The rotation trade continued yesterday but faded as we moved through the session. At one point the S&P 500 and Mega Cap Growth were down ~1%, but the S&P rallied to finish only 0.2% lower. The equal-weight was marginally better. The FOMC minutes were released yesterday afternoon and leaned somewhat hawkish, showing broad support for holding rates, outside of the known dissentions from Waller and Bowman. However, the meeting happened right before the jobs report that had big negative revisions (and led to the firing of the BLS commissioner). The highly anticipated speech by Fed chair Powell on Friday at the Jackson Hole symposium remains ahead of us, and in which Powell will again confront an exhausting amount of shifting, diverging and confounding data (and political commentary). Equites were trying to break into positive territory earlier but have slipped back into the red. The S&P 500 and the equal-weight are down ~0.5% but the Russell 2000 is trying to say in the green. Healthcare is outperforming, continuing its relative strength this week. Energy is also higher. Consumer Staples and Discretionary are underperforming today. Walmart is trading lower with mixed takeaways from earnings. In Discretionary, there's weakness across the board. Homebuilders are down as rates climb. Travel & Leisure are also under some pressure. The economic calendar was pretty active with a mix of positives and negatives. Weekly claims continued to show a job market where layoffs are relatively low but companies are not adding payroll. US flash PMIs showed manufacturing and service sectors both grew. Treasuries have extended to the downside, with yields up 4-6bp across the curve. The move was ignited by the PMI reports, which brought the Dollar higher as well and adding to that were comments from Cleveland Fed President Hammack, who said she didn't see the case for cutting rates yet.

Expand article