Good morning,

Last week was a very busy and volatile one with a ton of earnings, key central bank rate decisions and the continuation of the momentum unwind early in the week before a clearing event on Thursday when Citadel bought the levered positions of hedge fund Situational Awareness. The mega-cap earnings were a mixed bag with Microsoft and Amazon posting very strong numbers particularly within their cloud segments while both Meta and Apple left a bit to be desired. The S&P 500 ended the week up 1% reclaiming its 50d ma on Friday. The two other big stories throughout the week were the continued move higher in Treasury yields with the long-end hitting new YTD highs and the coordinated Yen currency intervention. Oil prices ended the week down after a de-escalation over the weekend before Iran broke the peace leading to a new round of strikes.

It’s like Ground Hog’s Day here yet again after President Trump called off strikes over the weekend suggesting negotiations taking place today could lead to a diplomatic resolution. Oil prices are pull back again with ICE Brent down ~5% holding at its 50d ma ~$83. This is helping to take some of the pressure off of Treasury yields which are down ~5bps across the curve but off the lows. Continued currency intervention is the other big story on the macro front with both the US and Japan confirming the first coordinated currency intervention since 2011 and suggesting further action could be taken. Treasury Secretary Bessent supports the use of the FIMA Repo Facility which allows central banks to use Treasury holdings as collateral to access dollar as opposed to selling bonds in the open market. The Yen has continued to strengthen breaking below its 200d trading around 157¥/$ from ~164¥/$ last Thursday.

The Iran headlines and pullback in oil/yields is putting a bid under US futures. However, it is notable that we’re seeing weakness in chips and DRAM stocks in the pre-market with the latter being weighed down by reports that CXMT is considering building a second DRAM plant in Beijing. Software stocks are bid up. S&P futures are currently up 0.6% while Russell 2k futures are up ~1%.