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Today we got something that seemed like a “normal” selling day with only two sectors down more than 2%. This seems a little ridiculous in perspective, given the lack of volatility for the past couple of years, but it’s definitely an improvement at a time when the VIX hits a 60-handle.
Tempting, then, to think, “Well, there’s only one way to go from here!” But before we get ahead of ourselves, bear in mind that no one has stepped in to support the market – bar some fake news about “delaying” tariffs for 90 days.
That’s not to say we can’t start kicking the tires on some bullish opportunities. That strong 90% down day on Friday would normally signal an imminent relief rally, but this time it feels a little different than it did on say, August 5, 2024, or December 18 of that year.
“What’s next?” you ask. Looking at bonds today, everything isn’t going to plan. Stocks down, check! Bonds up? Hmm… That seemed to work for a couple of days, but today’s selloff in U.S. Treasury bonds means that particular, classic rotation isn’t certain.
An unruly selloff in Treasury and corporate paper may be the next crisis that the market may need to tackle.
Here’s what I suggest we do about it…
