Yesterday a global tech rout sent equity markets lower. The S&P 500 declined 1.4% as memory, semis and mega-cap tech stocks fell sharply. The index traded within 10pts of the rising 50d moving average around the open but recouped some of the initial losses as defensive/yield oriented and areas of the market that have underperformed (i.e. healthcare) moved higher. Oil prices continued to move lower but that didn’t provide much of a tailwind for Treasuries. The USD rally picked up steam after breaking out of the year long range and weighed heavily on the metals complex.

Ahead of Micron earnings there was a modest bounce in tech stocks overnight. Futures traded on either side of unchanged for much of the overnight session. Oil prices continued to move lower with ICE Brent breaking below the 200d ma this finally woke up Treasury markets which have shrugged off the recent move lower, as we discussed last week (see correlation between 2yr yield/ICE Brent chart below). Ahead of the open Treasuries started to rally and that has accelerated throughout the session with yields down 5-10bps across the curve. This helped equities move higher after the open with a continuation of the rotation. The tech bounce was tepid and since the European close the sector has now turned lower again. As we head to print the S&P 500 has moved into the red however, the equal-weight, Dow Jones Industrial Average and small/midcap indices are still holding on to gains. The USD rally continues which is causing a puke in metals and crypto complexes both of which are either breaking or testing their recent lows.