Harder to Rally?

What’s in Today’s Report:

  • Harder to Rally?
  • Weekly Market Preview:  All About Rising Yields (and Central Bank Reaction)
  • Weekly Economic Cheat Sheet:  A Busy and Important Week of Data, and Powell Q&A on Thursday

Futures are sharply higher thanks to falling bond yields combined with progress on stimulus and vaccine distribution.

The Reserve Bank of Australia surprised markets and announced it was buying $3 billion of longer-dated bonds as global central banks ramp up the response to rising yields, and that is the main reason we’re seeing global bond yields (including Treasuries) lower this morning.

On stimulus, the House passed the $1.9 trillion stimulus bill while the FDA approved JNJ’s single-dose COVID vaccine.  Both events were already priced into stocks, however, so they aren’t causing this morning’s rally (again that’s based on falling bond yields).

Today focus will be on data and Fed speak, as we get the  ISM Manufacturing PMI (E: 58.9) and two Fed speakers this morning: Williams (9:00 a.m. ET) and Brainard (9:05 a.m. ET).  As was the case last week, expect stocks to move inversely to yields, and if the data is solid (but not too good) and the Fed speakers dovish, expect yields to fall further and an extension of this morning’s rally.