Thursday, May 29, 2025

Stocks Modestly Higher into Final Hour on Lower Long-Term Rates, Declining Inflation Expectations, Earnings Outlook Optimism, Energy/Biotech Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 19.2 -.4%
  • S&P 500 Intraday % Swing .77 -8.0%
  • Bloomberg Global Risk On/Risk Off Index 68.5 -1.7% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.74 +.51%
  • Euro/Yen Carry Return Index 184.34 +.24%
  • Emerging Markets Currency Volatility(VXY) 8.43 -.59%
  • CBOE S&P 500 Implied Correlation Index 21.9 +3.5% 
  • ISE Sentiment Index 176.0 +10.0
  • Total Put/Call .73 -8.8%
  • NYSE Arms 1.64 +74.5%
  • NYSE Non-Block Money Flow +$43.4M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 56.4 +.5%
  • US Energy High-Yield OAS 418.95 -2.9%
  • Bloomberg TRACE # Distressed Bonds Traded 215.0 -2.0
  • European Financial Sector CDS Index 61.7 -.6%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 143.7 -1.7%
  • Italian/German 10Y Yld Spread 98.0 basis points unch.
  • Asia Ex-Japan Investment Grade CDS Index 76.9 -2.1%
  • Emerging Market CDS Index 171.0 +.3%
  • Israel Sovereign CDS 98.1 +1.1%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.77 +.04%
  • 2-Year SOFR Swap Spread -22.5 basis points -.5 basis point
  • 3M T-Bill Treasury Repo Spread 2.25 basis point -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +1.25 basis points
  • MBS  5/10 Treasury Spread 155.0 +1.0 basis point
  • Bloomberg CMBS Investment Grade Bbb Average OAS 614.0 +2.0 basis points
  • Avg. Auto ABS OAS 60.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.15 +.36% 
  • US 10-Year T-Note Yield 4.42% -6.0 basis points
  • 3-Month T-Bill Yield 4.34% +1.0 basis point
  • China Iron Ore Spot 97.0 USD/Metric Tonne +.06%
  • Dutch TTF Nat Gas(European benchmark) 35.2 euros/megawatt-hour -4.2%
  • Citi US Economic Surprise Index 11.9 -2.4 points
  • Citi Eurozone Economic Surprise Index 14.9 +1.3 points
  • Citi Emerging Markets Economic Surprise Index 35.5 +1.4 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(487 of 500 reporting) +12.5% +1.2 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.19 -.03:  Growth Rate +8.7% -3.3 percentage points, P/E 21.3 -.1
  • S&P 500 Current Year Estimated Profit Margin 13.26% -4.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +32.5% +3.4 percentage points
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 426.46 -.07: Growth Rate +23.3% unch., P/E 32.2 -.2
  • Bloomberg US Financial Conditions Index .33 unch.
  • Bloomberg Euro-Zone Financial Conditions Index 1.45 unch.
  • Bloomberg Global Trade Policy Uncertainty Index 6.8 +.3
  • US Yield Curve 48.25 basis points (2s/10s) unch.
  • US Atlanta Fed GDPNow Q2 Forecast +2.2% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 37.5% -2.2 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% unch.: CPI YoY +2.40% unch.
  • 1-Year TIPS Spread 2.78 -14.0 basis points
  • 10-Year TIPS Spread 2.32 -2.0 basis points
  • Highest target rate probability for July 30th FOMC meeting: 74.9% (-2.7 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 52.8%(+4.7 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -527 open in Japan 
  • China A50 Futures: Indicating -136 open in China
  • DAX Futures: Indicating +20 open in Germany
Portfolio:
  • Slightly Higher: On gains in my utility/financial/industrial sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

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