LiveWire

The median short interest for members of the S&P500 suggests that not many market participants are betting against the current rally. Shares out on loan stands just <1% of the benchmark’s median free float as of Jan. 31, according to S&P Global Market Intelligence. 

Stocks and bonds are still falling together, in light of the recent climb in Treasury yields. Bonds are now close to have given up all their gains this year. Treasury yields are now 4.69% for the two-year and 3.95% for the 10-year. Investors are nervous the US Federal Reserve will be forced to raise interest rates further and keep them higher for longer, in order to cool demand and in turn tame inflation. 

Still all eyes are on the dollar, gaining strength this morning, weighing on stocks. This morning we will have Walmart and Home Depot earnings.

This week we will have Fed minutes Wednesday, followed by PCE (US inflation) data Friday. And in Europe, German CPI on Wednesday, and Eurozone CPI on Thursday. We will also be watching GDP data, in the US on Thursday, and Germany on Friday. Earnings continue with Walmart, Home Depot, Paloalto Networks, and Coinbase on Tuesday. And semiconductor giant NVIDIA on Wednesday. Booking ✈️, Domino’s 🍕, Alibaba on Thursday. Monday is a holiday in the US, Canada, and Brazil.

Stocks are feeling the heat this morning at the 10 year Treasury yield passes 3.9% again for the first time since December. Expected highs in interest rates worldwide rose in the last week. Forecasts for peak policy rate keep creeping higher as data on economy and inflation is hotter than expected. And odds of a 50 bps interest rate hike in March in the US are on the rise, now priced in at 18%. Rates will likely be higher for longer as recent data shows more demand destruction is needed. That should keep a lid valuation multiples expansion and perhaps continue to exert selling pressure on stocks.