Welcome to the third quarter. The S&P 500 is trading around unchanged but off its lows. We’re seeing some rotation play out: selling in the mega caps (FANG+ -2%, Mega cap growth -1%) and 1H outperformers (Momentum >1%) while smaller caps and 1H laggards are leading as we start the second half of the year. The equal-weight and Russell 2000 are up over 1%. The Dow is also outperforming, with names that have lagged recently seeing a bid (UNH, MRK, NKE, HD +3%). After a 27-hour vote-a-rama (excellent historical recap yesterday by the MAC Desk) Vice President Vance cast the tie-breaking vote in the Senate to pass its version of the Big Beautiful Bill, sending it back to the House for one final vote...maybe. Treasury yields started the day flat but the 2yr is now up 6bp and 10yr up 3bp, heading higher as the ISM and JOLTS data started coming in today. The US Dollar Index was down but reversed higher after testing 96, its lowest since early 2022. The Euro briefly traded above $1.18 today, last seen September 2021. The Dollar had its worst 1H performance since 1973. Fed Chair Powell spoke at the ECB’s Sintra conference and kept largely to his script (data dependent, would be cutting if not for tariffs, etc.). Job openings came in higher than expected in the JOLTS survey. Hirings ticked slightly lower as did separations . More of a steady-as-she goes picture of the employment conditions.

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