S&P 500 closed lower last week, reaching new lows, primarily due to the liquidity shock coming from the Treasury Bond selloff, as the nominal and real rates sharply increased.

Expect a strong rally as the liquidity risk eases, due to the peak inflation expectations (and peak Fed’s hawkishness).

Technically, S&P500 is near the bottom of the downtrend channel, which provides a solid support, but the 4000 level breakdown with the deepening liquidity risk can cause intensified selling.

Here is the full report: