The KBW Bank Index is underperforming the S&P 500 by 37% year-to-date, on pace for the widest annual gap on record
(note: data via Dow Jones going back to 1993). Source: Charlie Bilello
BREAKING: 30-Year Treasury Yield hits 5% for the first time in 16 years while the 10-year hits 4.8%
Macro fundamentals and inflation fears are not the only culprit. Indeed, the slide in Treasuries now seems excessive given recent economic data and Federal Reserve policy. This could suggest it’s instead being driven by fears over the swelling US deficit. As show on teh chart below (Bloomber), the supply/demand balance context is clearly not favroable to US Treasuries. The recent move shows rising alarm at what fiscal policymakers are doing. Concerns over U.S. debt levels and large Treasury issuance have prompted investors to demand more compensation for the risk of holding long term bonds, driving long-term yields higher. Source: Bloomberg
The gap between NASDAQ and the US 10 year (inv) remains absolutely massive
Source: TME
To put things into perspective: Nasdaq 100 now down ~9% from high, largely in the ‘zone’ of recent NDX drawdown episodes over the last 1 year
Source: Bloomberg, HolgerZ
NASDAQ's 1999 analogy chart isn't perfect but given the amount of shorting by hedge funds and short gamma selling by dealers, a squeeze in Q4 (the historically strongest quarter) is a possibility
Source: TME
Top five stocks by market cap are c.50% of Nasdaq-100 Index market cap
Source: SG
The longer term gap between NASDAQ and the US 10 year remains huge
Source: TME, Refiitiv
With total return data going back to March 1999, the Nasdaq 100 (NDX)’s 42.54% YTD total return is the best on record (2020’s post-Covid bounce in tech stocks came close)
Source: Jim Bianco
