Yesterday equities showed some strength in the early part of the trading session before weakening considerably around mid-day. While financial earnings overall have been solid, the regional names triggered concern after several more disclosures around credit write-offs sent the group sharply lower (KRE Regional Bank ETF -6%). That bled across the market. The S&P 500 finished down 0.6%, equal-weight down 0.9% and Russsell got hit the hardest, down 2%. Treasury yields fell (2y -8bp) and the 10y finally fell beneath 4.0%, below its Liberation Day lows. Bullish Analyst Day takeaways from Oracle and Salesforce along with strong earnings from TSMC propagated the AI narrative as Tech was the only sector to close (slightly) higher. Perhaps more important was the Oracle commentary about gross margins of AI infra projects, pushing back against concerns. S&P futures were threatening to continue the downside momentum into the weekend as they traded down 1.5% at the overnight lows. However, markets reversed on cooler China trade rhetoric from President Trump as he confirmed a meeting with President Xi at the end of October. Treasury Secretary Bessent is also expected to speak with China’s Vice Premier today. Also helping is the lack of new 8Ks detailing write-offs and a battalion of regional banks reporting earnings last night and this morning, with no obvious signs of more credit cockroaches. Futures are near the day’s high as the index looks to open flat-ish. Treasury yields are backing up after falling sharply yesterday. After spiking from 16.75 a few days ago to ~25 yesterday, the VIX is down to ~23.75 currently.

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