Not-So-Super Price Action
An interesting market gets testy.
The yield on the 10-year US Treasury note surged to four-month highs early on Tuesday, pushing up above 4.4 percent a couple of times in the morning.The 10-year reached 4.363 percent, levels it hasn’t seen since November 27.
Recent economic data have investors, traders, and speculators pricing out their dovish Federal Reserve forecasts and selling bonds.
We know it’s not happening in May, but even the odds for a rate cut in June dipped below 50 percent for a moment yesterday.
Stocks gapped down at the open and stayed down into the close, pulling up off the lows but nevertheless extending an atypical start to April.
At its low the Dow Jones Industrial Average had shed 515.15 points, which still seems like a lot but is just 1.3 percent. But we hadn’t had a day like that since March 5.
Commodities are up with yields, and more and more people who operate in those markets are once again using “super cycle” to describe what’s happening.
As Mish Schneider noted in her Weekly Market Outlook, this is an interesting market, with pockets doing well and pockets starting to look toppy.
And we have an inflation narrative that still hasn't fully resolved.
So, does Tuesday’s action reflect an equity market that’s spooked, or one that’s just digesting incoming data?