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Bonds Bid, Stocks Skid As Lockdowns Loom, Stimulus Doomed

A combination of various state/city lockdown orders (on the back of Biden advisors pushing for a national lockdown for up to 6 weeks) and headlines from Washington that stimulus will be dramatically smaller than hoped for (if at all), sent all the major US equity indices lower today. Small Caps were hit hardest but as the headlines hit, even Big-Tech couldn’t hold any gains (after Trump admin unveils EO blocking some China stock buys).

The S&P is back in the red post-vaccine and Small Caps are rapidly giving up their exuberant gains.

Additionally, after taking the day off yesterday to remember Veterans, bond traders were in buoyant mode, buying Treasuries across the curve (even after a weak 30Y auction) as Fed’s Powell hinted at more action required (and fiscal stimulus ‘reflationary’ hopes faded).

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