US equity markets have given back huge gains and are now trading flat in a trading day that’s had 4-5 big twists already.
Price action today is all about China and whether or not it’s reopening. Art Cashin had a great line on CNBC regarding China reopening talk: A rumor without a leg to stand on will find another way to get around.
Everyone wants China to reopen and everyone expects it to eventually happen so now every headline that hints at any kind of progress is being amplified. Some traders aren’t so sure.
Secondly, you have to ask: Is China reopening disinflationary through supply chains or inflationary via commodities? I can see both sides of the argument but I lean towards the inflationary side with supply chain pressures already falling.
The bond market appears to be struggling with the same question with US 2-year yields ranging from 4.64% to 4.88% today.
Finally, we’ve seen a series of days with heavy equity selling into the US close and I expect that many market particiants are wary of a replay given pressures on hedge fund redemptions.