Global stock markets are facing a dual challenge😲

While Chinese equities sold off on continued pessimism over local activity, US equities similarly faltered as higher rates are starting to give stock investors concerns again, especially considering that the gap between 10y real rates (inflation-adjusted) and SPX 12-month forward PE multiple remains wide. SPX futures touched a one-month low yesterday with regional banks (-3%) and energy (-2%) particularly hard hit. Technically speaking, futures should support around the 4450 level, especially with the bearish China sentiment feeling a bit overdone in the interim; however, the longer-term move will likely depend on where longer-term bond yields go from here, and whether we'll have another 'taper-tantrum' special in the fall as a more ominous development.

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