Good morning,
 
Tech was under pressure globally yesterday, pushing the S&P 500 down 1.4%. However the equal-weight outperformed, down only slightly, and the Russell 2000 modestly outpeformed (-1%). Momentum unwound as Memory (DRAM -14%) got smashed and semis (TSM, NVDA, AMD -4% to -7%) were hit, as well as mega-caps overall (NYSX -3%). Yields, oil and metals were lower while the Dollar was higher. S&P futures are bouncing modestly this morning but have retreated from their best levels, trading in a relatively tight range. Tech names are among the leaders in the pre-market. MU is up 4% heading into its earnings after the close.
 

 
A few earnings and news items to note:
 

• The Dow Jones Industrial Average will add Alphabet to its ranks and remove Verizon, effective June 29. GOOG is up slightly while VZ is slightly lower.
• FedEx (-5%) beat top and bottom lines. Underlying business momentum is “robust” with international volumes showing sustained growth. Margins in the Express segment look a bit light, possibly a reason for some of the weakness, along with a shift to a calendar-year reporting cycle.
• KB Homes (+2%) came in slightly lower on the top line. The company expects sequentially higher deliveries and margins in each of the final two quarters. New Home Sales will be released after the Open.
• Chip maker Cerebras (-10%) beat top line and guided above consensus.
• Logistics REIT Prologis (+1%) announced it offered to buy London-based SEGRO for $17B but was rejected.

Treasury yields are following up yesterday’s modest decline with more pronounced downside action. Yields are off ~5-7bp, beginning their decline just before Treasury Secretary Bessent spoke on CNBC, where he talked up a strong dollar, expects non-inflationary economic acceleration and praised new Fed chair Warsh’s elimination of forward guidance, among other topics. The US Dollar continues to strengthen, breaking above 101.5

• US 2yr -4bps to 4.16%, 5yr -5bps to 4.21%, 10yr -7bps to 4.43%, 30yr -7bps to 4.88%
• USD index: +$0.37 to $101.54 

Markets in Asia were mostly higher overnight after the drubbing yesterday. The Nikkei was the exception falling 0.9% with weakness in financials, manufacturing and some tech while communication services and healthcare outperformed. The BOJ minutes showed broad support for further hikes. South Korea bounced back 3% after falling 10% in the previous session. Samsung jumped nearly 10% on reports of a potential large buyback while SK Hynix was up about half that much. Central bankers continued to call for tighter policy. MSCI kept the country’s market classification as “emerging market” which was expected. In Australia headline inflation data came in better than expected driven by a decline in fuel prices but other measures came in a touch hotter than consensus. Markets in China/Hong Kong were modestly higher. “A rate cut could still be on the table” according to a PBOC official. European indices are modestly lower, trading in a tight range. Germany’s DAX is underperforming with Rheinmetall falling nearly 20% after Germany cancelled plans to build six warships. France is modestly higher as luxury stocks, which have been a drag recently, are bouncing.
 

 
Brent crude is down another 3% this morning with the August contract slipping below its 200d ma ~$75. Yesterday’s API data showed a crude draw of only 765K, well below the 8.3M draw last week, chalked up to draws from the SPR and lower exports. Inventory’s have often seen draws of 4-9M since mid-April. DOE inventory data is out later this morning. US natural gas is slightly higher while European gas is a bit lower. Metals continue to fall as the Dollar strengthens. Gold is down 3% while silver falls 5%. Copper is down as well. BTC and ETH are modestly lower while Ag is up a bit.
 

 
Earnings:

• After-Market: CBRS, FDX, ICR, KBH, WOR
• Pre-Market: NovaGold, PAYX
• After-Market: FUL, JEF, MLKN, MU, WS

 
Economic Data:
US:

• Mortgage Apps: -0.6% w.w vs prior -3.4%
  • Refis: +3.0% vs prior -4.5%
  • 30yr Rate 6.59% prior 6.6%
• 10:00 New Home Sales
• 10:30 Oil Inventories
• 11:30 2yr FRN Auction
• 1:00 5yr Auction
• 4:00 Fed Bank Stress Tests 

 
Global:

• Australia inflation: -0.7% / 4.0% m.m / y.y vs. -0.3% / 4.4% cons., prior 0.4% / 4.2%
• Germany Ifo Current Conditions: 87.0 vs. 86.4 cons., prior 86.1
• Germany Ifo Expectations: 84.1 vs. 85 cons. prior 83.9