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Equities Reverse Gains But Relatively Resilient To Yield Squeeze

US STOCKS
  • Equities have seen a quick but limited step lower with Israel advising its citizens to leave Turkey in a sign of regional spillover. It adds to reversal of earlier gains, hindered by the second wind of the sell-off in the belly of the Treasury curve that started around 1230ET.
  • Despite moving back lower on the day, they hold up well with 5Y yields hitting fresh highs since 2007 and currently +15.5bps despite having rallied 2bps off yield highs.
  • ESZ3 trades at 4388.8 (-0.3%) off a high of 4423.25 having stopped just short of resistance at 4426.42 (50-day EMA).
  • The Nasdaq 100 (-0.6%) e-mini underperforms in light of the real yields squeeze, and notably weighed by Nvidia which has pared losses but to a still heavy -4.5%, whilst the Russell 2000 (+1.2%) benefits from the strength in today’s US retail sales data helping support the soft-landing view.
  • Broad beats for today’s pre-market earnings: Johnson & Johnson (adj EPS $2.66 vs est $2.52), Lockheed (adj EPS 6.77 vs est 6.67), GS (net rev $11.82B vs est $11.13B), BofA (trading revenue ex DVA $4.42B vs est $4.16B)
  • A few smaller names to come after the close but greater focus is on tomorrow’s earnings slate, which includes Tesla, Procter & Gamble, Morgan Stanley, Netflix, Abbot Laboratories & Elevance Health.

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