Wednesday, June 18, 2025

Stocks Slightly Higher into Final Hour on Iran-Israel Ceasefire Hopes, Stable Long-Term Rates, Short-Covering, Tech/Financial Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 20.1 -6.9%
  • S&P 500 Intraday % Swing .63 +71.5%
  • Bloomberg Global Risk On/Risk Off Index 70.6 +2.9% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.79 -.18%
  • Euro/Yen Carry Return Index 187.4 -.14%
  • Emerging Markets Currency Volatility(VXY) 8.14 +1.2%
  • CBOE S&P 500 Implied Correlation Index 22.0 -7.0% 
  • ISE Sentiment Index 130.0 -14.0
  • Total Put/Call .91 -3.2%
  • NYSE Arms 1.34 -.74%
  • NYSE Non-Block Money Flow -$94.3M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 56.2 -1.1%
  • US Energy High-Yield OAS 376.0 +.1%
  • Bloomberg TRACE # Distressed Bonds Traded 224.0 +3.0
  • European Financial Sector CDS Index 63.2 +1.9%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 143.3 +1.5%
  • Italian/German 10Y Yld Spread 95.0 unch.
  • Asia Ex-Japan Investment Grade CDS Index 78.0 +1.5%
  • Emerging Market CDS Index 168.5 +1.2%
  • Israel Sovereign CDS 112.77 +2.3%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.9 +.15%
  • 2-Year SOFR Swap Spread -22.5 basis points +.25 basis point
  • 3M T-Bill Treasury Repo Spread 3.5 basis point +1.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +.25 basis point
  • MBS  5/10 Treasury Spread 152.0 unch.
  • Bloomberg CMBS Investment Grade Bbb Average OAS 609.0 +2.0 basis points
  • Avg. Auto ABS OAS 56.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.0 unch. 
  • US 10-Year T-Note Yield 4.39% unch.
  • 3-Month T-Bill Yield 4.32% +2.0 basis points
  • China Iron Ore Spot 92.7 USD/Metric Tonne +.3%
  • Dutch TTF Nat Gas(European benchmark) 38.7 euros/megawatt-hour -1.6%
  • Citi US Economic Surprise Index -23.1 -2.3 points
  • Citi Eurozone Economic Surprise Index 30.6 +.3 point
  • Citi Emerging Markets Economic Surprise Index 31.7 +.2 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(4 of 500 reporting) +.3% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 278.28 +.07:  Growth Rate +9.5% unch., P/E 21.6 unch.
  • S&P 500 Current Year Estimated Profit Margin 13.22% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 432.75 +.23: Growth Rate +15.9% +.1 percentage point, P/E 32.9 -.2
  • Bloomberg US Financial Conditions Index .26 -14.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index .85 -5.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 4.4 +.1
  • US Yield Curve 43.25 basis points (2s/10s) -5.0 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +3.4% -.1 percentage point
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 40.5% +.8 percentage point
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.58% unch.: CPI YoY +2.62% +1.0 basis point
  • 1-Year TIPS Spread 2.67 +2.0 basis points
  • 10-Year TIPS Spread 2.32 unch.
  • Highest target rate probability for July 30th FOMC meeting:  89.4% (+6.1 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 60.0%(+6.9 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Polymarket:
  • US Military Action Against Iran Before July 55.0% -11.0 percentage points
  • Will Iran Close the Straight of Hormuz in 2025? 34.0% -5.0 percentage points
  • US-EU Trade Agreement by July 9th 47.0% -8.0 percentage points 
  • Reconciliation Bill Passed by July 31st 69.0% +4.0 percentage points 
Overseas Futures:
  • Nikkei 225 Futures: Indicating -160 open in Japan 
  • China A50 Futures: Indicating -116 open in China
  • DAX Futures: Indicating -11 open in Germany
Portfolio:
  • Slightly Lower: On losses in my industrial sector longs and index hedges
  • Disclosed Trades: None
  • Market Exposure: 25% Net Long

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