Wednesday, May 28, 2025

Stocks Slightly Lower into Final Hour on Long-Term Rate Rise, Technical Selling, Profit-Taking, Homebuilding/Utility Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 18.8 -1.0%
  • S&P 500 Intraday % Swing .64 -46.7%
  • Bloomberg Global Risk On/Risk Off Index 70.7 +2.8% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.69 +.03%
  • Euro/Yen Carry Return Index 183.9 +.05%
  • Emerging Markets Currency Volatility(VXY) 8.46 -.7%
  • CBOE S&P 500 Implied Correlation Index 20.3 +2.4% 
  • ISE Sentiment Index 194.0 +47.0
  • Total Put/Call .72 -18.2%
  • NYSE Arms .69 -33.7%
  • NYSE Non-Block Money Flow -$139.7M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 55.9 +.4%
  • US Energy High-Yield OAS 418.5 -.9%
  • Bloomberg TRACE # Distressed Bonds Traded 217.0 -8.0
  • European Financial Sector CDS Index 62.0 -.3%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 146.2 -1.9%
  • Italian/German 10Y Yld Spread 98.0 basis points -3.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 78.6 -1.1%
  • Emerging Market CDS Index 170.5 +.1%
  • Israel Sovereign CDS 97.1 -1.8%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.93 -.03%
  • 2-Year SOFR Swap Spread -22.0 basis points +1.75 basis points
  • 3M T-Bill Treasury Repo Spread 2.75 basis point +2.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.5 basis point
  • MBS  5/10 Treasury Spread 154.0 -3.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 612.0 -1.0 basis point
  • Avg. Auto ABS OAS 60.0 -1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.02 -.2% 
  • US 10-Year T-Note Yield 4.48% +3.0 basis points
  • 3-Month T-Bill Yield 4.33% +3.0 basis points
  • China Iron Ore Spot 95.4 USD/Metric Tonne +.3%
  • Dutch TTF Nat Gas(European benchmark) 36.7 euros/megawatt-hour -.9%
  • Citi US Economic Surprise Index 14.3 +1.1 points
  • Citi Eurozone Economic Surprise Index 13.6 -1.1 points
  • Citi Emerging Markets Economic Surprise Index 34.1 +2.6 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(479 of 500 reporting) +11.3% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.22 +.05:  Growth Rate +12.0% unch., P/E 21.4 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.30% +1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +29.1% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 426.53 +.04: Growth Rate +23.3% unch., P/E 32.4 +.2
  • Bloomberg US Financial Conditions Index .33 +20.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.45 -34.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 6.5 +.5
  • US Yield Curve 48.25 basis points (2s/10s) +2.75 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.2% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 39.7% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% unch.: CPI YoY +2.40% unch.
  • 1-Year TIPS Spread 2.92 unch.
  • 10-Year TIPS Spread 2.34 unch.
  • Highest target rate probability for July 30th FOMC meeting: 75.6% (unch.) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 47.2%(-1.8 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating +205 open in Japan 
  • China A50 Futures: Indicating -106 open in China
  • DAX Futures: Indicating +131 open in Germany
Portfolio:
  • Slightly Higher: On gains in my tech sector longs, index hedges and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

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