Europe-led equity rally runs into resistance
We flag 12 markets & relationships at key levels, many with extended ASR Sentiment Barometer Indicators. Global Equities vs. Bonds hit “stretched optimism” zone on Friday. Europe led the way but extended in absolute & relative terms.
Tailwinds from lower vol, real yields & USD may now ebb
Recent fall in VIX futures has been unusually sharp but “oversold” at big level. Sharp fall in ‘24 Fed rate expectations that’s underpinned drop in US forward real yields and helped Growth vs. Value may run out of steam, aiding USD.
China plays at key levels
US 2s-30s curve and HY OAS are both testing trendlines; easy Fed without US recession likely needed for both to break at same time, so unlikely. Plus, a case for Hang Seng, China plays in DM, and AUD/CAD to all retrace near-term.