Morning Minutes

Stocks Keep Falling as Treasury Yields Keep Rising

morning-minutes-featured-image-jobs-employment-2-650x400

Share:

Facebook
Twitter
LinkedIn
Email
Print

The implications of stagflation (high inflation driving tighter monetary policy and a weakening economy) appear to be putting a squeeze and taking their toll on stocks, bonds and commodities again today.

From the inflation/monetary side, this week’s series of interest rate increases and hawkish comments from central bankers continues to impact trading across asset classes. Interest rate expectations continue to move upward across the curve.

The US 2-year treasury note yield is now trading above 4.2%, the US 5-year treasury note yield has broken out over 4.00% and the US 10-year treasury note yield has rallied up toward 3.75%, its highest level since 2010. Rising yields have ignited another rally for the US Dollar, which is up 2.4% against Bitcoin, 1.7% against the Pound, 1.4% against Gold, 1.0% against the Australian Dollar, 0.8% against the Euro and 0.2% against the Canadian Dollar.

Tightening monetary policy continues to put a headwind in front of equity markets. US index futures are down 1.1% to 1.3%, adding to yesterday’s US index losses of 0.3%-1.3% with the NASDAQ taking the biggest hit over both periods. In Europe today, the Dax is down 2.2% and the FTSE is down 1.9%.

From the economic side, today’s Flash PMI reports have shone a spotlight on a weakening global economy that could negatively impact corporate earnings and resource demand. For the most part, Flash Manufacturing and Flash Service PMI reports for Australia, Germany, France and the UK came in below 50 in contraction territory and/or worse than investors once again. The combination of weak economic news and a rising US Dollar has hammered commodities today with copper plunging 3.8%, and WTI crude oil dropping 2.9%.

There is more potential news to come that could impact trading heading toward the weekend. US Flash Manufacturing PMI (street 51.1) and Flash Service PMI (street 45.0) reports are due at 9:45 am EDT. Fed Chair Powell is speaking at 2:00 pm EDT.

Subscribe to the Morning Minutes:

Today's earnings reports and market activity, delivered right to your inbox.

Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Read More

Legal and Regulatory Disclosures

Terms and Conditions:
This information is for Investment Advisors only. The website is for informational purposes only and is not intended to provide a complete description of SIA Wealth Management’s products or services. Past performance is not indicative of future results. It should not be construed as investment advice or relied upon in making an investment decision. Products and services of SIA Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. The information contained in this Website does not constitute an offer or solicitation by anyone to buy or sell any investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot be legally made or to any person to whom it is unlawful to make an offer of solicitation. All products and services are subject to the terms of each and every applicable agreement. It is important to note that not all products, services and information are available in all jurisdictions outside Canada.

SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, Advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIA Wealth Management Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

INTERNET EXPLORER NOTICE