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"YOU MEAN A DOWN WEEK IS STILL POSSIBLE??"

A CORRECTIVE / CONSOLIDATION IS THE BEST THING THAT COULD HAPPEN!

(IF YOU WANT HIGHER EQUITY MARKETS!)

Click All Charts to Enlarge

HISTORICAL ELECTION YEAR PERFORMANCE: 2024 was the 3rd best Election Q1 since 1950. Chop continues up ~2.5% April-October. Only 2 losses in the last 7 months of election years since 1950: 2000 (Dotcom Bubble bursts) & 2008 (Financial Crisis).

1 - SITUATIONAL ANALYSIS

This was a week characterized by:

• Data supporting 'No Landing' from a Growth perspective, and
• Disappointment from a Disinflation perspective.

FedSpeak was without exception hawkish as they suddenly realized that all that 'pivot' optimism did nothing but dramatically ease financial conditions and interfere with their 'best laid plans' for a rate-cut and soft landing.

Friday, Nasdaq was down over 2% while The Dow managed to gain 0.5%. Small Caps were almost unchanged by the end of the day with the S&P lagging.

We are moving further into fear territory. This sell-off feels, so far, very well behaved. (Chart Right).

CHART BELOW: A lot of fear across various indicators, but things haven't fully spilled over to equities...yet?

WEEK'S RECAP

• INDEXES: Technically we are now in bear market since we are down over 22% from the prior highs.
• All the majors ended the week red (with The Dow desperately trying to get back to even).
• Nasdaq was down over 5.5% on the week! S&P and Small Caps down around 3%.
• Nasdaq is down for six straight days for its biggest weekly drop since Nov 2022, breaking below its 100DMA as CTA 'sell threshold's' were crossed.
• The Russell 2000, Nasdaq, and Dow are all back below their 100DMA, and the S&P 500 is pushing down towards its 100DMA (having blow thru the CTA 'sell' thresholds).
• The NDX is now pacing for its worst week in over a year (down 6 of 7 weeks) as a complicated technical backdrop (CTAs, lower retail participation, NDX now testing 100-dma, seasonality), sideways earnings revisions thus far (ASML, TSM and even Sheridan’s NFLX EPS revisions were only 1-2% last night), a tense geopolitical backdrop (overnight headlines) and elevated positioning are testing conviction into a busy week of earnings.
• VIX: Soared this week to six-month highs, and credit markets also finally started to crack.
• MAG7: basket broke below its 50DMA this week - the first time since October, when The Fed 'pivoted' and save the world. The market cap of the MAG7 is now down over $1 Trillion from its highs a week ago.
• AI LEADERS: crashed relative to firms 'at risk from AI', plunging to their lowest in two months.
• Of note is that the AI Leaders are perfectly back to their prior peak in 2021 (which was driven by chip demand for crypto mining and COVID disruptions), breaking down to the 100DMA and through the medium-term uptrend.
• NVDA plunged 10% Friday back to two month lows, closing below its 50DMA for the first time since Nov 2023.
• SEMIS: were basically brutally beaten down this week.
• BANKS: had a decent week with Wells Fargo and Morgan Stanley outperforming. JP Morgan is still lagging from the drop on its last Friday's earnings.
• TREASURY YIELDS: Ended the week higher, but not before plunging overnight on a flight-to-quality bid as initial Israeli missiles hit Iran, taking yields lower on the week.
• By the close of the week, the belly slightly underperformed but yields were all up by around 8-10bps.
• 5.00% remains a key level for the 2Y Yield.
• US DOLLAR: Rallied for the second straight week, hitting its highest since early Nov 2023 last night on the mid-east attacks before sliding back.
• PRECIOUS METALS:
• Spot Gold prices spiked overnight Thursday on the Israel attack, pulled back, then rallied up to $2400 once again to close at the highs. Gold closed the week at a new record high...
• Silver soared 3% on the week to new cycle highs (its highest since Feb 2021)..
• Silver has been broadly speaking outperforming gold in recent weeks after peaking at a gold-to-silver ratio of around 92x in January, it is ow down to 83 (still well above the 65x average since 1980, implying silver remains 'cheap' to gold.
• OIL: Despite two major attacks in the Middle East, oil prices ended lower for the second week in a row (well WW3 hasn't started yet). Some knock-on effects from an evaporation of hope for demand-sponsoring rate-cuts also weighed on sentiment as WTI

NOTES:

• CTA group sold $25B globally this week ($9B in SPX) with next week expected to bring another $27B globally (and $10B SPX) in a flat tape scenario. As a reminder the medium term threshold (aka most important) level is 4886 – less than 100 handles away from spot.
• Next week brings 43% of SPX set to report earnings highlighted by META/MSFT/GOOGL (aka $6.1T of mkt cap) reporting on Thurs night...on the macro front, key reports include 1Q GDP on Thurs & March PCE on Fri.

CHART TOP RIGHT: NASDAQ and SOX RSI hitting lowest levels in a while, but as we all know, oversold can stay in oversold mode for longer than most think possible.

CHART BOTTOM RIGHT: The market has seen more Hindenburg Omens than in any year since the peak

CHART BELOW: CSCO analog doesn't look so crazy anymore.

2 - FUNDAMENTAL ANALYSIS

CREDIT MARKETS LEAD

As you are well aware, we are strong believers that Credit Markets LEAD and Equity & Bond Markets FOLLOW.

In the way of a reminder let's revisit what we previously outlined in the Mid-Week Subscribers update for those that might be new subscribers.

The Bond Market (MOVE) and the Equity Market (VIX) before we look at the Credit Markets (CDX) to see what the signals are.

VOLATILITY - MOVE & VIX

It took bond volatility, MOVE, three months to reach more "normal" levels of volatility. This has basically been reversed in a few sessions. The latest move in the MOVE has been huge (CHART ABOVE)

CHART BELOW

Remembering that you don't compare mean reverting to trending assets, the gap between bond volatility and SPX is now simply huge.

The reaction in VIX has been extreme.

Last time we had a similar pick up in VIX was in Sep/Oct. The initial move higher in VIX was accompanied with a 5.5% sell off in SPX.

The VIX eventually surged even higher during the autumn, and the total SPX sell off reached around 8%.

SORTING OUT VOLATILITY v CREDIT MARKETS

Credit protection is up, but far from panic.

While the VIX has exploded to the upside, credit protection, CDX IG, is showing much less panic (chart right)

Compare SPX to the CDX IG and you realize this appears at this stage to be nothing more than just a normal sell off, with little panic.

(Chart Right shows SPX vs CDX IG inverted.

CHART BELOW: The High Yield Credit sector as represented by the "JNK" is currently reflecting nothing more than a consolidation to the 200 DMA before completing a potential final leg up.

This is normally good for the equity markets.

Note below that we bounced off the 200 DMA on Friday which matches the "Hammer Candlestick" in the S&P 500 (see S&P chart later).

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above: SUBSCRIBER LINK

3 - TECHNICAL ANALYSIS

THE HEADLINE MARKET: MAGNIFICENT 7

• We are reaching the vertical lift part of the parabolic (geometric) lift shown by the dashed red line.
• We have intermediate term Divergence with momentum (bottom pane).
• In the short term Momentum has rolled over but hasn't yet decisively broken the Momentum trend line support. (bottom pane).

MATASII CROSS: WEEKLY - CONTINUES TO SIGNAL A MAG-7 BUY

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

CHART RIGHT: As gold pushes to higher & higher record highs (in USD terms), Real yields have so far refused to play along (right)?? Normally Gold falls when real yields rise and are historically negatively correlated. 

What we believe is that what we are seeing is Gold aggressively discounting a coming collapse in Real Rates which we expect between 2.25% - 2.5%.

CONTROL PACKAGE

There are EIGHT charts we have outlined in prior chart packages which we will continue to watch closely as a CURRENT "control set".

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. OIL - XLE - MONTHLY (CHART LINK)
7. OIL - WTIC - MONTHLY - (CHART LINK)
8. BITCOIN - BTCUSD - WEEKLY (CHART LINK)
9. 10y TIPS - Real Rates - Daily (CHART LINK)

GOLD cfd's - DAILY

The 3 Std Deviation band for Gold has gone almost vertical with Gold prices tracking it!! Frankly, in over 40 years I don't believe I have seen this technically occur with a 3 Std Dev in Gold? Something is either broken, panic has set in somewhere or there is an "elephant(s)" now playing the market?

NOTE: Gold CFD's have not corrected (below) whereas Gold Bullion has.(GOLD - DAILY (CHART LINK))

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

INTEGRATED GOLD MINERS

We continue to have a close eye on Gold and the INTEGRATED GOLD MINERS as represented by Barrick Gold. Barrick has broken out of its long term declining overhead resistance trend.

It has been pulling back this week as Gold Bullion has. It may be a good opportunity to be adding to your Gold and Silver positions on any real pullbacks.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

Are bank reserves at The Fed still the driving force for reality? (Chart Right)

We saw the reality check from Aug-Oct last year; are we about to get another?

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set".

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 CFD

The S&P 500 cfd aggressively led the S&P 500 to its cfd 100 DMA but not yet the S&P 500 cash index (see "Thought Experiment")

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Daily - Our Though Experiment

The SPX put in a massive "Hammer Candle" overnight Friday, touching the 100 day at intraday lows. These are very rare candles when it comes to indexes. Occurring post sell offs they tend to mark a price decline is over and prices will rise from here (See chart right)

Our Though Experiment, which we have discussed many times previously in the way of a projection, suggests we have put in a near term top (or very close to it) and will now consolidate before possibly completing one final small impulse higher OR put in a final Wave 5 of a higher degree.

NOTE: To reiterate what I previously wrote - "the black labeled activity shown below, between now and July, looks like a "Killing Field" where the algos take Day Traders, "Dip Buyers", the "Gamma Guys" and FOMO's all out on stretchers!"

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR: What We Spotted

MONDAY

• The stock sell-off continued Monday to see the S&P 500 lose 2.6% across Friday and Monday, its largest two-day sell-off in more than a year, and now closing beneath its 50d MA for the first time in five months, according to Bloomberg, reflective of the weakening technical backdrop for risk assets.
• The VIX climbed above 19. While stock futures had made a recovery attempt during the overnight session after geopolitical hedges from the weekend were unwound, later reporting Israel was working on a retaliation contributed to renewed risk off conditions during stateside trade, with gold, oil, and haven currencies all finding some momentum into the APAC session here.
• Treasuries saw heavy losses, with the focus returning to the hot US economic conditions, highlighted by the massive beat in retail sales earlier, although yields did pare off highs as the geopolitical angst rose again into the NY afternoon.
• The Dollar Index hit new YTD peaks, while USD/JPY also found new multi-decade highs above 154, although some of the Iran/Israel angst has put a stop to the Yen's rot for now.

INFLATION BREAKEVENS: 5yr BEI +3.7bps at 2.494%, 10yr BEI +3.4bps at 2.440%, 30yr BEI +3.0bps at 2.368%.

REAL RATES: 10Y -- 2.1681%

STOCK SPECIFIC

• Goldman Sachs (GS) +3%: Earnings impressed; EPS, revenue, and other key metrics all beat, alongside a strong revenue breakdown.
• Charles Schwab (SCHW) +2%: Post-earnings, CFO expects net interest margin expansion through 2024. In earnings, they were mixed - top and bottom line marginally beat, but internals were more mixed.
• Tesla (TSLA) -5%: Lays off "more than 10%" of its global workforce. Separately, CEO Musk announced a cut in the price of the FSD package to USD 99/month.
• Apple (AAPL) -2%: iPhone shipments fell 10% in Q1 and short of Wall St. expectations as it was hurt by intensifying competition by Android, according to IDC.
• Informatica (INFA) -7%, Salesforce (CRM) -7%: Salesforce is in advanced negotiations to acquire Informatica, WSJ reports. The sources add the price being discussed is below INFA''s current share price of USD 38.48.
• Blackbaud (BLKB) +3%: Clearlake offers USD 80/shr to acquire Blackbaud (BLKB). Note, BLKB closed Friday at USD 76.72.
• Snap One Holdings (SNPO) +30%: To be acquired by Resideo (REZI) -4% for USD 10.75/shr. Note, SNPO closed Friday at USD 8.14/shr.
• Encore Wire (WIRE) +11%: To be acquired by Prysmian for USD 290/shr. Note, WIRE closed Friday at USD 260.98.
• Medical Properties Trust (MPW) +18%: Sold stakes in five Utah hospitals to a new JV with an affiliated investment fund for USD 886mln.
• Cisco (CSCO) -0.5%: Upgraded at BoFA citing three catalysts for growth acceleration.
• Alcoa (AA) +4: Benefitting from the surge in Aluminium prices.
• Lockheed Martin (LMT) +0.6%: Wins US missile defence contract worth USD 17bln, according to Reuters sources.

TUESDAY

• Stocks were choppy on Tuesday amid hawkish Fed speeches and mixed earnings reports as the indices attempted to find some ground after recent selling, with the VIX back under 19 and a lack of response (so far) from Israel.
• There were two key Fed speeches with both Vice Chair Jefferson and Chair Powell himself walking back comments around rate cuts, that weighed on Treasuries as yields continued to climb higher.
• There are now 40bps of cuts priced for the year in money markets vs 44bps beforehand.
• Banks were an area of weakness with Bank of America (BAC) and Bank of NY Mellon (BK) dipping post-earnings, although Morgan Stanley (MS) outperformed.
• Meanwhile, tech found some general recovery, while a solid UNH report supported Healthcare.
• The Dollar was ultimately flat. Note a mini-flash crash in USD/JPY in the NY morning ignited suspicions of BoJ intervention, although note the pair has recovered already.
• Oil prices were flat, although nat gas saw a late session spike which was followed by TC Energy (TRP) announcing it was responding to an incident in Yellowhead County involving NGTL with the affected section of pipeline having been shut down.

INFLATION BREAKEVENS: 5yr BEI -0.4bps at 2.495%, 10yr BEI -0.8bps at 2.429%, 30yr BEI -0.1bps at 2.366%.

REAL RATES: 10Y -- 2.239%

STOCK SPECIFIC

• Apple (AAPL) -2%: Insider sales from COO and CFO
• Microsoft (MSFT) flat: Plans to invest USD 1.5bln in G42, a UAE-based AI company with ties to China.
• Live Nation (LYV) -7.5%: Set to be sued by the DoJ, according to WSJ.
• Tesla (TSLA) -2.5%: Confirmed it is planning to layoff 10% if its global workforce. Following this, JPMorgan said TSLA layoffs show delivery miss about demand, not supply.
• Lockheed Martin (LMT) +0.5%: Secured a USD 17bln contract from US Missile Defense Agency.
• AMD (AMD) +2%: Upgraded at HSBC on reset expectations.
• Amazon (AMZN) flat: Prime subs jump 8% in US to new high of 180mln, according to Consumer Intelligence Partners.
• Envestnet (ENV) +9.5%: Is exploring options including a sale with the help of a financial advisor, according to Reuters sources.

WEDNESDAY

• Stocks were sold on Wednesday with losses led by the Nasdaq as the Tech sector underperformed with semis weighed on by a poor ASML earnings report.
• Stocks had pared some of the weakness after a stellar 20yr bond auction before selling resumed into the closing bell.
• Elsewhere, the Dollar was sold as it tracked US yields lower which in turn supported the Yen, Franc and Euro but the Antipodes outperformed despite the risk-off tone of trade.
• GBP only saw slight gains vs the Buck but it was weaker vs the Euro despite hotter-than-expected inflation, but BoE officials did not seem too concerned. There were few developments on geopolitics today other than reports suggesting Israel was going to respond to Iran on Monday, but ultimately decided to wait - a response seems a given but it is still a matter of when and how.
• Elsewhere, trade concerns between the US and China are rising after US President Biden was calling for higher tariffs on Chinese steel.
• The lack of updates saw oil prices pare some of the recent strength with inventory data showing a larger build than expected supporting the move while gold prices saw slight losses, despite the weaker dollar.
• Attention turns to more Fed speak overnight and on Thursday, with Thursday US data focusing on Jobless Claims, Existing Homes Sales and the Philly Fed business index.

INFLATION BREAKEVENS: 5yr BEI -3.0bps at 2.457%, 10yr BEI -2.2bps at 2.400%, 30yr BEI -2.1bps at 2.341%.

REAL RATES: 10Y -- 2.1858%

STOCK SPECIFIC

• Tapestry (TPR) -1% Capri (CPRI) -3%: FTC is preparing to sue to block Tapestry's USD 8.5bln takeover of Capri Holdings, according to NYT.
• Mobileye (MBLY) +3%: Secured orders for 46mln of the EyeQ6 Lite driver-assistance chips.
• Eli Lilly (LLY) +0.5%: Weight loss drug (Trezepatide) met all primary endpoints and key secondary endpoints in two Phase 3 clinical trials.
• Sage Therapeutics (SAGE) -20%: Phase 2 study of dalzanemdor did not meet primary endpoint.
• Autodesk (ADSK) -6%: Said it will further delay its annual 10-K filing due to an ongoing internal investigation of its board of directors.
• Knight-Swift Transportation (KNX) -4%: Lowers Q1 and Q2 guidance.
• Microsoft (MSFT) -0.7%: To reportedly avoid a formal EU probe over USD 13bln OpenAI deal, according to Bloomberg.
• Zuora (ZUO) +12%: Exploring potential options after receiving acquisition interest from potential buyers, according to Reuters sources.
• Snap (SNAP) +5%: US House Speaker Johnson says TikTok divest-or-ban bill is moving fast through Congress.

THURSDAY

• Stocks were subdued on Thursday, unwinding initial gains as the bearish trend continued.
• The downside came on the heels of Fed's Williams opening up the door to potential rate hikes, even though they are not his current base case.
• The weakness was led by tech, with TSM selling off after its earnings report where it trimmed its outlook for the semiconductor industry as a whole, despite decent quarterly figures and its own guidance.
• Treasuries bear-flattened after Fed's Williams, in addition to the hot Philly Fed survey, with prices paid at a YTD peak and the overall index at its highest level since 2022, not to mention set up for next week's 2s, 5s, and 7s auctions with little scheduled for Friday, although Goolsbee does speak ahead of the FOMC blackout.
• In FX, the Dollar edged higher as the Yen continued to weaken as participants await possible intervention. Euro was sold amid particularly dovish comments from ECB's Villeroy.
• Meanwhile, oil prices were choppy amid signs of technical fatigue in the oil market juxtaposed against some fresh Iranian bellicose rhetoric.
• Note that metals were bid, with copper and base metals in particular breaking out higher.

INFLATION BREAKEVENS:  5yr BEI -0.5bps at 2.473%, 10yr BEI +0.1bps at 2.414%, 30yr BEI +0.5bps at 2.357%.

REAL RATES: 10Y -- 2.2254%

STOCK SPECIFIC

• TSMC (TSM) -5%: Reversed initial gains after a strong report; slightly trimmed 2024 semi-industry growth forecast and semi demand for IoT remains sluggish in addition to announcing its Earthquake related costs.
• Equifax (EFX) -8.5%: Next quarter and FY guidance disappointed.
• CSX (CSX) +1.5%: Top and bottom line surpassed Wall St. expectations.
• Alaska Air (ALK) +4%: Posted a shallower loss per shr., revenue beat, with Q2 and FY profit view beating.
• Comerica (CMA) +1.5%: Beat on NII and avg. deposits.
• Marsh & McLennan (MMC) +2% and Ally Financial (ALLY) +6.5%: Reported solid results.
• Las Vegas Sands (LVS) -8.5%: Operating profit was short with Macau operations results also light.
• Elevance Health (ELV) +3%: Topped on EPS and raised FY outlook.
• Blackstone (BX) -2.5%: Lowered quarterly dividend.
• Tesla (TSLA) -3.5%: Downgraded at Deutsche.
• BlackRock (BLK), MSCI (MSCI) -1%: US House Committee is probing index funds that channelled billions of Dollars into blacklisted Chinese companies; probe is focused on BlackRock and MSCI, according to WSJ.
• Google (GOOGL) +0.5%: CEO Pichai says plan to share more AI progress on earnings call (earnings date April 25th).
• Nordstrom (JWN) +4.5%: Family reportedly weighing taking the retailer private, according to WSJ.

FRIDAY

• Stocks were sold with losses largely led by the Nasdaq with notable downside in Nvidia (NVDA) and Netflix (NFLX) shares.
• The latter was hit on a slightly disappointing next quarter revenue guidance and stopping to report subscriber count, while NVDA weakness was seemingly a continuation of the weak ASML earning report reaction earlier in the week, in addition to a collapse in Super Micro (SMCI) shares on a lack of upside pre-announcement also hit the chip space.
• Weakness was also observed overnight as Israel retaliated against Iran which led to upside in Treasuries and oil, but the moves in the latter two assets had pared the majority of the move as it came to fruition not too much damage was dealt and neither side intend to retaliate again.
• The tech weakness kept stocks pressured, however.
• There was a lack of US data on Friday, but Fed's Goolsbee sounded a bit more hawkish than his normal dovish self, noting progress on inflation has stalled, and it makes sense to wait for more clarity before moving.
• The Dollar was flat on Friday but GBP lagged on some dovish Ramsden commentary, who said the risks to UK inflation outlook are tilted to the downside vs February forecasts.
• There were also soft UK retail sales this morning.
• Attention next week turns to a plethora of earnings, as well as US GDP and US PCE.

INFLATION BREAKEVENS: 5yr BEI -0.5bps at 2.473%, 10yr BEI +0.1bps at 2.414%, 30yr BEI +0.5bps at 2.357%.

REAL RATES: 10Y -- 2.193%

STOCK SPECIFIC

• Netflix (NFLX) -9%: Posted light Q2 revenue guidance and announced it is to stop reporting subscriber counts. Although, EPS, revenue, subscriber additions, and operating margin all topped expectations.
• SLB (SLB) -2.5%: Top and bottom line were more-or-less in line, although revenue declined due to seasonality; it remains confident in the FY outlook.
• Procter & Gamble (PG) +0.5%: EPS beat and raised FY core EPS growth view.
• American Express (AXP) +6%: Top and bottom line beat.
• Regions Financial (RF) -1%: EPS light of forecasts.
• Tesla (TSLA) -2%: Recalling certain 2024 Cybertruck vehicles over unintended acceleration from a trapped pedal, according to NHTSA.
• KB Home (KBH) +1%: Board authorised a USD 1bln share buyback and raised quarterly dividend 25% to USD 0.25/shr.
• Paramount (PARA) +13.5%: Sony and Apollo are in talks to jointly bid for Paramount, potentially offering an all-cash deal to take the Co. private, NYT reports.
• Super Micro (SMCI) -23%: Desks cited a lack of a positive pre-announcement for earnings after the Co. announced its post-earnings call on April 30th. As such, Nvidia (NVDA) closed down 9% with the semiconductor ETF SOXX falling 4%.

BOND MARKET

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set".

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)
6. FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.414% + 2.193% = 4.607%

WEDNESDAY TREASURY AUCTION

Another super strong demand showing for 20yr Treasuries with the USD 13bln reopening stopping through the WI by 2.5bps, the largest stop-through since 2023, better than March's 2bp stop-through and the six-auction avg. 0.2bps. The auction was covered 2.82x, above the prior 2.79x and avg. 2.57x, Dealers were left with 9.1%, beneath the prior 9.3% and avg. 13.7%, with Indirects taking a chunky 74.7%, above the prior 73.5% and avg. 68.0%. After recent heavy selling, the auction was seen as a litmus test for dip-buying appetite, and it has clearly passed with flying colors.

Yields fell on the 10Y TNX (below)

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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