Transportation stocks feeling unloved

May not be a good sign for other equities

Chart of the Day

Proponents of Dow Theory won’t be too happy with recent equity market developments. Although the Nasdaq and S&P 500 have been advancing to new record highs, transport stocks remain some way below their respective high from earlier this year. To some extent, that could simply be payback from their very solid outperformance as the economy re-opened, but to some, it is a sign that the recent strength of equities may not be sustained.

Macro

The eurozone money data showed that broad money growth in the bloc was 8.4% in May, still much less than the US but base effects mean the US rate is coming down sharply.

The eurozone six-month private sector credit impulse shows firms and households have been doing little in the way of new borrowing recently.

The personal income and spending data for May showed the household saving rate fell to 12.4% in the US.

US PCE core inflation rose to 3.4% in May. That compares to the most recent core CPI rate of inflation of 3.8%. Both far above the Fed’s target then…

Markets

Traders seem to be getting behind the S&P 500 again, but remain wary of small caps.

After traders cut their net short in long-term bonds significantly in recent months, in the past week they kept a similar position in the 30-year.

Traders have started betting against the precious metals to a greater degree, excluding gold.

Traders’ net long in oil has been a winning trade - the GSCI energy index has risen by 10.7% in the past month, while the non-energy index has fallen by 6.1%.

Oil prices are benefiting from a lack of supply - the rig count has barely rebounded.

Like what you see? Please forward this email to your friends and colleagues, or use the button below to share it on social media. They can also follow us https://twitter.com/macro_daily

Got a question? You can reply directly to this email to get in contact.