The market optimism switch has been turned back on, judging by the performance in markets on Monday — where the S&P 500

ended at its second-highest level ever — and the early moves on Tuesday.

But the technical outlook across multiple markets isn’t conducive for risky assets, according to Paul Ciana, the chief global fixed income, currencies and commodities technical strategist at Bank of America.

The ratio of the U.S. treasury bond future vs. Russell 2000 index reached a new all-time low in March, and has since turned higher. When this ratio has turned up from such low levels before, it has preceded a period when the bond market outperformed the Russell 2000, he says.

Bonds also have turned up vs. copper and oil.

Moreover, the charts of the U.S. dollar suggest the greenback is positioned to outperform bonds, the Russell 2000, copper and oil. The last time the dollar

“double-bottomed” vs. the Russell 2000, it outperformed in 2018 and 2014.

“This cross-asset conundrum casts a shadow over risk taking in the second half of 2021,” he says.

Technical analysis by its very definition excludes fundamental analysis, but a world where bonds and the dollar rally would be consistent with a global economy struggling to maintain its momentum. Recent economic data have disappointed analysts, including Monday’s report showing a drop in the U.S. composite purchasing managers index to an eight-month low.

The buzz

Speculation continues over the Federal Reserve’s plan ahead of Friday’s speech by Chair Jerome Powell. New-home sales data highlight Tuesday’s slate of economic releases.


CEO Elon Musk panned his company’s software, saying “FSD Beta 9.2 is actually not great imo, but Autopilot/AI team is rallying to improve as fast as possible.” He subsequently tweeted that a later version of the software is much improved.

Electronics retailer Best Buy

comfortably beat consensus earnings estimates as it lifted its same-store sales guidance. Best Buy shares rose 4% in premarket action.

Cybersecurity company Palo Alto Networks

jumped 12% in premarket trade after its profit and outlook topped Wall Street estimates, as cybersecurity rivals also advanced.

The House of Representatives is at an impasse over how to move forward on infrastructure spending and a broader budget.

The markets

U.S. stock futures were again in an upbeat mood, as stock futures



The yield on the 10-year Treasury

edged up to 1.26%, while bitcoin

traded under $50,000.

The chart

Courtesy of fund manager DWS, this chart shows just how unusual it is for corporate earnings forecasts to be raised during the year — optimism usually peaks around new year. “Overall, corporate reporting has been so firm in recent months that analysts seem to be barely keeping up with upward revisions to their earnings estimates,” said Thomas Bucher, global equity strategist at DWS, who added that companies have been able to profit from supply bottlenecks by focusing production on their highest-margin products.

Random reads

The story of how the legendary song “White Rabbit” by Jefferson Airplane was made.

This viral Reddit thread, of how a three-dog owner was able to skirt a two-dog rule from the local homeowners association.

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