The S&P 500 is at the lows of the day and the US dollar is at the highs.
The moves come with Treasury yields creeping higher and breaking Monday’s high. US 10-year yields are up 7.6 bps to 4.21%, narrowly above Monday’s high that was driven by the oil price spike.
The market is trying to figure out Trump’s timeline for the war.
In comments to Axios today he said the war would be over “soon” but the report also cited US and Israeli officials that were preparing for two more weeks of strikes. Trump also emphasized that it will end when he says so and that there was nothing left to bomb.
I tend to think the market is over-emphasizing the part of the post that highlighted a two-week timeline, as it wasn’t made clear where that reporting came from. I think it’s from previous reports and certainly doesn’t read like it was from Trump.
With nearly 20 million barrels lost each day, every day counts and even a 400 million barrel release from various global strategic reserves will take weeks to execute, leaving a tightening market in the interim.
Once the war ends, the focus will shift back to AI and rate cuts. On the former, there was some good news today as Oracle reported strong results and shares jumped 10%. That’s coming from a low base though.
In terms of rate cuts, today’s CPI was in-line with estimates but did see some uncomfortable price rises in things like apparel and restaurants. Next month’s report will be a bigger challenge as higher fuel prices hit.
Another theme that will continue is the implosion of private equity stocks with exposure to software companies via private equity or lending. The increasing consensus is that many of these companies are zeros. Blue Owl is the most-exposed on the lending side and shares are down 5.1% today and have been cut in half since late January.
This article was written by Adam Button at investinglive.com.
