5/21/25 Live Trading Room Market Recap & Trades
YOU ARE WELCOME ;-)
Liquidity Getting Tested turns out to be a good warning.
Now, VIX still has to get/stay > 20.57 to cause a bigger worry.
For now, a -1682 low TICK hit on a massive sell program - after trapping early morning bulls.
I did warn...post VIX expiry today would bring weakness.
It's here.
Reason? Bad Bond Auction - 20Y specifically.
It caused the US 20Y to spike to 5.1%, pulling 10Y + 30Y yields with it.
RISING TREASURY YIELDS
Do you remember what happened after the 2011 Standard & Poors US downgrade?
Global sovereign debt got scrutinized & vulnerabilities got amplified.
Europe was fragile. Sovereign default risks rose. ECB Draghi came out with “whenever it takes” to backstop the selling.
Which country is now weakest?
FYI: US 10Y yields are actually lagging UK and Japan…
And it looks like Japan may get the spotlight this time.
The very long end of the bond market is trading like a debt reckoning is coming.
Japan remains the most heavily indebted developed economy in the world.
The BOJ meets June 19th to review their current Yield Curve Control and bond-buying.
How will they keep the GLOBAL carry trade alive without jeopardizing their economy?
Tough needle to thread, especially without active support by US Treasury, but Bessent wants them to let the yen appreciate.
But suppressed yen is tied to the basis trade of shorting UST against long NDX.
A rising yen is what upset the apple cart in July of last year - when NDX fell -15%, SMH -25% and NVDA -35%.
High rates, high deficits, & high inflation may be good for the rotation into stocks, but it's not good for bonds.
And eventually, what's not good for bonds is not good for stocks.
Liquidity Matters Until Rates Rise
NVDA IS NEXT WEEK!
Next week, the Fed will release the minutes of its most recent meeting on Wed.
Then NVDA reports afterhours Wed. My long from $96-136 is done. I am not expecting a blow-out higher above $146 for Nvidia this year. I know, I am the exception.
We also get update on Q1 GDP growth after initial read says U.S. economy grew at a meager 0.3% for the first three months of this year.
Jobless Claims Thursday and ... all of this is just more reason to hedge.