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Much less bothered.
Markets shook off much of the fear from last week and S&P futures rallied in the premarket, alongside rallies in Asia and Europe. The S&P opened around +40 and climbed to +75 by around 10:30 AM. That was the high and the index slipped downward for the rest of the session, albeit gently. All of the Mag 7 rose today. The information technology sector performed best while energy lagged. The rebound by stocks was pretty boring, all things considered. Capital flow was almost normal at 95%.
Headlines out of the Middle East remain the focus of markets but reports of Iran expressing a willingness to deescalate the situation buoyed confidence that last week was simply the latest in a long history of scary flareups between the two countries. Dip-buyers and never-worrieds are vindicated again, at least for a day. The broader market is returning to the comfort of the previous rally and already making plans for new all-time highs.
Treasury yields continued to climb, a sign of bond market sentiment isn’t as rosy as equity’s. The Treasury curve has puzzled many investors of late. The favorable inflation data hasn’t been as influential on Treasuries as it was on stocks. The market’s attention on the coming enormous government deficits, and necessary issuance, appears to keep bond bears in business and bond bulls sidelined. To be fair, Treasury yields haven’t really trended lately and the situation is best described as a stalemate. That said, it seems the bond market is more nervous than usual. There’s ample speculation as to why but no solid evidence.
Stocks started the new week by picking themselves up and brushing themselves off. Headlines cooperated, thus far.
See you tomorrow.
-Mike
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