The market opened under pressure then the 20-year bond auction was a dud, and the trap door was released.

The Treasury Department sold $16.0 billion in 20 – year bonds, through auction that began at 1:00 EST.

Investors accepted 5.047% yield versus the 4.613% average over the prior six auctions. This was the first move above 5.0%, since October 2023.

The reaction was clearly a message or several messages, including to the GOP in the House, to move the tax bill forward.

Communication Services (XLC) finished higher while interest rate sensitive Real Estate (XLRE) took the biggest hit.

No Bargains

485 of 504 names in the S&P 500 finished in the red – a remarkable number. I think it points more to a lack of perceived value than an overwhelming urge to be out of the market. 

Small caps were the deepest in the red (they need interest rates to come down), even though it’s the least expensive niche of the market.

House Passes Budget…and its Big

Lots of compromises to get the House bill overt the finish line – kudos to Speaker Johnson.  But this bad boy will be sliced, and diced, in the Senate.

Note to my blue state friends: Do not spend that SALT cash, yet.

The biggest problem with the bill is that it still increases the deficit, and the bond market isn’t happy with that.

The Ten-year yield (TNX) broke 4.5% at a pace (see red arrow) that is equally unnerving.

Message from C-Suites

Retailers are scoring huge moves in pre-opening action.

• Ralph Lauren (RL) knocked the cover off the ball.
• Advanced Auto’s (AAP)long-awaited turnaround is paying off.
• Urban Outfitters (URBN) says the consumer is alive and well.

I think the market is having a tantrum, but there are niches we are exploring for potential risk—credit markets being one.

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