A very quiet session in the markets buoyed risk sentiment as we highlight, as markets carried on with their inertia after last week’s dovish developments (Fed policy asymmetry towards weaker labour markets, softening JOLTS/NFP data, slowing economic data, and a market caught short fixed income exposures). A lack of 1st tier data until CPI on May 15th (one week away), with only ~7% of SPX market cap reporting earnings, and no pending speeches from Fed heavyweights in Powell and Waller will likely leave markets to be dominated by technical price action in the near future.

Speaking of momentum, bond yields have recovered smartly after testing and rejecting upside ceilings, with yields falling over 20–30bp in the past week alone. On the equities side, SPX futures have recovered its 50d MA with the recent all time highs back within shooting distance, though near term technicals do look a bit overbought. Cross asset volatility has also come down, with equities falling back to their cycle lows, with rate and FX vol close on its heels, especially with USDCNH and USDJPY settling back into their recent ranges. We maintain our recent view that markets are likely to grind slowly higher over the near-term, until markets decide to have another reckoning of when ‘bad (economic) news’ is decidedly ‘bad news’ for earnings and growth down the line.

Not much to report in crypto land outside of more litigation action by the SEC, this time centered on Robinhood’s crypto unit. Otherwise, BTC prices continue to mirror the ebb and flow in equity sentiment, with the 1 month chart of SPX futures and BTC carrying an incredible resemblance. We expect crypto prices to remain in lock-step with equity prices absent a new catalyst (what happened to all the halving talks?), though remain skewed to the upside given the amount of levered long liquidations that have happened over the month of April. Good luck.

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