Wednesday, July 09, 2025

Stocks Rising into Final Hour on Falling Long-Term Rates, Rising Fed Rate-Cut Odds, Short-Covering, Biotech/Homebuilding Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 15.9 -5.4%
  • S&P 500 Intraday % Swing .61 +50.9%
  • Bloomberg Global Risk On/Risk Off Index 77.5 +1.6% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 9.04 +.18%
  • Euro/Yen Carry Return Index 192.99 -.28%
  • Emerging Markets Currency Volatility(VXY) 7.79 -.64%
  • CBOE S&P 500 Implied Correlation Index 17.5 -5.1% 
  • ISE Sentiment Index 175.0 -22.0
  • Total Put/Call .86 +1.2%
  • NYSE Arms 1.65 +63.4%
  • NYSE Non-Block Money Flow +$40.4M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 50.4 -1.6%
  • US Energy High-Yield OAS 374.3 -.45%
  • Bloomberg TRACE # Distressed Bonds Traded 181.0 -9.0
  • European Financial Sector CDS Index 57.8 -1.2%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 127.1 -.63%
  • Italian/German 10Y Yld Spread 85.0 unch.
  • Asia Ex-Japan Investment Grade CDS Index 73.2 -.42%
  • Emerging Market CDS Index 154.2 -1.3%
  • Israel Sovereign CDS 81.4 -1.0%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.97 +.09%
  • 2-Year SOFR Swap Spread -25.0 basis points -.5 basis point
  • 3M T-Bill Treasury Repo Spread 3.25 basis point -1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap .75 +.25 basis point
  • MBS  5/10 Treasury Spread 143.0 -2.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 599.0 -1.0 basis point
  • Avg. Auto ABS OAS 55.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 -.01%
  • US 10-Year T-Note Yield 4.34% -6.0 basis points
  • 3-Month T-Bill Yield 4.35% unch.
  • China Iron Ore Spot 96.5 USD/Metric Tonne +.5%
  • Dutch TTF Nat Gas(European benchmark) 34.3 euros/megawatt-hour +.3%
  • Citi US Economic Surprise Index 1.1 +.2 point
  • Citi Eurozone Economic Surprise Index 32.2 unch.
  • Citi Emerging Markets Economic Surprise Index 24.2 -.8 point
  • 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 281.41 +.19:  Growth Rate +10.7% +.1 percentage point, P/E 22.2 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.44% +2.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 447.74 +.35: Growth Rate +19.9% +.1 percentage point, P/E 33.5 +.3
  • Bloomberg US Financial Conditions Index .57 +4.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.70 +4.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 7.0 +1.2
  • US Yield Curve 47.75 basis points (2s/10s) -2.75 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.6% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 41.5% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.68% unch.: CPI YoY +2.64% unch.
  • 1-Year TIPS Spread 2.75 -4.0 basis points
  • 10-Year TIPS Spread 2.34 -2.0 basis points
  • Highest target rate probability for Sept. 17th FOMC meeting: 66.3% (+5.5 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Oct. 29th meeting: 44.1%(-2.0 percentage points) 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 76.0% unch.
  • India 74.0% -4.0 percentage points.
  • Japan 45.0% -15.0 percentage points 
  • South Korea  51.0% +4.0 percentage points
Overseas Futures:
  • Nikkei 225 Futures: Indicating +150 open in Japan 
  • China A50 Futures: Indicating -67 open in China
  • DAX Futures: Indicating +171 open in Germany
Portfolio:
  • Higher: On gains in my tech/consumer discretionary/utility/industrial/financial sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 100% Net Long

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