The prospect of monetary tightening at a time of rising inflation and weakening economic conditions remains front and center with investors today. After threatening for several days, the US 10-year treasury note yield has decisively broken out over 3.00% this morning and has been advancing toward 3.10%, while the German 10-year Bund yield has broken out over 1.00%.
Rising treasury yields continue to put a headwind in front of stocks. Continuing on from yesterday’s US market drops of 3.1% for the Dow Industrials, 3.6% for the S&P 500 and 5.0% for the NASDAQ, US index futures are down another 0.3% to 0.6%. With the NASDAQ still leading the way lower, cryptocurrencies falling again, and gold climbing 0.3%, it appears that investor sentiment remains fearful driving capital away from risk markets and toward defensive havens.
Overseas markets are also under pressure today with the Dax down 1.3%, the FTSE falling 1.0%, the S&P/ASX dropping 2.1% and the Hang Seng plunging 3.8%. In commodity action, WTI and Brent Crude oil are both up about 1.9%, while copper is down 0.5%.
A big week for economic news wraps up today with North American employment reports which were middle of the road, not barn burners but not disappointing either In the US, nonfarm payrolls increased by 428K, better than the 391K the street had expected and a similar pace to last month. Average hourly earnings were up 5.5% from a year ago, in line with expectations and down slightly from last month, suggesting wage inflation may be levelling off. In Canada, employment growth slowed from last month and was below expectations (15K vs street 55K and previous 72K). US index futures have trimmed their losses slightly on the news.
It’s a lighter day for corporate news. In Canada, Telus beat the street on earnings by a penny ($0.24 vs street $0.23). In the US, Under Armour has been pounded down 18.9% in premarket trading after the clothing company reported a surprise loss (-$0.01 vs street +$0.06).