Dollar, yields and Friday’s repricing

S&P 500 showed some intraday resilience before selling off as the closing bell approached – Nasdaq though didn‘t break below its intraday lows. Sufficient safe haven bid as tech was the go-to place following the late Mar bottom? Sure earnings are still great, but market is very selective about which tickers it‘ll reward (check out breadth, is that broadening well?) as Hormuz no longer dominates the headlines.

It‘s though not solved, and markets are pricing in rising inflation to come, combined with the US economy still reasonably robust. Robust as in not giving signs of slipping into recession. Of course, there are signs of weakness in the job market (I talked already birth-death model contribution to e.g. last month‘s headline figure, participation rate and hourly earnings slowdown, there‘s decrease in full-time employment and U6 unemployment too), bearing heavily on consumer sentiment talked already a we

ek ago at length.

What‘s the most important development as the Trump-Xi summit drew to an end? The continued rise in yields and the dollar, which is putting pressure on risk assets – and on equities through the equity risk premium (the greater appeal of risk-free Treasuries). Stocks dialed back the premarket decline after the opening bell (for a while), and then retreated into the closing bell just as precious metals did.

Check also how crucial stock market sectors are doing lately – it‘s AI and tech vs. (what‘s happening with) financials and consumer discretionaries. This is not a story of two-speed economy (for that, check corporate bonds) – and is more than Warsh effect (remember the reaction to his hearing).