A Crack in One Pillar of the Rally
What’s in Today’s Report:
- A Crack in One Pillar of the Rally
- Weekly Market Preview: Will Inflation Data Push Yields Higher (And Stocks Lower?)
- Weekly Economic Cheat Sheet: CPI on Wednesday.
Futures are moderately lower despite stimulus progress over the weekend, as markets digest Friday’s big rally.
The Senate passed the $1.9 trillion stimulus bill and the House will debate it on Tuesday. Biden could sign the bill by the end of the week, meeting market expectations and unleashing more stimulus into the economy as we begin the 2nd quarter.
Economically, Chinese trade numbers signaled an ongoing global recovery as exports exploded 60.6% y/y vs. (E) 40%.
The 10 year Treasury yield is up four basis points on the stimulus news and is again testing 1.60% (this is the main reason futures are lower this morning).
Today there are no economic reports and no Fed speakers, but yields will once again dictate trading in stocks. Markets rallied on Friday because the 10 year Treasury yield failed to meaningfully breakthrough 1.60%. But, if that happens today, look for stocks to drop in response, as rising yields remain the biggest headwind on stocks in the near term.
