Good morning,
 
Coming out of the long weekend most major US indices kept on trucking hitting new all-time highs yesterday. The hopes for a diplomatic resolution in Iran prevailed despite the US conducting “self-defense” strikes.  Oil prices fell >2.5% with ICE Brent breaking below $100 and its 50d ma which helped Treasury yields pullback as well. The S&P 500 was up 0.6% closing back over 7,500 while small/midcap indices were up ~1.5%. The strength in memory stocks and to a somewhat lesser extent chips was the big story with Micron surging nearly 20% and clearing a $1T market capitalization following a UBS upgrade (NYSE Semi Index +6.2% and ~90% YTD). The speculative juices were flowing with space stocks surging and strength in other popular thematic trades like nuclear and rare earths. Quantum stocks paused after surging in the previous two sessions.
 
Futures continued to move higher overnight amidst more tech strength. Futures were pulling back from the overnight highs this morning but jumped after Iran State TV released details of the draft MOU with the US which would include the withdrawal of US military forces and the lift of the blockade while Iran would restore the number of commercial ships moving through the Strait to pre-war levels within 1 month. However, futures have given those gains as there was no mention of enriched uranium and the suggestion of tolling in the Strait, which have been redlines for the administration.  The move in S&P futures was reasonably muted up trading up ~0.35% at the highs before pulling back modestly.  Oil prices have extended to the downside and were down >5% at the lows but have bounced, ICE Brent trading just under $96.  
 

 
Overnight SK Hynix joined Micron in the $1T club and the latter is up ~7% in the pre-market after a Barclays upgrade but they only doubled their PT, weak, the trailblazer UBS nearly tripled theirs yesterday. Speaking of trailblazers space stocks continue to “moon” as the kids say with many stocks up well north of 5% in the pre-market. There is some weakness in software particularly the cyber security stocks, which have been moving sharply higher recently. Zscaler (->20%) reported solid numbers but cut ARR guidance. The company also announced that it was pulling forward Capex investment in an attempt to lock in current pricing due to the rising costs of memory and data center equipment increasing their Capex estimate as a % of revenue from mid-single digits to high single digits. Retail earnings were mixed (BBWI/ANF trading higher, DKS/CPRI is trading lower). There are multiple sell side conferences going on today (see list below).
 
This morning mortgage apps continued to fall amidst following the recent increase in rates. The ADP weekly employment change moderated to ~36k from ~42k last week. After the open the Richmond Fed index and Dallas Services will be released. This afternoon there is a 5yr auction. Treasury yields started to reverse the overnight bid ahead of the Iran news but are back near the lows down 1-3bps across the curve (also not a particularly large reaction). The USD index is also pulling back modestly.
 
Government Yields

• US 2yr +0bps to 4.04%, 5yr -1bps to 4.17%, 10yr -2bps to 4.47%, 30yr -1bps to 5.01%
• USD index: -$0.10 to $99.01

 
Markets in Asia were mixed overnight. The Nikkei closed around unchanged. Local yields were down modestly despite a somewhat weak 40yr bond auction. The Yen continues to weaken approaching 159.50 ¥/$ despite some hawkish comments from BOJ Ueda overnight. Softbank fell 7% giving back some of the recent gains. The Kospi and Taiwan both hit new all-time highs with the tech strength. Local markets in China/Hong Kong fell over 1% as regulators continue to crackdown on brokerages. China industrial profits improved. Inflation data in Australia came in a bit hot. The Bank of New Zealand left rates unchanged in a 3-3 vote with half the members preferring a hike. Indices in Europe have been in the green overnight and have extended to the upside following the Iran headlines.
 

 
Energy related commodities are moving lower.  The metals complex has been under pressure overnight with gold breaking below recent lows ~4,450 currently down 1.7% at 4,426 the 200d ma is ~4,388. Silver is down >2% but off the lows. Copper is a relative outperformer holding around unchanged. Ag is under pressure. After reversing lower yesterday crypto continues to drift lower. Bitcoin is trading ~75.5k its 50d ma is around 74.8k.
 

 
 
Earnings:

• After-Market: BOX, MOD, SMTC, ZS 
• Pre-Market (Wed): ANF, BBWI, CPRI, DKS, DY, MNRO, P 
• After-Market: A, CRM, HEI, HPQ, MRVL, NTNX, SNOW, SNPS    

 
Broker Conferences:

• KeyBanc Industrials & Basic Materials Conference
• TD Cowen Technology, Media & Telecom Conference
• Goldman Sachs Leveraged Finance and Credit Conference
• Bank of America Power Utilities and Cleantech Conference
• Deutsche Bank Global Financial Services Conference
• Jefferies Software, Internet & AI Conference
• Bernstein Strategic Decisions Co..

 
Economic Data:
US:

• Mortgage Apps: -8.5% w/w prior -2.3%
  • 30yr rate - 6.65% prior 6.56%
• ADP Weekly Change: 35.75 prior 42.25k
• 10:00 Richmond Fed Index
• 10:30 Dallas Services
• 11:30 $28B 2yr FRN auction
• 1:00 $70B 5yr Auction
• 3:55 Fed Cook
• 4:30 API Oil Inventories

Global:

• Australia Inflation: 1.1%/4.6% m.m/y.y vs. 0.7%/4.6% cons., prior 0.6%/4.4%
• China Industrial Profits: 15.5% vs. 12.0% cons.