Yesterday, the market was experiencing a very impressive reversal after opening lower on a slightly hotter-than-expected Consumer Price Index (CPI) report when the 30-year bond auction derailed everything. I’m calling it the ‘Tumbleweed Auction.’  When it began, the 30-year yield was 4.68. When it was over, the yield was 4.86.

No Buyers

The Federal Reserve wasn’t a buyer, and they weren’t alone, as it was very crowded on the sidelines. the Treasury only raised $20.0 billion—more than 22.0% at the highest bid.

Dealers ate 18.17%, very similar to what happened with the ten-year auction the day before. Usually, dealers take in around 11.0%.

The auction tail (the gap between the lowest and highest bid) moved to its narrowest gap since November 2021.

Thus, $47.0 billion was tendered, and less than $20.0 billion was accepted.

The Stock Market

The S&P 500 tried to come back after being blindsided by the miserable bond auction. That attempt was too little, too late, and failed. Technology (XLK) and Energy (XLE) eked out gains.

The S&P 500 broke an impressive move going back to last Friday. The failure in the shadow of the 200-day moving average is not a good sign.

 

Key Charts

The Russell 2000 was slammed!  It was a horrific move lower, extending an ugly drawdown.

The equal weight S&P was also hit hard. Forget all that talk about rotation for now.

Banks at the Plate

Banks kick off earnings season today.  Key trends to note:

• Discount window -$200,000,000 to $2.6 billion
• Bank Term Funding Program (BTFP) +$1.2 billion to $108.9 billion
• Federal Deposit Insurance Corp (FDIC) loans -$5.5 billion to $58.3 billion

Charge-offs are increasing.

Delinquencies are surging.

Today’s Session

Bank results are in, and for the most part, they beat and offer upbeat guidance and observations.  Loan loss provisions were not as much as expected, and guidance was cautiously optimistic.

Bank Financial Results	Revenue	Earnings
C	Beat	B $0.41
JPM	Beat	B $1.21
WFC	Beat	B $0.23
PNC	Missed	B $0.49
BLK	In-Line	B $2.71

Stocks are edging higher, and the ten-year bond yield is pulling back.

This could be a positive session / turning point.

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