S&P 500 Breaks Major Resistance Level 

Trump Centre Stage

The S&P 500 closed above the key level of 6000 last week on the back of positive tariff news and a better-than-expected Nonfarm Payroll.

Trump was again centre stage. A public falling out with Elon Musk over the “Big, Beautiful (tax) Bill”, a post confirming a phone call with Xi and tariff talks planned for today and a swipe at Jerome Powell regarding interest rate cuts.

Bond yields remain in the spotlight as uncertainty surrounding tariffs and the “Big, Beautiful (tax) Bill” persist.

Some analysts and commentators view 30-year bond yields approaching 5% as a sign that something is amiss.

That the bond market is signalling discontent with the implications of the “Big, Beautiful (tax) Bill” and tariffs, and in part, that may be true.

However, the Move index is at its lowest point in three months. There is no stress in the bond market.

Interest Rate Cuts

It appears that everyone, including Trump, believes the Federal Reserve should cut interest rates. Inflation is at a four-year low, and on that basis, interest rates should be lower.

They are forgetting that when the Federal Reserve cut rates in September, the bond market responded negatively.

It was a clear rejection of a policy that was stimulating the economy in a period of inflation uncertainty.

While inflation is at a four-year low, it is higher and will likely remain higher than the period from 2010 to 2020.

Interest rates will be higher, and bond yields will be higher. A 30-year bond yield of 5% will likely be the norm.

The concern, however, is that the “Big, Beautiful (tax) Bill” will result in a 30-year bond yield of 6% or higher.

S&P 500 Key Levels

The S&P 500 opens in positive gamma today, and the key levels remain unchanged. The gamma flip zone sits at 5792; the call resistance level has moved up to 6020, and the put support remains at 5600.

The direction this week will likely depend on the outcome of tariff negotiations with China.

The market is narrative-driven and, more specifically, driven by Trump’s narratives. There is, however, early evidence that the economy and stock markets are placing less weight on their impact.  

The market is just 2.35% away from an all-time high; however, expect some volatility and consolidation at the current level.

Key levels to watch to the downside are the put wall at 5800 and below that at 5650.