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Zdjęcie autoraJarosław Jamka

Another risk-off?

Do current markets look like we're going to have another risk-off correction?


Certainly yes... the further you go from Mag7, the more serious the risk-off seems to be ... and Mag7 is practically at the new all-time high (ATH on May 28, and 0.02% below ATH on May 29) - see Figure 1.



Mag7 in May alone (MtD) increased by 13.01% (until May 29).


This would be the third risk-off correction since July 2023, although currently the S&P500 is only down by 1.02% from the peak of May 21 this year. But the Russell 2000 is already down 3.47% (since May 15 this year). The Russell 2000 is only +3.15% in May (MtD).


Table 1 shows more details.


Again rising bond yields are generally associated with the beginning of a correction in the stock market - see Figure 2.



During the S&P500 correction in 2023 - 10Y UST yield increased by 87 bps.

During the S&P500 correction in April 2024 - 10Y UST yield increased by 42 bps.

During the current correction - starting from May 21 - 10Y UST yield have already increased by 20.2 bps - see Figure 2, black arrows during "risk-off" periods.


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