Wednesday, June 04, 2025

Stocks Modestly Higher into Final Hour on Plunging Long-Term Rates, Rising Fed Rate-Cut Odds, Short-Covering, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: About Even
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 17.6 -.6%
  • S&P 500 Intraday % Swing .41 -53.7%
  • Bloomberg Global Risk On/Risk Off Index 69.6 +.7% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.77 +.48%
  • Euro/Yen Carry Return Index 183.4 -.4%
  • Emerging Markets Currency Volatility(VXY) 8.31 -.2%
  • CBOE S&P 500 Implied Correlation Index 21.0 -.7% 
  • ISE Sentiment Index 137.0 -9.0
  • Total Put/Call .83 -10.8%
  • NYSE Arms 1.44 +41.2%
  • NYSE Non-Block Money Flow -$81.9M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 55.0 +.05%
  • US Energy High-Yield OAS 400.1 -.14%
  • Bloomberg TRACE # Distressed Bonds Traded 235.0 -3.0
  • European Financial Sector CDS Index 60.9 -.09%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 142.0 -.7%
  • Italian/German 10Y Yld Spread 97.0 basis points unch.
  • Asia Ex-Japan Investment Grade CDS Index 76.9 -1.9%
  • Emerging Market CDS Index 165.6 -1.0%
  • Israel Sovereign CDS 98.3 +1.1%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.7 +.01%
  • 2-Year SOFR Swap Spread -21.25 basis points +.25 basis point
  • 3M T-Bill Treasury Repo Spread 4.25 basis point +4.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.0 +.25 basis point
  • MBS  5/10 Treasury Spread 155.0 unch.
  • Bloomberg CMBS Investment Grade Bbb Average OAS 611.0 -7.0 basis points
  • Avg. Auto ABS OAS 58.0 -1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.1 +.1% 
  • US 10-Year T-Note Yield 4.36% -9.0 basis points
  • 3-Month T-Bill Yield 4.34% +2.0 basis points
  • China Iron Ore Spot 95.0 USD/Metric Tonne -.5%
  • Dutch TTF Nat Gas(European benchmark) 33.7 euros/megawatt-hour -.6%
  • Citi US Economic Surprise Index -3.1 -5.1 points
  • Citi Eurozone Economic Surprise Index 24.6 +8.9 points
  • Citi Emerging Markets Economic Surprise Index 33.7 +1.0 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(495 of 500 reporting) +12.4% -.1 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.86 +.11:  Growth Rate +9.0% +.1 percentage point, P/E 21.6 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.25% -1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +32.4% -.1 percentage point
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 428.75 +.35: Growth Rate +14.8% -9.1 percentage points, P/E 32.7 -.1
  • Bloomberg US Financial Conditions Index .41 +5.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.39 +7.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 7.4 -.2
  • US Yield Curve 48.75 basis points (2s/10s) -1.25 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +4.6% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 40.0% -1.6 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.65% unch.: CPI YoY +2.40% unch.
  • 1-Year TIPS Spread 2.80 -6.0 basis points
  • 10-Year TIPS Spread 2.31 -3.0 basis points
  • Highest target rate probability for July 30th FOMC meeting: 69.6% (-5.7 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 56.0%(+.6 percentage point) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -141 open in Japan 
  • China A50 Futures: Indicating -69 open in China
  • DAX Futures: Indicating +33 open in Germany
Portfolio:
  • Higher: On gains in my consumer discretionary/tech/industrial sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

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