Discussion
Sector action beneath the surface leaned bullish, with Semis, broader Tech, Banks, and Smalls leading the way and defensives lagging; but overall breadth was poor, the VOL complex finished green (which was a surprise to me given the Fed’s rate cut commentary), and HY CDX didn’t get liquidated as it typically would on a bullish day.
Perhaps the most notable development of the day and since CPI day last week is the resilience of the 2-year Note yield. Despite Core CPI coming in soft, the soft landing narrative running wild, and the Fed making noise about rate cuts in March, 2s really haven’t moved much. Very curious.
Lastly, more color from The Kitty on recession timing: 3Q/4Q start date.