Democrats took both chambers overnight, and markets read gridlock as fewer bonds, a softer dollar and less war: the VIX had a four-sigma collapse and oil lost its war premium. The risk is in semis, where levered funds are still forced sellers.
Three things
- The midterm sweep set off a rare risk-on shock. Six of fifteen tape instruments moved two standard deviations at once, led by a four-sigma collapse in the VIX.
- Oil's war premium came out in a single session. Brent fell 8.4% as Trump played down Iran strikes and Iran floated a two-day Hormuz reopening.
- The rally broadened while the AI leaders were sold. Leveraged funds had to sell an estimated $3.5bn into the close as semis broke their late-July low, so we own the average stock against the Nasdaq 100.
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Cambridge Sigma Daily, written after the US close. For information only; not investment advice.