“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from 6 to 18 months from today…” said Tom Essaye in a note on Wednesday. Click here to read the full article.
“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will…” said Tom Essaye in a note on Wednesday. Click here to read the full article.
“Looking ahead though, the outlook for oil remains neutral at best right now as global growth concerns remain the single biggest…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower as investors digest historical moves in the bond market amid disappointing economic data.
The 10s-2s yield spreads in the U.S. and U.K. inverted for the first time since the financial crisis while the 30-Yr Bond yield hit fresh lows, further stoking fears of a looming recession.
Chinese Industrial Production (4.8% vs. E: 5.7%), and Retail Sales (7.6% vs. E: 8.5%) both missed expectations as did Eurozone Industrial Production (-2.6% vs. E: -1.5%), adding to the downside pressure on global equities this morning.
Today, there is one second-tiered economic report: Import and Export Prices (E: -0.1%, -0.1%) but because it can offer insight on inflation trends, the release could potentially move markets, as if it runs hot, it could further invert the 10s-2s yield curve spread which is one of the key factors weighing on markets today.
To that point, investors will be closely focused on the bond markets today as the historic inversion of the 10s-2s spread and the drop to new lows for the 30-year yield will likely weigh on risk assets as the odds of a looming recession just increased significantly.
What’s in Today’s Report:
Futures are in the red and Treasury yields are extending the week’s declines amid continued unrest in Hong Kong, growing fears of a financial crisis in Argentina, and more broadly, rising concerns about the global economy.
The German ZEW Survey was terrible with Business Expectations hitting a 2011 low of -44.1 while the U.S. NFIB Small Business Optimism index was a modest upside surprise with the headline beating expectations at 104.7.
The most notable moves this morning are in the bond market where the 30-Yr Treasury is threatening to open with a record low yield below 2.10% while the 10s-2s spread fell below 5bp earlier this morning underscoring the risk-off money flows across asset classes. Gold is also notably up well over 1.5%, trading at fresh multi-year highs.
Today, the focus will remain on the crowded macro landscape as the market has been largely driven by overly cautious investor sentiment over the past few days however there is one economic report to watch ahead of the bell: CPI (E: 0.2%).
Bottom line, if headlines remain negative regarding Hong Kong, Argentina, and global growth, then it will be very difficult for stocks to rally today.
“Although gold futures remain near-term overbought, momentum is decidedly higher. Fundamentally, the sharp downtrends in bond yields…” said Tom Essaye, founder of the Sevens Report, in a note.
“The worst of it may be over but, I’d be surprised if the pullback is over. I think we’ll go back and likely take a look at some of this week’s lows simply because the issues that have really been…” said Tom Essaye.
“Although gold futures remain near-term overbought, momentum is decidedly higher. Fundamentally, the sharp downtrends in bond yields firmly support the bullish case for gold.” said Tom Essaye. Click here to read the full article.
“The worst of it may be over but, I’d be surprised if the pullback is over. I think we’ll go back and likely take a look at some of this week’s lows simply because the issues that have really been the underlying causes…” Click here to read the full article.
Yahoo Finance’s Alexis Christoforous and Brian Sozzi talk to David Nelson, Belpointe Asset Management Chief Strategist and Tom Essaye, Sevens Report Founder and President around the opening bell to discuss Uber earnings. Click here to watch the full video.
