Jeff deGraaf on Market Lows, Breadth Metrics, and Bond Yields

Market Lows and Breadth Metrics

• 💡 The current market setup is supported by a massive expansion in momentum and a surge in new high data, typical of a market low that's hard to breach.
• 🎯 The rally off recent lows was led by beta, which is common, but improvements in breadth metrics suggest a more robust foundation.

Shifting Market Leadership

• 🚀 The focus is shifting away from beta-led gains towards relative strength and momentum as the primary drivers for the latter half of the year.
• 🔑 Identifying leadership names driven by momentum and relative performance is key, as these will likely set future market narratives.
• ⚠️ Hunting for laggards and turnaround candidates is historically one of the worst strategies during such market transitions.

Bond Market Dynamics and Potential Disruptors

• ⚠️ The stock-bond/treasury yield dynamic is a potential disruptor, with yields showing sensitivity to higher levels.
• 📈 While bond yields are becoming more consensus, the bond vigilantes are a concern, particularly if the 10-year Treasury yield moves above 4.75%.
• 📊 The 30-year yield is in an uptrend, while the 10-year remains in a range (4.20%-4.75%), and the short end of the curve is in a downtrend, indicating a complex bond market.
• 🔍 Despite concerns, corporate credit and liquidity measures are not showing signs of distress, providing some solace.