The Quiet Before Yellen’s Storm? S&P Unable To Breach 1800 Resistance

The Quiet Before Yellen’s Storm? S&P Unable To Breach 1800 Resistance

US equity markets traded in a narrow range ahead of tomorrow’s Yellen testimony with Trannies underperforming and Nasdaq outperforming. Cross-asset-class correlations picked up from their negligible levels on Friday as JPY (and increasingly 5Y bonds) are linked at the hip with stocks. The S&P cash tested almost up to 1,800 (but failed at 1799.94) then faded. Notably from the European close, equity handily outperformed credit markets – which ended closing near their wides of the day. Treasuries ended the day modestly bid (30y -2bps) but T-Bill yields are starting to reflect debt-ceiling concerns. The USD closed unch – drifting lower from overnight strength – but gold and silver rallied on the day (though faded of early highs). Late-day ramp efforts got the S&P green but failed to cross 1,800… and VIX decoupled on the ramp.

The magical 1,800 line for S&P 500 cash was tried and failed twice…

Trannies underperformed and Nasdaq won as the Dow, S&P and Russell closed practically unchanged

USDJPY 102 saved the day once again

Stocks stuck close to bonds today too…

Treasury Bill markets are starting to reflect a growing fear of the debt-ceiling shenanigans… 2/20 T-Bills closed at -2bp!!

Credit decoupled from stocks after the European close…

And VIX did not play along with the late-day JPY-based surge in stocks…

On the day, gold and silver rallied early and faded…

Treasuries staged 3 rallies off unchanged…

Charts: Bloomberg

Bonus Chart: Cross-asset-class correlation (lower pane) picked up but as is clear there is a lot of volatility in the relationships – especially from the US open…

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