Asia's Impressive Winning Streak Comes to an End

U.S. oil drillers and refiners come out the big winner from Donald Trump's “Wag the Dog” routine.

Key Takeaways

• Flat Futures, Furious Rallies: For the second day in a row, we had U.S. equity futures doing nothing in the overnight trade, only to then close with huge gains. Over one thousand points in the Dow over two sessions doesn’t happen that often — just three other times since coming off the tariff reprieve announcement back in mid-April.

• The Bond Market Has Checked Out: The bond market has stopped responding to the economic data, at least when it comes in weak, nor do Treasuries even respond to the Fed any longer. For the first time ever, we have gone over a year where the Fed cut the funds rate by -175 basis points, and yet the 10-year T-note yield is up over +50 basis points since that first volley in September 2024, and the long bond yield is up by more than +90 basis points.

• Momentum Rules Until Complacency Breaks: Clearly, the path of least resistance is higher until something knocks the marginal investor from his/her complacency and belief system that the stock market only goes in one direction. What that shock will be is anyone’s guess — but from what we have learned, it will not be from the economy, because macro really doesn’t matter anymore for markets.