its hawkish narrative with some action at its next meeting in September. 

If the jobs report comes back ok-ish, then that frees up the FOMC to deliver a hike markets have been waiting on. 

But as Deutsche Bank’s Jim Reid noted this morning: ”The most recent jobs report for July was much weaker than expected, with payrolls unexpectedly contracting, along with downward revisions to the previous couple of months. So that casts further doubt on a September hike.” 

He added: “Our U.S. economists are expecting nonfarm payrolls to rebound by +65k, with the unemployment rate holding steady at 4.1%. So if realized, that would cement the view that the labor market is holding up and keep the Fed’s focus on inflation.” 

• S&P 500 futures were up 0.045% this morning. 
• In Europe, the Stoxx 600 was up 0.072% in early trading, and the U.K.’s FTSE 100 was down 0.073% before lunch.
• Asia: South Korea’s KOSPI was up 1.64%. Japan’s Nikkei 225 was up 1.26%. India’s Nifty 50 was up 0.27%. China’s CSI 300 was down 0.099%. 
• Brent crude was $95.17 per barrel this morning.
• Bitcoin was just under $81,000.

CHART OF THE DAY

Subprime auto loans show signs of distress among poorer households

“The clearest signal of stress remains concentrated in subprime consumer credit,” according to Pimco’s Tiffany Wilding and Lotfi Karoui. “90-day delinquency rates on subprime auto loans have risen significantly in recent years, even as the rate for prime auto loans has remained relatively stable.”

The rising delinquencies suggest that low-income households will get hit hard if the economy experiences a reversal: “It’s worth considering whether today’s subprime weakness is a leading indicator of broader stress to come, or whether any broader stress would require an exogenous catalyst—a genuine labor-market shock, or an abrupt end to the AI capital-expenditure cycle—to materialize.”

NUMBER OF THE DAY

3%

The percentage of British people who have gambled online and have done so while in hospital “or during the birth of a child,” according to a survey of 2,001 adults by Gamble Mind, a website that ranks online casinos.

THE FRONT PAGES TODAY

The inflation genie could be out of the bottle — and bond markets are sounding the alarm - CNBC

Volkswagen jumps 6% on plans to cut 50,000 jobs amid tariffs, China competition - CNBC

Anthropic finalizing $15 billion pre-IPO credit facility - Bloomberg

OpenAI says it has overtaken Anthropic with its latest AI model - FT

Musk’s Boring Co. pushes investors for recruiting, business help - WSJ

U.S. diesel prices set new high - NYT

ONE MORE THING

Multimillionaire Suze Orman says eating out in restaurants is a big waste of money

Suze Orman has spent decades as a best-selling author and TV host, teaching people how to invest, save for retirement, and manage their money. She’s also built a fortune of her own, with a net worth in the tens of millions. But there’s one category of spending that has always bothered her: eating out at restaurants, which she has called one of the biggest wastes of money, Fortune’s Prestone Fore writes.

“Look up McDonald’s. Look up Taco Bell. Are you kidding me? $23, $30 just to go to McDonald’s for whatever you eat there,” Orman once complained.

She has a particular hatred for your daily Starbucks habit: “You need to think about it as: You are peeing $1 million down the drain as you are drinking that coffee,” Orman said to CNBC in 2019. “Do you really want to do that? No.”

Having said that, if you do go out to eat with Orman, you are in for a treat—because she will insist on paying. “If we go out to eat, the deal is we have to pay because I am not going to let people, who I know don’t have the kind of money that we have, waste their money on ... eating out,” she said.

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