U.S. Futures & World Markets

Stocks are on shaky ground — if that's possible after a 7-week winning streak for the S&P 500 — reacting to every headline out of Iran. Meanwhile, 10-year yields are now pushing 4.60%.

Consumer spending has been resilient, but this is an inflationary story. The bond market needs to see a lasting resolution to the Iran conflict for rates to move meaningfully lower. Think of the bond market as Glenn Close in Fatal Attraction: "I'm not gonna be ignored." Until then, expect stocks to remain sensitive to inflation data, while bulls lean on record earnings growth and AI spending.

We know that AI mania has taken over stocks, but here is a stat from Torsten Slok of Apollo that shows just how deep the theme has spread:

"AI is penetrating every corner of financial markets. What began as an equity market phenomenon has become a capital markets-wide transformation. AI now accounts for nearly half of all investment-grade bond issuance, 87% of VC funding, and a growing share of high-yield bonds — underscoring how deeply the AI investment cycle has penetrated every corner of finance."

Torsten Slok — Apollo

There's also a good chart below on IPO hype and how stocks tend to trade after they go public. While these may be fine companies with a bright future, it's still a reminder that valuation matters. That ice cold water bottle may look amazing as you're sitting on the beach in sweltering heat, but is it really worth $30?

S&P Futures vs. Fair Value: -14.00  |  10-Year Yield: 4.60%

CORE Headlines

Charts & Data

Treasury yields driven by real yields, not inflation breakevens — a glaring risk. Simon White, Bloomberg via Daily Chartbook: "Despite one of the biggest energy shocks since the 1970s, the bulk of Treasury yields' rise has been driven by real yields, not by inflation breakevens. That leaves a glaring risk if the market decides to take inflation risks from rising energy prices more seriously." The inflation repricing hasn't fully happened yet.

Investors buying the bond dip — biggest IG inflow since March. BofA via Daily Chartbook: "Folks are buying the bond dip. Biggest 4-week inflow to IG bond funds since March 2026." At 4.60%+ on the 10-year, yield-seeking is alive and well.

Risk sentiment still neutral — rally could be durable. TS Lombard via Daily Chartbook: "Despite the blistering rally in US equities, risk sentiment remains neutral on our US indicator, which suggests the rally could be durable as many investors have not actively participated." Not everyone is in yet.

Equity positioning still below levels implied by earnings growth. Deutsche Bank via Daily Chartbook: "Equity positioning is still well below levels implied by booming earnings growth." That gap is the bull case in a single chart.

Short interest at highest since 2010 — more fuel for a squeeze. Deutsche Bank via Daily Chartbook: "Aggregate median short interest as a percentage of shares outstanding is at the highest since 2010 for Russell 3000 companies." Bears are heavily positioned. If they're wrong, the forced covering adds rocket fuel.

Software short squeeze risk at 100th percentile. JPMorgan via Daily Chartbook: "Shorts are herding in software while semis shorts hover near recent lows. Short squeeze risk in software is now sitting at the 100th percentile versus the past six years." The next leg of this rally may come from software, not semis.

Retail traders piling into leveraged ETFs — smart until it isn't. Goldman Sachs via Daily Chartbook: "Retail traders are piling into leveraged US equity index ETFs. The trade looks smart in the moment, until it doesn't." Leverage amplifies both gains and losses.

Hyped IPOs lose 16.6% in the six months after day-one rally. ProCap Insights via Daily Chartbook: "Across 15 highly-anticipated tech IPOs since 2015, the median name lost 16.6% in the six months after its day-one rally." Cerebras opened big on Thursday and then sold off sharply as retail piled in after the open.

Active mutual funds on pace for 4th-worst year vs. S&P in 20 years. Bloomberg via Daily Chartbook: "The share of mutual funds outperforming the S&P 500 this year has plunged to just 28%, down from over 60% at the end of February. Active managers are now headed for their fourth-worst showing in the last 20 years relative to the benchmark."

Market breadth: index making highs but breadth not confirming. Bespoke via Daily Chartbook: "The only other times with this many S&P 52-week highs without breadth confirmation was in July 2024 and April 1995." A narrow market can keep going — but it's fragile.

NDX above 10-DMA for 32 straight days — 100% win rate 6 months out. @bluekurtic via Daily Chartbook: "Despite a weak day, Nasdaq 100 is still above its 10-day moving average for 32 straight days — the 11th best streak since 1985. Six months later, NDX was positive 100% of the time, with an average gain of 11.8%."

Overbought ≠ bearish. Frank Cappelleri, CappNotes via Daily Chartbook: "Overbought conditions deserve respect after such a powerful run from the March lows. But overbought does not automatically mean bearish. Bearish price action occurs when bullish patterns start to fail — so far, that has yet to happen."

Eight 1%+ gains in a row without a 1% decline — longest in nearly 10 years. Ryan Detrick: "This streak ended Friday. Bottom line? A day like Friday was more than due."

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.