Another Deal Day Another Market Rally
It feels like we are stuck on a carousel that just keeps going around and around. For the past two months, we have seen headlines about a deal between the US and Iran to end the fighting. The odd part is that the deal is supposedly meant to extend the two-week ceasefire, which began on April 8 and is now 50 days old, by another 60 days. It is not entirely clear to me why a new deal is needed to do that.
In any event, news that a deal may be coming once again sent the S&P 500 higher by 58 basis points, while the VIX fell below 16. To be honest, it is also starting to interfere with my Treasury settlement calendar work. The index finished about 10 basis points above its average gain of 48 basis points on positive days.
Bitcoin behaved largely as expected, though it fell about 2% around midday and is currently down roughly 1% on the day. While I do not believe Bitcoin has much intrinsic value, it does appear to provide a useful pulse on liquidity conditions. For that reason alone, it is worth watching.
The highly liquidity-sensitive private equity ETF, PSP, also finished the day lower, adding to the evidence that some of the market’s more liquidity-dependent areas remain under pressure despite the broader market’s gains.
I have nothing else for today. The news cycle has worn me out, and, to be honest, I have a lot of other things I need to finish before month-end.
-Mike
Glossary by ChatGPT
Basis Point (bp) — One one-hundredth of a percentage point, equal to 0.01%.
Bitcoin — A decentralized digital asset often monitored as a proxy for speculative risk appetite and liquidity conditions.
Ceasefire — A temporary suspension of hostilities between conflicting parties.
Liquidity — The ease with which assets can be bought or sold without significantly affecting their price.
Private Equity ETF — An exchange-traded fund that provides exposure to publicly traded private equity firms and related investments.
PSP — The Invesco Global Listed Private Equity ETF, commonly used as a proxy for liquidity-sensitive private equity exposure.
S&P 500 — A market-capitalization-weighted index tracking 500 leading publicly traded U.S. companies.
Treasury Settlement Calendar — A schedule used to track the issuance, settlement, and maturity dates of U.S. Treasury securities.
VIX — The CBOE Volatility Index, often referred to as the market’s fear gauge, measuring expected S&P 500 volatility.
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