JGBS: Futures Down Post Bessent BoJ Comments, 2/30s Curve Continues To Flatten

The S&P(ESZ5) Friday night range was 6657.00 - 6703.75, SPX closed +0.59%, Asia is currently trading around 6710. The stock market ended its 3 day retracement on Friday and had a healthy bounce as US data came in as expected with no smoking gun with respect to inflation. This morning US futures have followed through trading higher on our open, E-minis(S&P) +0.20%, NQZ5 +0.25%. The stock market continues to look way overdone and is in what is supposed to be a difficult seasonal period, the last 2 weeks of September in particular. In saying that, if that was the pullback it was very shallow ! The market is clearly still in an uptrend and dips continue to be supported for now.

• Wei Li(CIS BlackRock) on LinkedIn - “I don’t know if this is a bubble, but even a bubble can grow and grow before it bursts.” Fundamentals are really good, I am not changing overweight in ai and tech+, which means studying anatomies of past bubbles and signposting them in the current ai super cycle will be the MOST IMPORTANT thing to risk taking.”
• Adam Taggart on X: “David Einhorn on AI: “The numbers that are being thrown around are so extreme that it’s really, really hard to understand them...I’m sure it’s not zero, but there’s a reasonable chance that a tremendous amount of capital destruction is going to come through this cycle.”
• Daily Chartbook on X: "It's helpful to look at the S&P compared to its 200-day moving average. The current number ... is at 10%, but that's not when we've seen local tops. We've generally seen local tops when this number is somewhere between 13% an 15% ... that would imply 6,950." - @fundstrat. See Graph Below
• Barchart on X: “Foreigners now have the highest allocation to U.S. Stocks in history.”

Fig 1: S&P 500 - More To Go

Source: MNI - Market News/@dailychartbook/fundstrat

• The PBOC issued CNY288.6bn of 7-day reverse repo at 1.4% during this morning's operations.
• Today's maturities CNY240.5bn.
• Net liquidity injects CNY48.1bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.47%, from prior close of 1.55%.
• The China overnight interbank repo rate is at 1.32%, from the prior close of 1.30%.
• The China 7-day interbank repo rate is at 1.50%, from the prior close of 1.58%.

• CHINA PBOC CONDUCTS CNY288.6 BLN VIA 7-DAY REVERSE REPO MON