E-mini S&P 500 (June): Settled at 4185.50, down 8.25
E-mini Nasdaq-100 (June): Settled at 13,656.25, up 21.00
U.S. benchmarks settled in yesterday and are now priming for their next bullish push. As of yesterday’s close, the S&P gained 3.2% from last week’s low, and the Nasdaq 5.4%. Although market participants have become accustomed to such swings, these are extraordinary gains, and the market must digest them; yesterday was exactly that.
If you look across the board, it was mostly tech that held ground, whereas financials, industrials, energies, and much of healthcare pared back. Underpinning tech has been the strength across Treasuries, or lower yields.
Yesterday, we discussed how the Fed tacked on $92 billion to their balance sheet in the week ending May 19, and tomorrow we get data for the week ending today. While this is a major factor supporting Treasuries, smaller auctions of late have also helped. Furthermore, the Fed’s persistently dovish rhetoric itself hasn’t only been supportive, it’s also been right.
It would seem we’re in the midst of this feared rise in inflation, and it isn’t so bad; on the recent hot CPI data, there were, in fact, transitory components such as used car and truck sales. Real inflation, the type that hits our pockets, has already been here and rates priced this in over the last 6 months. Remember, we were steadfastly bearish on the Treasury complex beginning last October and through the end of February.
Yesterday’s soft Consumer Confidence data and a continued dovish stance from Fed officials this week has further buoyed Treasuries.
Today’s calendar is rather quiet, but we look to comments from Fed Governor Quarles at 9:00 a.m. CT and 2:00 p.m. CT, along with a 5-year Treasury auction at noon. Tomorrow will prove pivotal with the second look at Q1 GDP and the hated 7-year auction, but the week culminates into Friday’s Core PCE data, which is the Fed’s preferred inflation indicator.
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