Monday, July 07, 2025

Stocks Lower into Final Hour on Higher Long-Term Rates, US-Global Tariff Uncertainty, BBB Passage Profit-Taking, Energy/Tech Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Around Average
  • Market Leading Stocks: Performing Inline
Equity Investor Angst:
  • Volatility(VIX) 18.0 +3.0%
  • S&P 500 Intraday % Swing .75 +29.5%
  • Bloomberg Global Risk On/Risk Off Index 73.1 +.02% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.99 -.37%
  • Euro/Yen Carry Return Index 192.6 +.6%
  • Emerging Markets Currency Volatility(VXY) 7.80 +1.7%
  • CBOE S&P 500 Implied Correlation Index 19.8 +10.2% 
  • ISE Sentiment Index 168.0 -8.0
  • Total Put/Call .89 -23.9%
  • NYSE Arms .72 -29.4%
  • NYSE Non-Block Money Flow -$361.9M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 50.74 +2.6%
  • US Energy High-Yield OAS 374.5 +2.4%
  • Bloomberg TRACE # Distressed Bonds Traded 200.0 -8.0
  • European Financial Sector CDS Index 58.2 -1.8%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 128.4 -1.0%
  • Italian/German 10Y Yld Spread 85.0 +1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 73.2 +.7%
  • Emerging Market CDS Index 155.9 +2.9%
  • Israel Sovereign CDS 83.0 +.5%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.0 -.15%
  • 2-Year SOFR Swap Spread -26.5 basis points -1.0 basis point
  • 3M T-Bill Treasury Repo Spread 2.75 basis point -.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap .25 unch.
  • MBS  5/10 Treasury Spread 146.0 +3.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 598.0 unch.
  • Avg. Auto ABS OAS 55.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 -.45%
  • US 10-Year T-Note Yield 4.39% +5.0 basis points
  • 3-Month T-Bill Yield 4.35% -1.0 basis point
  • China Iron Ore Spot 95.5 USD/Metric Tonne +.3%
  • Dutch TTF Nat Gas(European benchmark) 33.6 euros/megawatt-hour +.5%
  • Citi US Economic Surprise Index -.4 +2.2 points
  • Citi Eurozone Economic Surprise Index 32.3 -.1 point
  • Citi Emerging Markets Economic Surprise Index 25.4 -2.1 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(18 of 500 reporting) +1.7% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 281.17 +.47:  Growth Rate +10.6% +.2 percentage point, P/E 22.2 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.43% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 447.18 +.70: Growth Rate +19.8% +.2 percentage point, P/E 33.5 +.3
  • Bloomberg US Financial Conditions Index .54 +1.0 basis point
  • Bloomberg Euro-Zone Financial Conditions Index 1.47 -9.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 4.9 +.2
  • US Yield Curve 49.0 basis points (2s/10s) +3.0 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.6% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 45.7% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.68% unch.: CPI YoY +2.64% unch.
  • 1-Year TIPS Spread 2.71 +9.0 basis points
  • 10-Year TIPS Spread 2.36 +2.0 basis points
  • Highest target rate probability for Sept. 17th FOMC meeting: 62.7% (-1.3 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Oct. 29th meeting: 45.1%(+1.0 percentage point) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Polymarket:
  • Which Countries Will the US Agree to Tariff Agreements with Before August?: 
  • EU 73.0% +16.0 percentage points 
  • India 78.0% -7.0 percentage points
  • Canada 69.0% unch.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +23 open in Japan 
  • China A50 Futures: Indicating -100 open in China
  • DAX Futures: Indicating +45 open in Germany
Portfolio:
  • Lower: On losses in my industrial/tech/financial/consumer discretionary sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure: Moved to 75% Net Long

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