Markets are reversing some of the positive momentum seen over the past few sessions. The Nasdaq outperformed on the day (thanks to NVDA & META) but only just managed to close green. The rest of the US majors were red with Small Caps the biggest loser…

…albeit without any clear drivers aside from potential anxiety ahead of Powell’s speech and GDP tomorrow and PCE on Friday.

The vol market is taking note…

Source: Bloomberg

Goldman’s Chris Hussey notes that under the surface, markets seem to be leaning into a combination of traditionally defensive and secularly growing pockets of the market, with Utilities, Tech, Communication Services, and Staples offsetting declines in more procyclical areas.

Source: Bloomberg

Yields on most US Treasury durations are also higher, a potentially another signal of investors more defensive posture…

Source: Bloomberg

The yield curve (2s10s) continues to bear-steepen – now at its steepest since June 2022…

Source: Bloomberg

But, as Hussey notes, with little new news to trade on, it’s hard to see what, exactly, is behind the move.

Another take on today’s price action – outperformance from stocks related to power demand, AI, plus higher 10-year yields – is increased confidence in the economy over the longer term.

Mag7 stocks extended yesterday’s gains but faded a little as the day wore on…

Source: Bloomberg

NVDA rallied notably but up to a key resistance level…

We also note that NVDA topped $3 trillion market cap once again (GOOGL and AMZN back above $2 trillion)…

Source: Bloomberg

Perhaps more notably, the machines were unable to manufacture some momentum in most-shorted stocks today, as they continue to languish in a narrow range…

Source: Bloomberg

Goldman’s trading floor noted that it was skewed small to buy with volumes quiet but S&P top of book (liquidity) bouncing back to much better levels ($11m+).

Both HFs and LOs net for sale.

We continue to see risk off flows on our trading desk.

HF covers (macro) by L/O passive trimming (singles) into strength.

Before we leave equity-land, we note that VIX ended higher today, holding above the 15 handle…

The dollar was on fire today, erasing the post-China stimulus weakness…

Source: Bloomberg

Yuan rejected 7.00/USD and faded…

Source: Bloomberg

…but despite the dollar strength, gold managed small gains to a new record high…

Source: Bloomberg

Some context for gold vs USD…

Source: Bloomberg

The strong dollar did weigh on crude prices which sank back below $70 (WTI) despite strong inventory draws (erasing all of the post-China-stimmy gains)…

Source: Bloomberg

Crypto pumped and dumped, with Bitcoin testing down to $63,000 (after topping $64,500)…

Source: Bloomberg

Finally, US Sovereign risk remains extremely elevated relative to the last few months…

Source: Bloomberg

Is crypto (and gold) starting to sense something’s breaking?