The worst weekly performance since March for the sp500...
Markets like clarity and hate confusion. The first half of the year was about disinflation + AI buzz. Now the markets are not sure about what's next. And some of the confusion seems to be coming from central banks... This week we got a very confusing message from the #fed: a pause in rates, higher dot plots in 2024 but also calling a soft landing NOT a base line expectation, hence sharing fears that keeping real rates for a long period of time creates some downside risks for the economy and the markets... The combo higher inflation risk + downside growth risk is not a great value proposal for Mr Market at the time you can nicely paid by keeping your assets in money markets funds... Source chart: Bloomberg
Deere is back on March 2020 uptrend support
Deere (DE US) is back again on March 2020 uptrend support. Are we going to see a rebound once again ? Source : Bloomberg
S&P 500 Index back on major support 4'325
S&P 500 Index (SPX) is back once again on major support 4'325. Keep an eye on this important level. Next support at 4'195. Source : Bloomberg
BOJ Update
Japan | BOJ left its monetary settings unchanged and offered no clear sign of a shift in its policy stance, putting a damper on market speculation over the prospects for a near-term interest rate hike and adding pressure on the yen. The Bank of Japan kept its negative interest rate and the parameters of its yield curve control program intact on Friday in an outcome predicted by all 46 economists surveyed by Bloomberg. It also maintained a pledge to add to its stimulus without hesitation if needed, a vow that offers yen bears a reason to keep betting against it. Japan’s currency weakened as much as 0.4% after the decision to around the 148.20 mark against the dollar. This helped stocks, which trimmed about half of their losses for the day. The benchmark 10-year bond yield was down half a basis point from Thursday’s closing level at 0.74%. Source: Bloomberg
Yields pushing higher
US 2Y yields hit their highest since July 2006 US 5Y yields highest since Aug 2007 US 10Y highest since Nov 2007 US 30Y highest since April 2011 Source: Bloomberg, www.zerohedge.com
Inflation fear is NOT the driver of rising yields
Indeed, 10y real yields (10y nominal yields - 10y inflation expectations) jumped to 2.11%, the highest since 2009. In other words, investors are demanding higher REAL yields in the face of political chaos in Washington and high debt. Source: Bloomberg, HolgerZ
The longest duration bond ETF is now down 60% from its peak in March 2020
How is that possible? The 30-Year Treasury yield has moved from an all-time low of 0.8% in March 2020 up to 4.6% today. Long duration + Rising interest rates from extremely low levels = Pain $ZROZ Source: Charlie Bilello
In case you missed it...
US Jobless Claims Fall to 201,000, Lowest Level Since January...There haven't been many times in the last 50+ years that #us initial jobless claims have been lower. Source: Bespoke
