Below find a daily graph of US 5 year yields that have scored a multi-year high today.5 year yields following the short end of the curve higher in making new multi year highs.The cause is pricing in more not less fed hikes.
Below look at 10 year yields on a daily basis,as they have struggled to breakout of a 2 month sideways pattern.Short end worried about rate hikes long end worried about Inflation.If 10’s can trade above 2.48 Yield it will be approaching a 2 year high.lets see a break of these yield levels and then we could get some technical momentum helping to push prices even lower/yields higher.Dow +375 is sure a good way to test these yield levels.
2 years yields ,8 year high,5 year yields 6 year highs and 10s cant even make YTD highs.You have to believe that the wave of Higher short term yields will eventually turn into higher long term yields.But we need the catalyst of higher Inflation to make that happen.
take a look at these 2 30 minute charts of the XLF and the BKX ,Financials and banks.Look at the date on the inflection point it was the day that OMB Director Mulvaney took over as head of the Consumer protection agency. Incoming Fed chairman Powell also sounded less aggressive when it came to bank regulation when he testified at congressional hearing earlier this week.less regulation=Higher bank stocks ,tax bill pass= Risk on . A double dose of good news for the sector that has also been provided a boost from the rotation out of Big tech into banks.
BKX 30 minute
XLF 30 minute
Dollar on the offer as Senator Collins raising concerns about senate tax bill,Senator Corker saying he hopes to vote on tax bill tonight and a story that Tillerson is being forced out by trump.Just out on Wires is Comment from Senator McCain who said he will vote for this Tax bill this is now providing a small lift to the dollar as it is off session lows.It really is providing a boost to Stocks as Spoos + 19 handles now,Nasdaq down 150 handles yesterdays at one point now higher by 55 handles. Crazy indeed.
OPEC meeting now over and a big dud.One bullish nugget is that OPEC delegates said no exit from production deal were discussed at meeting and Libya and Nigeria would agree to a cap on output.Oil just chopping around and is little changed from earlier levels.
Risk On Theme after mCcain Vote .
NASDAQ +15 handles this morning after dropping 1.7% yesterday “fang” Stocks dropped between 2-4% weighing heavily on Index. However, fear not NDX still up ~27% for the year. Some of this Tech weakness was felt in South Korea and Taiwan where stock market closed down 1.5% or so. NKY though +.5%.Chatter was that A rotation out of Tech into Blue chips or anything not tech as SPX and Dow closed little changed. Most European stock markets higher and why as the Worlds broadest equity market the MSCI all country index will close higher for 13 the consecutive month (Reuters) The other big Story, Bitcoin has calmed down somewhat today as It trades 9958, trading 3% lower than yesterdays “settle”. Yesterday’s panic selloff was exacerbated when one of the exchanges went down. Still working out the Bugs I guess. Overnight Economic releases saw EZ Unemployment and CPI, The former lower then consensus by.1 and the latter higher then consensus by .1%.The more important CPI print weighed on the Euro for a few minutes but she sits unchanged on day trading higher than she was prerelease. Euro Unchanged, Yen down 30 ticks and Dollar up a couple ticks. GBP higher as it continues to expect a smooth Brexit divorce now that a cost is agreed upon GBP+50 Pips.
OPEC meeting concludes today and it appears that Production cuts will extend until end of Next year with members possibly meeting next June to discuss progress of cuts. No surprise if to markets if true. OPEC press conference scheduled for 8:00 today. Currently oil +1%.Natural gas giving back some of her recent gains as prices have rallied some 9% so far this week. Mid December, Artic Blast not going to be as cold as forecast.
Copper +.5%, Gold and Silver little changed. Dollar activity will be driver of action today. Month end today may see more than normal action as some funds may call today their yearend.
The senate may bring to the floor there version of Tax bill as it has cleared all the appropriate committees. Today’s vote does not make this bill a law as it must be reconciled with House before sent to President. The surprise would be no Vote on bill this week. Next week the political conversation will turn towards Government shutdown, Budget ETC. never ending political drama.
• President trump Nominated Marvin Goodfirend to be a Fed Governor a position that has been vacated since 2014.He is perceived to be a hawk
• Monthly PCE Inflation reading is economic highlight of day.
2 minute chart,no need for explanation.
NDX -1% SPX=Unchanged,Russell +.5% and Dow +.3% Hmm. Plenty of talk and rightfully so I guess, that A rotation out of Big Tech into Blue chip stocks is underway.Approaching the 10:30 European Cash Equity close and Dax went from +.8% earlier this morning to unchanged ,Stoxx also +.6% now unchanged on day as cash closes.The weight of NDX losses too much for Other Stock Indices to ignore for now but they haven’t collapsed. I cant recall last time saw such a diversion between 2 markets
Bearish As products build ,Exports lower and Demand drops on w/w basis.All focus on OPEC so weekly numbers an annoyance nothing else