0722 | U.S. 30‑year bond above 5%, Tesla miss, diesel surge, IBM AI push

Mia: This is After Market, a Bri podcast. I'm Mia.

Milo: And I'm Milo. Here's what we're watching right now.

Mia: The yield on the 30-year US bond is trading above 5 percent for the longest stretch since the onset of the financial crisis.

Milo: Tesla just missed Wall Street earnings expectations, free cash flow turned negative, and margins slid.

Mia: US refiners are pushing diesel output toward near-record levels, defying typical seasonal patterns.

Milo: And IBM has lowered its full-year forecast and is pursuing productivity gains with AI, including a new coding tool.

Mia: The yield on the US 30-year bond is trading above 5 percent for the longest stretch since the onset of the financial crisis. That is raising alarm among investors who are watching a mounting debt pile and sticky inflation.

Milo: And this is happening just days before the Federal Reserve's next meeting. Traders remain split on whether the central bank will raise interest rates.

Mia: Part of the uncertainty comes from the new Fed Chair himself. Kevin Warsh has already made five public appearances, and Fed watchers are actively parsing his words for signals about where policy is headed.

Milo: In those five appearances, Warsh has used the phrase family fight thirteen times. He has returned to first principles eleven times. And six times he has told audiences that inflation is a choice for the Federal Reserve.

Mia: Those talking points are not just rhetoric. Traders are trying to decode what a Warsh-led Fed means in practice, and right now, the message is far from clear.

Milo: The result is a bond market on edge. The 30-year yield above 5 percent reflects genuine concern about whether the Fed can bring inflation under control without rattling the long end of the curve.

Milo: Tesla just reported earnings, and the numbers missed Wall Street expectations. Free cash flow turned negative, margins slid, and the results land during a slide in the company's stock price.

Mia: Analysts are describing Tesla stock as being at an inflection point. Traders are looking beyond the auto business now. They want AI credibility from this company.

Milo: The core auto business does show signs of a rebound. Under Elon Musk, Tesla actually beat Wall Street's delivery estimate by nearly 74,000 vehicles.

Mia: But that bright spot is competing with the earnings story. Negative free cash flow and sliding margins are hard for the market to overlook, especially when the narrative around Tesla has been shifting toward artificial intelligence ambitions.

Milo: There is also a forward-looking prediction in the mix. Some analysts suggest the earnings released today could send Tesla stock to a specific price target, though direction depends on how investors weigh the miss against the delivery beat.

Mia: This is the crossroads. Tesla needs to show it is more than a car company to justify its valuation, and earnings like these make that argument harder to sustain.

Mia: US refiners are going all-in on diesel production, pushing output toward near-record levels and defying the typical seasonal pattern.

Milo: The backdrop is a global diesel shortage that is being intensified by the wars involving Russia and Iran. Analysts warn the Iran war energy shock is already hitting the US economy as prices for gasoline and diesel climb.

Mia: In the gas market, a separate supply disruption is set to continue. QatarEnergy is preparing to extend its force majeure on LNG shipments through mid-October.

Milo: Meanwhile, a naval group reports that the Houthis are attacking ships in the southern Red Sea with missiles and drones, adding another layer of risk to global energy supply chains.

Mia: The effects are showing up in transportation. Southwest Airlines posted a more than 9 percent jump in second-quarter profit because higher fares are increasingly covering its rising fuel bill.

Milo: But Southwest's third-quarter forecast fell short. Fuel costs continue to climb, and even higher fares have limits when it comes to offsetting those increases.

Mia: IBM has lowered its full-year forecast following an earnings warning. The company is now pursuing productivity gains with artificial intelligence, including a new coding tool called Bob.

Milo: Over at Amazon, the artificial general intelligence unit has released a set of AI models called Nova. That same unit includes groups working on silicon and quantum computing.

Mia: But Amazon has also cut some jobs in that artificial general intelligence unit. The Nova launch and the layoffs are happening at the same time, which signals a recalibration rather than a simple expansion.

Milo: GE Vernova shares fell after a higher revenue outlook failed to impress investors. The signal here is that it is becoming harder for data-center equipment sellers to satisfy the market's very high expectations.

Mia: The stock dropped despite surging AI-driven orders. The wind segment weighed on results, and that offset what would otherwise have been a strong AI tailwind.

Milo: Taken together, these stories reveal a pattern. Companies are racing to capture AI productivity gains and AI-driven demand, but investors are raising the bar for what counts as success.

Mia: That is our look at the markets right now.

Milo: Thanks for listening to After Market, a Bri podcast. We'll be back next time.