Volatility Sleeps While Cross-Asset Signals Grow Louder
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Supposedly, tomorrow is another opportunity for the Supreme Court to issue an opinion on tariffs. Who knows—we’ll find out around 10:00 a.m. whether an opinion is released or not. The timing is ideal for the stock market, as the S&P 500 is compressing and will soon be forced to make a decision on direction. I continue to think this looks more like a topping area for the index than the start of a “melt-up.” It could certainly be counted as an ending diagonal triangle.
Really, the main reason remains volatility, which is still very low. Today did see a sizeable jump in the left-tail index, which rose to 10.7—still a fairly low reading, but higher nonetheless. But hey, we’ll find out tomorrow, one way or another I guess.
In the meantime, rates appear to be frozen in time, with economic data—whether good or bad—having no effect on the long end of the curve. Today’s CPI report, which missed on the core, had no impact on the 30-year yield. It still looks like a bull flag, but for now, nothing is happening.
To find rates moving higher, one needs to look to Japan, where the 10-year continues to grind higher. The 10-year JGB is currently at 2.17%. Based on the wedge pattern and extending it forward, the 10-year yield could climb toward 2.25%.
USDJPY broke out today, rising above resistance at 159. For now, it appears the market cares more about Japan’s fiscal spending plans than interest-rate spreads. A move toward 162 seems increasingly likely at this point.
Software stocks were absolutely obliterated. Shares of Salesforce (CRM), ServiceNow (NOW), and Workday (WDAY) were smashed. In fact, ServiceNow is back at its 2021 highs, which also correspond to the April 2025 lows.
Workday actually looks even worse.
Salesforce appears to be the best of the bunch, but that isn’t saying much. I’m guessing the market thinks these businesses will be cannibalised by AI. The charts all look horrible.
Anyway, see you later.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. ...
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