"When one door closes, another door opens; but we often look so long and so regretfully upon the closed door that we do not see the ones which open for us."
- Alexander Graham Bell
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Global stock markets got a sugar rush from the progress of the tariff talks between China and the US over the weekend in Switzerland. It is maybe less the 90-day pause on previously threatened tariffs, but the overall more constructive tone from all parties involved in Trump’s Tariff Tantrum (TTT™).
The S&P 500 rallied over three percent with follow-through right into the session end, which should be interpreted as very bullish, even if futures are slightly lower this Tuesday morning:
Upside participation was very broad, with winners outpacing losers by more than four to one, leaving us with following heatmap:
Sector wise, there was a clear rotation away from defensive into the more growthy segments of the market:
But of course where stocks not the only place where the TTT™ unwind trade showed up …
US 10-year bond yields rallied as high as 4.47% before caving in a bit a gain:
Now, it is normal for bond yields to move higher (bond prices to sell off) on an improved economic outlook with the tariff overhang removed, BUT, as a sweet reminder, 4.50% on the Tens is where the Trump put was only a month ago. I.e., at the level he (or better said the Treasury) got very nervous about “things”. Sure, the situation is much more relaxed now, but keep in mind that lower tariffs now also means that the US fiscal budget could move into focus again. Just saying…
Currency also joined the TTT™ unwind trade, with the Dollar rallying against nearly everything,
leaving us with following daily candle on the Dollar Index (DXY) chart:
As mentioned in yesterday’s Quotedian (click here), 102.60 could be a first target for the greenback on this chart, however, structural weakness should remain over the coming months to years.
Gold dropped nearly three percent, but is holding on to key support … for now:
Time's up, more tomorrow - May the trend be with you!
True over and over again…
