Out of Tune

Despite some fairly hawkish Fed Minutes this afternoon it appears as though a solid 10-Year auction is sufficient to send rates back below 5.3% as I write this in the final hour.

That said, rate-sensitive sectors like the REITs (IYR) and homebuilders (XHB) are not responding in kind to the fade in rates, at least not yet. Regarding the Minutes, the committee seemed hawkish but also did not specify whether they would raise again at the October or December meetings, which was enough for the market to infer a pause. 

Regarding equities, the action is reverting to that familiar drift--Downside is not sticking on the senior indices, albeit with small caps on the IWM flirting with losing the 200-day moving average again and clearly lagging. In essence, the various sectors and indices are completely out of tune with each other, which transcends any normal type of market where there is some interconnectedness and overlap.

Semis are among the tech leaders lower on the day, with the Philadelphia Semiconductor Index (below on the weekly chart) still sporting a lower high versus the June 22nd prior highs. That was quite a long time ago at this point, considering the amount of victory laps the White House and bulls have taken after yesterday's fresh highs on the S&P and Nasdaq.

Finally, amid a generally soft day for commodities across the board we have natural gas staging a nice comeback from the late-September rug-pull. With winter coming into focus one can clearly envision a scenario where natty surprises to the upside just when it seems like it is a perennial laggard.