Could Dennis Gartman be right?
For the third day in a row, stocks have burst higher out of the gate, only to be met with a wave of selling which has promptly pushed the S&P to session lows.
While there has been no specific news catalyzing the move, traders are attributing the move to a sudden drop in 10Y breakevens - with 10Y real rates unchanged - as long-term inflation pressures are suddenly looking far less pressing...
... which in turn has pushed Breakevens back levels not seen in one month as real 10Y yields remain rangebound.
One potential factor spooking risk may be a Reuters headline, which confirms that the White House is seeking a $100 billion reduction in the trade deficit with China:
This confirms reports from last week that the Trump administration is planning to cut the annual US trade deficit with China by USD100bn. For context, the US-China trade deficit reached a record USD375bn last year, which means the White House is targeting roughly 26.7% of trade.
Meanwhile, after the tariffs on US steel and aluminium imports as per Section 232, the technology sector is considered the next target as the US wants to tackle China's use of intellectual property. Reports suggested such tariffs could come as early as this week with sources noting that anywhere between $30bn and $60bn in tariffs may be targeted. It appears that after generally ignoring trade war news, markets are becoming incrasingly sensitive to any trade developments in the aftermath of Tillerson's departure.