The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Lack of faith
Risk-off began overnight and gathered steam with time. Headlines didn’t encourage markets into believing that the US and Iran were making progress. The usual war-based price action continued. The S&P opened down 40 points and kept the pain in that neighborhood until lunch. Momentum lower won out and equities fell significantly in the afternoon. Treasury yields climbed significantly with extraordinary increases from 2 yr to 5 yr. Fed Funds futures now price 14 bips of rate *increases* in 2026. Precious metals sold hard and the Dollar strengthened. Despite the significant move in US equities, capital flow was light at 92%.
If markets leaned a bit towards optimism yesterday, they went the other way, and then some, today. Perhaps this is a reflection of the mixed messages coming across the newswires. Patience appears exhausted and investors are no longer in a believing mood. Markets are at the point where agreements need to be forthcoming and the announcements coming out of the White House need to be similar to the ones coming out of Iran.
There’s always tomorrow of course. The complicating factor is that the 5-day suspension of US attacks ends tomorrow. Is there enough time for an eleventh hour deal? Are we destined to a new escalation, another negative market reaction, and some unknown-but-hoped-for conclusion?
Investor sentiment is poor and markets are focusing on the negatives. That’s not to say investors have it wrong. It’s just a reflection of what the market is thinking, which is that there’s no short-term off-ramp anymore.
See you tomorrow.
-Mike
Visdom Market Commentary
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