The cap-weight reading on the S&P is +1.2 this morning, down from +22 Monday. Equal weight is -91. The daily pulse went negative on every index, the S&P, the Nasdaq and the Russell.
Two sectors are still positive. Healthcare at +8 and technology at +5. Financials are -35, with one name breaking out against 36 breaking down. Consumer cyclical -24, industrials -17, real estate and utilities both negative with zero breakouts between them.
Rates are driving the damage. The 10-year is 5.15% and the 30-year is 5.44%, the highest since 2004. Wednesday's five-year auction priced at 5.03%, with the second-largest tail on record and the weakest demand since 2018, and flash PMIs came in at 57 and 58.7, with input costs at a four-year high. Seven-year paper gets sold this afternoon. The MOVE index is at 95, its highest since April. October hike odds are 73%. Mortgage rates just hit a one-year high.
Oil is feeding that rather than offsetting it. Brent closed up 3.9% Wednesday on the same day Saudi Arabia restarted the East-West pipeline, because Iran's president told the UN there's no freedom of navigation through Hormuz while the blockade stands. Every dollar back into crude goes straight into the inflation read the bond market is pricing.
Xi is at the White House today. The trade truce was extended to January 10 before he landed.
It's worth watching whether anything comes out of it on Iran, since China is the one party with real leverage in Tehran.
