Short-dated yields have bounced and helped to lift the US dollar off the lows across the board. That hasn’t inspired any slowdown in equities though, with the S&P 500 near a session high, up 1.5%. Many of the heavily-shorted names are leading with way, with Shopify up 20% after earnings. Paypal and Tesla are both also up 6%.
The price action in broad equities is different from recent rallies led by big tech. Those names are generally lagging while shorted names and value are picking up.
All this is coming ahead of two major data releases on Friday in non-farm payrolls and ISM services. Weak readings would confirm the bid in bonds and keep equities rolling but risks run both ways as another round of strength could spark fresh angst.
As for the dollar, I wonder if this latest round of strength isn’t foreshadowing some angst into the equity close ahead of those data releases and AAPL earnings.