Price action yesterday saw the first signs of a small crack in the bullish facade, starting with fixed income where the flood of corporate and treasury issuance have finally led to some supply indigestion. Monday saw $20bln of new corporate paper spread over 19-deals and 37 tranches, which follows last week’s $60bln bonanza and $145bln in February MTD, just $5bln short of the all time record established last year. This is happening against a backdrop of $63bln in 2yr and $64bln of 5yr treasuries being issued, with both auctions seeing tepid demand, causing treasury yields to rebound back close to the December highs and unwinding all of the gains YTD.

Equities fared a little better, though both Nasdaq and SPX ended in the red on early rumblings of month-end rebalancings. With SPX (+4.8%) outperforming treasuries (-1.5%) drastically this month, Wall Street estimates that there to be significant rotation flows in favour of bonds over the next few days.

In the meantime, investor sentiment continues to extend into stocks despite stretched prices, with only HK equities seeing a net negative normalized positioning, while investor expectations of a no-landing scenario (ie. No recession) has increased to 41% based on a BoA survey.

Speaking of FOMO, BTC has jumped to nearly $57k as of the time of writing as the market appears to be entering into accumulation model. Positive reports out of Microstrategy accumulating another $150mm of BTC ($10bln holdings at a cost base of low $31k!) gave markets another confidence boost, while declining outflows out of GBTC and continued inflows into the new ETFs are supporting the mainstream adoption case.

Meanwhile, with almost perfect comedic timing, ECB analysts have seized this moment to reiterate that “crypto is worthless” despite the ETF approvals as the asset has zero intrinsic value (etc etc). Maybe Central Bank officials can kindly remind us how buying bonds at a negative yield (circa 2016–2021) was a much better “investment decision” for their pensioners instead…

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