S&P 500: Is Bad Breadth the Norm, Not the Exception?

Stocks

Summary:

Since 2020, bad breadth in the S&P 500—rallies led by few mega-cap stocks—has appeared 95 times, nearly triple pre-pandemic levels. CPI met expectations at 2.7%, easing Fed concerns over lasting tariff-driven inflation.

ince the pandemic, markets have been behaving abnormally. One such instance is a somewhat regular occurrence of bad market breadth. In other words, the market-cap weighted S&P 500 drives higher, yet fewer and fewer stocks are participating in the rally. For instance, in Monday’s Commentary, we discussed the current instance of bad breadth. To wit:

Market breadth has also narrowed, as shown, with fewer than 60% of S&P 500 stocks above their 50 and 200-day moving averages, highlighting the reliance on mega-cap technology to prop up index levels.

Given we have seen many instances of bad breadth over the last few years, it’s worth quantifying the number of cases before and after the pandemic.

The graph below charts SPY on a logarithmic scale versus instances of bad breadth. Bad breadth is the 50-day return differential between the marketcap (SPY) and equal weighted RSP S&P 500, diverging two standard deviations from the norm.

Between 2003 and the pandemic, there were 38 daily instances. All of these instances occurred between October and December of 2008, during the heart of the financial crisis. In 2020, there were 52 instances. Like 2008, the episodes of poor breadth accompany periods of high volatility.

However, since 2020, there have been 95 instances. That is almost 3x the amount occurring in the 17 years prior to the pandemic. Moreover, many of the cases did not happen when markets were in disarray.

While bad breadth is certainly a warning today, we should be careful to appreciate that this warning has not been a great indicator recently.

S&P 500: Is Bad Breadth the Norm, Not the Exception?_1

CPI Comes In As Expected

CPI rose 0.2% as expected, keeping the year-over-year CPI rate at 2.7%. Simply, it was just right, not too hot, not too cold. While the annualized monthly rate is 2.4% and above the Fed’s target, the latest round of data should ease the Fed’s concern that tariffs are highly inflationary.

The table below breaks out inflation by its broader categories and weighting. Shelter and rents continue to cool slowly, which is offsetting some pressure from items that carry much lesser weights. For instance, footwear rose 0.9% last month after declining in the prior months. However, the 0.1% decline in shelter prices offset the rise in footwear by a factor of 4.

It’s possible the price hike in footwear due to tariffs is a one-time, and not persistent, increase. For example, if there is a new 10% tariff on an item and it’s passed through entirely to the consumer, prices should rise by 10%. However, that 10% increase will occur when the tariff takes effect.

Thus, the price change in the following months will likely revert to its prior changes. Moreover, with higher prices, some consumers may negatively impact demand by delaying purchases or buying a different, lower-cost item. As a result, companies that hiked prices due to tariffs may need to reduce prices after the tariff. In some instances, we may see disinflation or deflation after a bump up in prices.

Source: investing

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Daniel Carter

Political

Russia-Ukraine Conflict

U.S. President Donald Trump has said Ukraine must be involved in talks about territory in any ceasefire deal with Russia, French President Emmanuel Macron said on Wednesday.

The comments were the first indication of what came out of talks between Trump, European leaders and Ukrainian President Volodymyr Zelenskiy, intended to shape Trump's meeting with Russian President Vladimir Putin in Alaska on Friday.

Trump's insistence on involving Ukraine, if confirmed, could bring a measure of relief to Ukraine and its allies, who have feared that Trump and Putin could reach a deal that sells out Europe's and Ukraine's security interests and proposes to carve up Ukraine's territory.

Trump and Putin are due to meet in Alaska on Friday for talks on how to end the three-and-a-half-year-old conflict, the biggest in Europe since World War Two. Trump has said both sides will have to swap land to end fighting that has cost tens of thousands of lives and displaced millions.

On a day of intense diplomacy, Zelenskiy flew into Berlin for German-hosted virtual meetings with European leaders and then with Trump. The Europeans worry that a land swap could leave Russia with almost a fifth of Ukraine and embolden Putin to expand further west into the future.

Source: Reuters

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Adam

Economic

President Trump has re-started his public humiliation of the chairman of the Federal Reserve, Jerome Powell. Earlier on Tuesday, he demanded that ‘too late’ Powell lower the US interest rate now. As usual, when a head of state demands that borrowing costs are reduced it tends to have the opposite effect, and US Treasury yields are rising on the back of Trump’s comments.

UK yields march higher, as labour market data erodes hopes of rate cuts

US Treasury yields are rising at a slower pace than European yields, which are surging on Tuesday. The UK 10-year yield is higher by 6bps, and European yields are higher by a similar amount. The spike in European bond yields coincided with the release of the UK labour market data, which showed stubbornly high wage data and a slowdown in job losses in recent weeks and months. As we move through Tuesday, interest rate cut expectations for the UK are being scaled back, there is now less than 1 rate cut getting priced in by the end of the year, and only a 40% chance of a cut priced in for November.

US political risk premium rises

The President’s outburst at the Fed chair, could keep US interest rates elevated, at least in the near term, as it raises the risk of official policy interference. Added to this, since the President has failed in actually firing Jerome Powell, he is now considering suing him because of the ‘horrible and grossly incompetent job’ he is accused of doing while managing building works at the Federal Reserve. Powell is in Trump’s cross hairs, and he is unlikely to come away unscathed unless he cuts rates sharply.

Tariff inflation fails to materialize in July

The US CPI data was a mixed bag, but for those looking for a big surge in tariff-related inflation, they were sorely disappointed. The headline rate of price growth remained at 2.7%, while the core rate jumped from 2.9% to 3.1%, driven by increases in shelter costs, airfares and medical costs, which are unrelated to tariffs.

This has boosted expectations for Fed rate cuts, the chance of a rate cut in September is now at 96%, according to the Fed Fund Futures market. However, in the strange world that we live in, higher expectations of rate cuts are only having a mildly moderating impact on Treasury yields, which are rising due to a political risk premium being priced in by investors.

Nasdaq makes record high

For now, UK bonds are taking the brunt of the selling, and Gilt yields are rising faster than yields in Europe and the US. Due to the UK’s weak fiscal position, this is to be expected. The increase in global bond yields is only having a mild impact on stocks. European indices are mildly lower, although tech stocks and real estate stocks are the weakest performers on Tuesday, as both sectors are impacted by rising bond yields.

US stocks are managing to extend gains, and the Nasdaq has made another intra day record high this afternoon. This comes even though Nvidia and AMD are continuing to register losses due to the ongoing fall out of the deal they have cut with the White House to give 15% of all profits from sales of H20 chips into China.

Ahead today, all focus will be on the bond market to see if yields continue to rise, and if this starts to drain sentiment from the stock market. For now, US stocks are resilient in the face of rising yields.

Source: xtb

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Warren Takunda

Economic

US Treasury Secretary Scott Bessent made his most explicit call yet for the Federal Reserve to execute a cycle of interest-rate cuts, suggesting the central bank’s benchmark ought to be at least 1.5 percentage points lower than it is now.

“I think we could go into a series of rate cuts here, starting with a 50 basis-point rate cut in September,” Bessent said in a television interview on Wednesday. “If you look at any model” it suggests that “we should probably be 150, 175 basis points lower.”

Fed policymakers last month kept their benchmark at a target range of 4.25% to 4.5%, where it’s been all year. Bessent said officials might have cut rates if they’d been aware of the revised data on the labor market that came out a couple of days after the latest meeting. The Bureau of Labor Statistics on Aug. 1 slashed the numbers for payroll gains in May and June by 258,000.

“I suspect we could have had rate cuts in June and July,” Bessent said.

Treasury secretaries have typically shied away from making specific calls on Fed rates, and Bessent has said for months he would only discuss the central bank’s past policy decisions — not their upcoming ones. President Donald Trump has repeatedly criticized Chair Jerome Powell for refraining from rate cuts this year. Powell and many colleagues have said they want to see more evidence about the inflationary impact of Trump’s tariff hikes.

‘Big List’

Bessent said there are 10 or 11 candidates under consideration to succeed Powell when his term as chair ends in May — including current Fed officials — without running through the names.

“We’re working on the big list right now,” he said, adding that two more names might be “revealed” Wednesday.

CNBC reported that Trump is considering candidates including David Zervos, chief market strategist at Jefferies; Rick Rieder, chief investment officer for global fixed income at BlackRock; and former Fed Governor Larry Lindsey.

Bessent also said he didn’t expect Stephen Miran, whom Trump has nominated to fill the existing opening on the Fed board, to stay on after January when that term is up. A new 14-year term opens at that point, and Bessent’s comments indicate Trump would pick a new candidate.

Unless there’s an unscheduled opening on the Fed board, Powell’s replacement would need to come from either the slot that will be open in January, or from the Fed chair’s own seat on the board. That option is more complicated because Powell’s governorship extends into 2028, and he hasn’t clarified if he’ll leave the board when his term as chair ends.

Bessent reiterated he was hopeful that the Senate can confirm Miran, who heads the White House Council of Economic Advisers, by the time of the Fed’s Sept. 16-17 meeting.

‘Inflation Problem’

He also said that US Treasury yields are feeling the impact of overseas developments, including from Japan and Germany.

“There’s definitely leakage from — the Japanese have an inflation problem,” he said. Bessent said that he had spoken with Bank of Japan Governor Kazuo Ueda. “My opinion, not his — they’re behind the curve. So they’re going to be hiking.”

Japan’s super-long dated government bond yields have surged in recent months, and some auctions have seen the weakest demand in many years. Germany’s yields have also been climbing, with 30-year rates on Tuesday reaching the highest level in 14 years. “Our 30-year is getting dragged along with that,” Bessent said.

Asked if those moves argued for the US to pare back its own issuance of 30-year debt, Bessent said that the department’s thoughts “are evolving, and we’ll see where things go.”

The Treasury last month left its debt-issuance plans for longer-dated maturities unchanged and indicated it didn’t see a need to boost those sales for at least the next several quarters. Bessent said that asset managers are “most interested” in the so-called belly of the yield curve. Dealers often use the term “belly” for maturities in the 5- to 10-year range.

Bessent highlighted that 10-year Treasury yields are lower now than at the start of the year, in contrast with some markets overseas. “That tells me there’s credibility” from investors in the Treasury and the Fed, he said. “Inflation expectations are well-anchored.”

Source: Bloomberg

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Adam

Commodity

Technical Breakdown Pressures Light Crude Futures

Daily Light Crude Oil Futures

Light crude oil futures are under pressure on Wednesday, with prices retreating after failing to hold above the 200-day moving average at $64.07. The market briefly breached key support at $62.69—the June low—before rebounding slightly.

However, technical sentiment has turned decidedly bearish. With $62.69 now acting as resistance, traders are eyeing further downside toward the May 30 bottom at $56.91. A move below that level could open the door to a steeper selloff, especially if prices remain capped below the 50-day moving average at $65.60.

IEA Raises Supply Forecast, Weighs on Oil Prices

Adding to the downside pressure, the International Energy Agency (IEA) revised its supply forecast upward on Wednesday, citing increased output from OPEC+ producers.

At the same time, the agency trimmed its global oil demand outlook, pointing to sluggish consumption across major economies. This rebalancing of the supply-demand equation tilted sentiment bearish, with traders now pricing in weaker fundamentals through the rest of the year.

Geopolitical Watch: Traders Await U.S.-Russia Talks

Markets are also closely watching the upcoming meeting between U.S. President Joe Biden and Russian President Vladimir Putin, scheduled for Friday in Alaska. While the summit will focus on the war in Ukraine, analysts expect no additional sanctions on Russian oil.

According to PVM Oil’s Tamas Varga, this has contributed to the softening in crude prices, as uninterrupted Russian exports continue to flow into southern and eastern markets.

U.S. Inventory Data Sends Mixed Signals

The latest American Petroleum Institute (API) data showed a 1.52 million barrel build in U.S. crude inventories last week, reinforcing supply-side concerns. Gasoline stockpiles declined, while distillates posted a slight gain.

Traders now await the official Energy Information Administration (EIA) report due later today, with consensus expecting a modest 300,000 barrel draw.

Meanwhile, the EIA’s Short-Term Energy Outlook issued Tuesday projected Brent crude prices to average below $60 per barrel in Q4—the lowest quarterly average since 2020.

Oil Prices Forecast: Bearish Below Key Technicals and Soft Demand Outlook

With a failed breakout above the 200-day moving average and fundamental data skewing bearish—higher supply, softening demand, and stable Russian exports—WTI crude is positioned for further downside.

Unless prices can reclaim the $65.60 level, the technical setup favors continued weakness, with sub-$60 levels likely in play in the near term.

Traders should watch for confirmation from EIA stockpile data and Friday’s geopolitical developments, but for now, the market bias remains bearish.

Source: fxempire

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Winkelmann

Economic

Cryptocurrency

Forex

Key Points:

● Vietnam's finance ministry plans to pilot a digital asset exchange, integrating blockchain.

● Exchange aims to enhance asset liquidity in Vietnam.

● Global market sees growing interest in digital asset innovations.

Vietnam will pilot a digital asset exchange in an international financial center, finalized by the Ministry of Finance, and awaiting government approval in August 2025.This move signals Vietnam's commitment to digital finance, potentially increasing regional liquidity and paving the way for modernized economic infrastructure.

Vietnam's Blockchain Exchange Initiative Targets Enhanced Liquidity

Vietnam's move to pilot a digital asset exchange stems from legislative developments that include the National Assembly's resolution and the Ministry of Finance's comprehensive proposal. The planned pilot policy, awaiting August submission, will encompass trading, issuance, and management of digital assets, with a focus on blockchain and cybersecurity. The policy is designed to offer service providers the autonomy to select listed assets.The pilot exchange aims to boost liquidity and demand for leading digital assets, serving both Vietnamese and foreign markets. Vietnam's central bank's ongoing research into a national digital currency underlines the government's long-term strategy for a digital economy. Service providers will play a key role in asset selection, potentially elevating trading volumes.

Market observers note the announcement's potential to catalyze investment flows into Vietnam's digital asset market. Blockchain proponents herald this as an opportunity for expansion and innovation. The exchange pilot suggests broad support for blockchain technology, attracting notable attention within the regional and global financial community.

Pilot May Spur Global Investment and Technological Innovation

Did you know? Vietnam's policy fosters transparency and growth, potentially setting a regulatory standard in the region.

As of the latest data from CoinMarketCap, Bitcoin (BTC) holds a price of $119,220.74, with a market capitalization of $2.37 trillion and a dominance of 58.81%. However, its 24-hour trading volume decreased by 10.61% to $73.77 billion. Over 90 days, BTC's price increased by 15.74%.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 02:29 UTC on August 13, 2025.

The Coincu research team highlights that Vietnam's policy fosters transparency and growth, potentially setting a regulatory standard in the region. "The pilot policy for digital asset trading finalized for government review by August," states the Vietnam Ministry of Finance. By integrating blockchain tech into the infrastructure, the exchange is positioned as a model of innovation in Southeast Asia's financial landscape. The pilot policy is anticipated to accelerate Vietnam's standing in an evolving financial climate.

Source: CryptoSlate

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Damon

Economic

Commodity

Strategic Petroleum Reserve increased from 403.0 million barrels to 403.2 million barrels.Domestic oil production grew from 13.284 million bpd to 13.327 million bpd.Oil prices moved lower as traders reacted to the EIA report.

On August 13, 2025, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by +3 million barrels from the previous week, compared to analyst consensus of -0.8 million barrels. At current levels, inventories are about 6% below the five-year average for this time of the year.

Total motor gasoline inventories declined by -0.8 million barrels, compared to analyst forecast of -1 million barrels. Distillate fuel inventories increased by +0.7 million barrels from the previous week.

Crude oil imports increased by +958,000 bpd, averaging 6.9 million bpd. Over the past four weeks, crude oil imports averaged 6.2 million bpd. Rising crude oil imports were the key driver behind the increase in crude inventories.

Strategic Petroleum Reserve increased from 403.0 million barrels to 403.2 million barrels. From a big picture point of view, Strategic Petroleum Reserve has remained mostly unchanged in recent weeks.

Domestic oil production increased from 13.284 million bpd to 13.327 million bpd. A move above the 13.4 million bpd level will signal that domestic oil production is ready to increase at current oil price levels.

WTI oil remained under pressure as traders reacted to the EIA report. Currently, WTI oil is trying to settle below the $62.50 level.

Brent oil pulled back towards the $65.50 level after the release of the report.