Choppiness and rotation in global equity markets continued yesterday.
In particular, the tech sector rallied sharply, whilst financials and certain other cyclicals areas of the market were weak (the S&P500 IT sector, for example, was up +1.9% whilst the financials were down 1.3%). That rotation and choppiness has been ongoing for the past few weeks and bond yields sit at the heart of the rotation. As yields recently backed up, tech suffered. With bond yields arguably finished backing up (for now), the downward pressure on tech is easing, whilst the upward momentum of cyclical areas of the market is dissipating/fading. The key near term question, therefore, is: How long will that rotation (back into tech) last? And, how will it shape the overall direction of global markets in the near term?
Key macro data today includes US new homes sales (for February, due at 2pm London time); as well as the Richmond Fed manufacturing index (for March, due at 2pm). Key events include speeches by a number of FOMC members, including Bullard (1pm); Williams (6:45pm); and Brainard (7:45pm). All eyes, though, will be on Powell’s joint testimony with U.S treasury secretary Yellen before Congress (at 4pm).