Inside Markets — Technical Resistance
The S&P 500 (SPX) has moved toward strong technical resistance in the mid-4100s. We expect this range will cap the rally in the near-term without a change in macro fundamentals.
Inside Markets — SPX Resistance
The S&P 500 (SPX) is advancing toward technical resistance in the 4100s on strong growth sector leadership. The rotation into growth sectors and Tech in particular is following what looks like a peak in bond yields.
Inside Markets — Growth Rotation
Calls for increased bank regulations fit the disinflation and recession narrative, driving the rotation into growth equity sectors.
Inside Markets — Bank Failures
There was no obvious catalyst for yesterday’s pullback other than the end of Washington hearings on recent bank failures without mention of expanded FDIC insurance.
Inside Markets — Fed Policy Measures
FCNA’s acquisition of SIVB assets and deposits has helped near-term risk sentiment, but markets are still looking for additional policy measures from the Fed, FDIC and Treasury.
Inside Markets — Rotation
Recent equity market resilience has been driven by lower bond yields and rotation into growth sectors. Sidelined cash and value sectors have been a source of funds with mega-cap Tech as the primary beneficiary
Inside Markets — Credit Standards
Credit standards have been tightening over the past year as banks anticipate a recession. The tightening of credit standards will now accelerate and lending will slow as banks build cash on hand to match the velocity of recent deposit flows.
Inside Markets — Treasury Yields
A week-long back up in 5-year Treasury yields stalls out at moving average price support near 3.80%. The decline in 5-year yields looks like it will resume with a near-term target of 3.30%.
Inside Markets — Fed Decision
In addition to the Fed decision, markets will pay close attention to Powell’s press conference for: 1) near-term direction on efforts to contain financial contagion; 2) associated impact on financial conditions from expected tightening of bank lending standards.
Inside Markets — BTFP Facility
The debate over whether the Fed hikes by 25bp or decides to pause at tomorrow’s meeting seems less important when you consider that an estimated $440B of its BTFP facility has already been utilized.