Citi's recent analysis underscores a complex macroeconomic environment affecting the S&P 500, where positive economic data is paradoxically leading to negative market reactions. This "good news is bad news" phenomenon is driven by negative correlations between the Citi Economic Surprise Index and the S&P 500, a trend that has persisted since early December. Key factors include negative real rate correlations and a flipped breakeven relationship, with the 10-year yield playing a significant role. Additionally, tariff risks are impacting the dollar, further complicating the equity-greenback correlation. As the Federal Reserve meeting looms, investors are closely monitoring macro influences, particularly the equity market's response to changes in 10-year yields and dollar movements.
The ProShares Ultra S&P500 (SSO) ETF experienced a decline, dropping 0.81% to $98.86 as of 3:00 PM on Friday, January 24.