Really what you’re seeing is, across asset classes, the market [is adopting] a pro-cyclical view…Tom Essaye, The Sevens Report Research Founder. Click here to read the full article.
The losses quickly spread to broader markets as experts started warning its default…market analyst Tom Essaye wrote in a note last week. Click here to read the full article.
Investors should prepare for more volatility over the coming days…according to Tom Essaye, a former Merrill Lynch trader who writes the “Sevens Report” newsletter. Click here to read the full article.
What’s in Today’s Report:
Stock futures are rebounding from yesterday’s sharp losses this morning as bond yields pullback with the 10-year dipping below 1.50% overnight, easing valuation concerns.
Regarding Evergrande, the company’s stock rallied 15% overnight as the developer announced the partial sale of a regional bank stake that will result in $1.5B in cash.
Looking into today’s session there is one economic report: Pending Home Sales Index (E: 0.9%) but it should not move markets.
That will leave traders focused on a busy day of Fed chatter: Harker (9:00 a.m. ET), Powell (11:45 a.m. ET), Daly (1:00 p.m. ET), Bostic (2:00 p.m. ET), and Williams (5:00 p.m. ET).
Bottom line, the bond market has been a major driver of equity flows this week and if yields continue to pullback as they did overnight, then a rebound in the major stock indexes is likely however a retest of yesterday’s highs would result in another uptick in volatility.
The “risk-off money flows” that are hitting the U.S. stock market on Tuesday also dragged crude and other…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
From a futures market standpoint, bullish energy calls from big banks including Goldman Sachs and major oil traders like…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Both oil and natural gas are expected to continue higher in the months ahead as fundamentals decidedly favor…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
U.S. equity futures are decidedly lower this morning as Treasury yields continue this week’s surge higher. The 10-year note yield topped 1.52% in overnight trading which is weighing heavily on high valuation tech names today.
From a catalyst standpoint, today is lining up to be a busy day with a slew of economic data due to be released: International Trade in Goods (E: -$87.0B), Case-Shiller Home Price Index (E: 1.6%), FHFA Home Price Index (E: 1.5%), and Consumer Confidence (E: 114.8).
Of those releases, the market will be most interested in whether or not Consumer Confidence can stabilize following the disappointing August print.
There is a 7-Year Treasury Note action at 1:00 p.m. ET and given how much bonds are influencing stocks so far this week, the results could impact equity markets (strong demand would help stabilize stocks, weak demand would likely see losses extended).
Finally, there are multiple Fed speakers today including: Evans (9:00 a.m. ET), Powell (10:00 a.m. ET), Bullard (1:40 & 7:00 p.m. ET), and Bostic (3:00 p.m. ET). Focus will clearly be on Powell and any insight he may provide regarding inflation expectations and the Fed’s plans to react.
Bottom line, the stock market is being driven by the bond market this week and if we see bonds continue to drop (yields spike higher) then that will result in further underperformance by growth stocks and drag the broader market lower while stabilization in yields would likely allow for a rebound.
Sevens Report Q3 Quarterly Letter Coming October 1st.
The Q3 2021 Quarterly Letter will be delivered to advisor subscribers on Friday, October 1st.
With Fed tapering, Washington budget battles and possible tax hikes looming, Q4 could be the most volatile of the year. Our quarterly letter will help you set the right expectations for clients so they aren’t blindsided by any market volatility.
It’s now clear that Chinese officials won’t allow a disorderly default, and that’s really all global markets care about…money manager Tom Essaye, president of Sevens Report Research wrote. Click here to read the full article.
Value and cyclical sectors have given back some of their early-year outperformance in recent weeks, but as long as bond yields begin to rebound, value and cyclicals should outpace growth…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
