What’s Up With Today’s Huge Rally?(Spoiler Alert: Quarter-End Rebalancing
)Wed, Jun 24 2026, 3:52 PM
What’s Up With Today’s Huge Rally? (Spoiler Alert: Quarter-End Rebalancing)
Stocks went on a tear in Q2 with the S&P up 20% as just recently at June 16th. AI-adjacent stocks were up over 50%. Bonds lost ground over the same time. That indicates the 60/40 stock/bond portfolio targets were thrown escape of whack, at times approaching a 70/30 balance. Massive cash supervisors (insurance/pension funds and foreign mutual fund) take the last couple of weeks of a quarter to get that balance back to 60/40. This is accomplished via selling stocks, purchasing bonds, or both. In today’s case it was both, however primarily the “purchasing bonds” part. If the mathematics is so cut and dried, why can’t the market properly cost it in ahead of time (after all, it was being spoken about)? Ultimately, rebalancing circulations are just a small portion of trading volume. For example, the stock selling in early June was deemed early rebalancing tradeflows. This stuff doesn’t comply with a set schedule, so it’s only really obvious in hindsight. Sadly, it does not talk to a material shift in bond purchasing need moving forward– simply an accounting modification in reaction to the past.
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- New Home Sales (May)
- 0.58 M vs 0.64 M f’cast, 0.622 M prev
- New Home Sales (May)
09:20 AM
MBS up almost 3/8ths and 10yr down 6.6 bps at 4.432
11:33 AM
MBS up nearly half a point and 10yr down 9.1 bps at 4.407
02:43 PM
MBS up half a point and 10yr down almost 10bps at 4.401
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