IF YOU ARE WONDERING WHY STOCKS JUST ALL WENT DOWN AT ONCE WE JUST HAD A HORRIBLE BOND AUCTION IN THE UNITED STATES FOR OUR 20-YEAR TREASURIES Because of the lack of bidders…it caused the 20-year bond yield to surge to 5.1%. Credit market is screaming for help right now. https://x.com/amitisinvesting/status/1925241383973011968
It was a "sell US" day on Wednesday with equities posting notable losses while Treasuries were sold across the curve, particularly in the long end to see the curve steepen. Amid a lack of data this week (aside from Flash PMIs on Thursday) the US focus has largely been on Trump's Tax bill. On which, an agreement has been made on the SALT deductions, although some Republican hardliners are still worried that not enough spending cuts are included in the bill. The CBO estimated the bill would add USD 2.3trln to deficits over the next decade, raising fiscal fears.
The equity sell-off sharply accelerated in the wake of the 20-year bond auction, which saw a chunky 1.2bps tail and soft bid-to-cover, and led to weakness in Treasuries across the curve, the dollar and US equities. On the tax bill, House Speaker Johnson has said they will vote on the bill tonight, although the timing is TBC.
In FX, the Dollar was the clear laggard with JPY outperforming despite higher UST yields. AUD saw mild upside vs. the Buck but retraced some of the post-RBA losses. However, the cyclical currencies (AUD, GBP, NZD) were relative underperformers, excluding the Dollar due to the weakness in US equities.
Crude prices settled lower despite overnight strength on reports Israel is considering striking Iran's nuclear facilities, but a final decision has not been made - crude pared the strength and sold off throughout the session in the risk-off conditions while the EIA data also weighed.
Gold was bid as the dollar, and stocks took a hit. Attention on Thursday looks to the Flash PMI report on Thursday, and any more tax bill updates.
..Dow fell -817pts or -1.91% to 41,860, S&P500 down -1.61% to 5,844, Nasdaq -1.41%, Russell 2000 (IWM) -2.81%
..BTC hits all time high intraday of $109,778 now at $108.410.
..Gold rebounds +0.77% to $3,315
..bank stocks hit, XLF -2.05%, Morgan Stanley -3%, Wells Fargo -3.09%, BoA -3.31%, Citi -3.27%, JPM -1.76%
..Lithium stocks plunged, ALB -4.86%, SQM -2.13%, LAC -2.14%
..United Health leads health stocks lower, XLV -2.32%, UNH -5.78%, Vertex -2.65%, Eli Lilly -2.95%, Bristol-Myers -1.82%
..DXY closed below 100 at 99.60
And, the run continues after the market closes:
The 2Y Note Yield is now ABOVE 4.00%. When the US is paying 4% interest “risk free” on a 2-Year bond, the market starts paying attention. https://x.com/KobeissiLetter/status/1925296326184468700
...Walmart may have to 'eat some of the tariffs but this is your outcome, Mr President.
..market pundits say no recession including the Fed. Jamie Dimon puts it as 50:50
US RECESSION ALERT:
The Conference Board Leading Economic Index FELL to the lowest level in 11 YEARS. The drawdown since the peak has been 17.3%, the biggest since the Great Financial Crisis. Such a drop has never been seen outside of recessions and is higher than in 2001. https://x.com/GlobalMktObserv/status/1925182345134363134
Every major move in $SPX since February? Pinned to OpEx. Feb OpEx marked the top. March & April OpEx = selloffs. April OpEx bottom = +600pt rally into May OpEx. May Opex = starting to selloff. Definitely something to be aware of going forward. https://x.com/kurtsaltrichter/status/1925266160490025261
