Equity markets remain in a choppy environment. Yesterday we saw a sharp reversal off of technical levels with the S&P closing at marginal new high. Today the sharp reversal has occurred in Treasury markets. Ahead of the open the ADP jobs survey came in at less than half of the estimate (330k vs. ~700k cons.). This was clearly a disappointment ahead of Friday’s employment report and this pushed yields lower. The 10yr yield traded down ~5bps retesting the July lows ~1.12%. However, at 10:00 the ISM services data came in well ahead of estimates hitting a new all-time (64.1 vs. 60.4). Right at the same time the text of Fed Vice-Chair Clarida’s speech was released in which he said that he believed the conditions could be in place for raising interest rates by the end of 2022. The 10yr yield proceeded to move up nearly 10bps over the next 30 minutes before settling in right around yesterday’s high up 1bps to 1.185%. Equity markets have been lower throughout the day with the S&P trading in a 10pt range for most of the session. As we head to print the S&P is down 11pts to 4,412 (-0.2%), the Dow is just off of session lows down 270pts to 34,845 (-0.8%) while the Russell 2k is down ~1% testing 2,200. Reversals seem to be the theme right now. Yesterday we also highlighted the reversal in the VIX after testing last week’s high ~20.50 it reversed sharply it is now hovering 18. Last week’s low is ~17, if we continue to see the vol. bleed that will help to keep a bid in the equity market. Clearly there is a lack of conviction and or leadership in the market right now. At this point it feels like we are seeing multiple asset classes probe key technical levels. Look at the intraday activity in rates, the USD index and metals to illustrate.Think of this like shaking a tree to see what falls out which helps to create some additional volatility for traders/models to take advantage of.

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