After a day of diffuse inspiration from several competing market movers yesterday, we ended up with far more focus today. That wasn’t readily apparent at first, because it took some time for today’s superstar to arrive. Once it did, it was clear where the spotlight was to be pointed.
As transfixed as markets may have been by the tax bill drama, it was nothing compared to today’s news that Michael Flynn struck a plea with federal prosecutors in exchange for cooperation on the investigation into communication between the Trump administration and Russia. Long sentence, I realize, but that’s a big deal–or at least markets have to treat it like a big deal for now–because Flynn could implicate Trump.
This realization gave way to a rather epic few minutes of selling in stocks and rallying in bonds. It was the sharpest intraday move we’ve seen in a long time, but it didn’t last, because the news didn’t implicate Trump. Rest assured, if that changes, so will markets. For now, yields moved back into slightly more disconcerting territory in the bigger picture despite maintaining solid gains on the day. The lack of conclusive progress on the tax bill certainly didn’t hurt!