Good morning. Mega caps were notably weak yesterday, pulling the S&P 500 down overall (-0.4%) and creating underperformance versus the equal-weight (+0.2%) and small caps (R2K +0.8%). Reports of progress in nuclear talks between Iran and the US helped stocks early on, continuing to pressure crude (down ~3%). Yields saw no benefit from that however and rose ~5bp across the curve. Hyperscalers were the main target of weakness. On the other hand, the DRAM memory ETF continued to climb to new heights.

A night’s sleep didn’t help matters. Asian equites were under significant pressure overnight, especially the high-flying chip/memory names. That has bled into European markets and US futures, which opened about flat but steadily declined overnight. Tech, Industrials and Consumer Discretionary sector ETFs are leading to the downside in the premarket. FedEx reports tonight and Micron reports after the close tomorrow. Carnival reports this morning and flash PMIs are due after the open. It was ugly in Asia. The Nikkei dropped 3.5% overnight. South Korea’s KOSPI plummeted 10% and triggered a market circuit breaker. European equities are faring better than Asian counterparts but are still seeing losses of around 1%.

Treasuries have a bid this morning and yields are erasing some of yesterday’s increase. The 2y is down 4bp, 10y 2bp. The US Dollar Index has breached 101 for the first time since last May. Crude and nat gas are down less than 1%, off their lows with Brent hovering above its 200d ma. Metals are lower, especially silver which is falling back towards YTD lows ~$61.25. Bitcoin and ETH are under pressure as well, reversing yesterday’s gains.