MICHAEL KRAMER OWNS SPY PUTS<\/strong><\/em><\/p>\n\n\n\n What a weird day. The yield curve was utterly crushed as yields on the long-end collapsed, and bonds on the short-end rose. It started last night with the 2-yr popping higher around 8:30 PM ET and ended today by 6 bps to 51 bps.<\/p>\n\n\n\n The UK 10-Year Gilt fell 11 bps after the government said it would issue fewer gilts in the coming year. That sent traders scrambling to buy the bond, sending the 10-year below 1%, closing at 0.97%. Couple this with the ECB meeting tomorrow, and global rates fell sharply, including the US.<\/p>\n\n\n\n The US 10-Yr fell by 7 bps to finish at 1.54%. Meanwhile, the curve flattened by a stunning 13 bps, versus the 2-year. I have been noting that I expect the curve to continue to flatten, and if the ECB is a dovish as I expect them to be tomorrow, then yields on the long-end of the curve should continue to fall over time as the short-dated bonds rise. Due to the pressure of falling global rates.<\/p>\n\n\n\n This flattening crushed the financials and small-caps, with the XLF dropping by 1.65% and the Russell falling by 1.9%. The more the curve flattens, the more the two sectors will fall, along with the industrials, the materials, and energy.<\/p>\n\n\n\n Meanwhile, the S&P 500 finished the day down just 50 bps, and it would have been worse if not for Microsoft, Alphabet, and Tesla holding the index up. The equal weight RSP fell 1.3% on the day, with decliners beating advancers nearly 3 to 1. Please do not underestimate the change in the yield curve and what it means. The movement is the market\u2019s expectation that either the Fed is making a policy mistake forcing them to tighten much more quickly and killing growth, or 2) the global recovery is faltering.<\/p>\n\n\n\n It is beginning to look like we have seen the top of this wave B higher. Which I think is in its initial phase will take the S&P 500 back to 4,485.<\/p>\n\n\n\n Meanwhile, the Qs tried for a second day to break out and failed. Not a good sign, in my opinion. If we break below the top of the broadening wedge tomorrow, it will probably be the start of a drop to $370.<\/p>\n\n\n\n Twilio shares are trading 11.5% lower after results and news its COO was resigning. I don\u2019t know what to say about this stock. It is one of those overvalued names that can\u2019t grow fast enough to fit into the market\u2019s valuation. A drop below $306 sets up a further decline to $275. There is that gap at $120 that should not be forgotten.<\/p>\n\n\n\n![\"US](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/1-US-Government-Bonds-1100x759.png\")
<\/figure>\n\n\n\n![\"Financial](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/2-Financial-Sector-1100x759.png\")
<\/figure>\n\n\n\nS&P 500 (SPY)<\/h2>\n\n\n\n
![\"S&P](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/3-SP-500-4-1100x759.png\")
<\/figure>\n\n\n\n![\"S&P](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/4-SP-500-1-1100x759.png\")
<\/figure>\n\n\n\nNasdaq (QQQ)<\/h2>\n\n\n\n
![\"Nasdaq\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/5-Nasdaq-1100x759.png\")
<\/figure>\n\n\n\nTwilio (TWLO)<\/h2>\n\n\n\n
![\"Twilio\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/6-Twilio-1100x759.png\")
<\/figure>\n\n\n\nTeladoc (TDOC)<\/h2>\n\n\n\n
![\"Teladoc\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/7-Teladoc-1100x761.png\")
<\/figure>\n\n\n\n![\"AMD\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/8-AMD-1100x761.png\")
<\/figure>\n\n\n\n![\"Amazon\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/10\/9-Amazon-1-1100x761.png\")
<\/figure>\n\n\n\n