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Sevens Report: 10-Year Yield Drop Below 4% Could Break ‘Bad News Is Good’ Trade

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Tom Essaye warns a fast move lower would signal economic anxiety, not relief

A sudden move below 4% on 10-year Treasury note yield could kill the ‘bad news is good’ market vibe

Lower yields can be a positive for stocks, foremost by making equities more attractive in comparison. But context matters, and a sudden drop could serve to unnerve investors who have largely continued to view negative economic news as a positive because it reinforces expectations for the Federal Reserve to resume cutting interest rates later this month, said Tom Essaye, founder of Sevens Report Research, in a note.

“The 4.00% level on the 10-year yield is important and if we move quickly through that level, it will signal more economic anxiety and that will further undercut the ‘bad-is-good’ narrative around weak data and Fed rate cuts (point being, if the 10-year yield falls quickly through 4.00% and heads lower, bad data will be bad for stocks because it’ll signal rising chances of an economic slowdown),” he wrote.

Also, click here to view the full article published in MarketWatch on September 9th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Understanding Where the “Bubble” Is in AI

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What’s in Today’s Report:

  • Understanding Where the “Bubble” Is in AI
  • Weekly Market Preview: Does the Fed Start a New Rate Cutting Cycle?
  • Weekly Economic Cheat Sheet: Fed is Key, but There’s Important Growth Data This Week, Too

Futures are slightly higher following a mostly quiet weekend and despite negative tech news and economic data from China.

China declared that NVDA had broken anti-monopoly news, escalating existing tech tensions between China and the U.S. (although this move isn’t a total surprise).

Economically, Chinese data underwhelmed as Retail Sales rose 3.4% vs. (E) 3.8% while Industrial Production gained 5.2% vs. (E) 5.6%.

Focus today will be on the first economic reading of September, the Empire Manufacturing Index (4.3) and markets will want to see stability to further push back on slowdown concerns.

Were Powell’s Comments Really That Bullish?

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What’s in Today’s Report:

  • Were Powell’s Comments Really That Bullish?
  • Weekly Market Preview: Does the Tech Pullback Continue? (NVDA Earnings on Wednesday)
  • Weekly Economic Cheat Sheet: More Focus on Inflation (Core PCE Price Index on Friday)

Futures are modestly lower mostly on digestion of Friday’s big rally and following a quiet weekend of news.

Economically, the only notable report was German IFO Business Expectations, which jumped to a one year high (91.6 vs. (E) 90.8).

There was no notable geopolitical news over the weekend.

Today there are two economic reports, Chicago Fed (Prior: -0.10), New Home Sales (E: 628K) and two Fed speakers, Logan (3:15 p.m. ET) and Williams (7:15 p.m. ET), but none of that should move markets as the economic reports shouldn’t change the outlook for growth while Powell largely acknowledged a likely rate cut in September (making other Fed commentary less important).

On earnings, there are two reports to watch today: PDD ($1.69) and HEI ($1.12).

 

Beyond the very short term, it’s all about growth

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Beyond the very short term, it’s all about growth: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Is Rising. It’s Not All About the Size of Rate Cuts.

Data on both retail sales and U.S. industrial production were solid, but traders still see a 61% chance of a half-point rate cut tomorrow. Sevens Report Research’s Tom Essaye says investors are still optimistic about a soft landing for the economy as the Fed prepares to cut rates. He notes tech earnings recently showed signs of life after some weaker showings in August.

Though you can expect some fireworks tomorrow as traders react to the rate decision and the forecasts for future cuts from central bank officials, Essaye argues economic data and earnings will be the market’s main driver ahead.

“Beyond the very short term, it’s all about growth,” Essaye says. “This Fed rate cut is honestly, other than from a sentiment standpoint, largely inconsequential, because whether or not the economy slows a lot between now and year end, this rate cut is not going to impact that; they take too long to filter through the economy.”

Also, click here to view the full Barron’s article published on September 17th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

I really don’t think the market should be rooting for a 50 basis point rate cut

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I really don’t think the market should be rooting for a 50 basis point rate cut: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Odds of a Double Rate Cut Are Rising. Be Careful What You Wish For.

“I really don’t think the market should be rooting for a 50 basis point rate cut in September,” Sevens Report Research’s Tom Essaye told Barron’s. “If the Fed feels like they have to cut 50 bps, then that means they’re all of a sudden worried about the economy, and Fed policy just doesn’t work fast enough to fix those problems.”

The consumer price index for July, due out tomorrow, will give Wall Street a better idea of how inflation stands. Essaye says markets should really be rooting for decent data on inflation and 25 basis point cut in September. In the following days, though, we’ll get updates on the economy that could be more significant signals than the PPI and CPI.

“No one thinks inflation is a problem anymore,” Essaye says. “It’s just a question of how fast it’s declining, right? The bigger question is, what is happening with growth and this does not give any insight into that, and that’s why Thursday’s data is also going to be important.”

Also, click here to view the full Barron’s article published on August 13th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Massive rotation from tech and tech related sectors

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Massive rotation from tech and tech related sectors: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why Tech Stocks Dropped — And Everything Else Popped

“Bottom line, this massive rotation from tech and tech related sectors was caused primarily by investors positioning for a rate cutting cycle and secondarily by anticipation for a Trump administration and negative tech news,” writes Sevens Report’s Tom Essaye. “The intensity of it was absolutely turbocharged by the historically crowded trade of ‘long mega-cap tech,’ which is making this rotation out of tech and into cyclicals, value and the ‘rest of the market’ more intense.”

Also, click here to view the full Barron’s article published on July 18th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

CPI Preview (Good, Bad & Ugly)

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CPI Preview (Good, Bad & Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview (Good, Bad & Ugly)
  • EIA Analysis and Oil Market Update

Futures are slightly lower as investors digest Wednesday’s new highs while earnings this morning underwhelmed.

PEP and DAL both posted disappointing guidance and the stocks are down pre-market, weighing on futures.

Economically, data was good overnight as German CPI was in-line while UK GDP was better than expected.

The most important report of the week comes this morning via the CPI report and expectations are as follows:  CPI (E: 0.1% m/m, 3.1% y/y), Core CPI (E: 0.2% m/m, 3.4% y/y).  To keep things simple, if CPI shows a continued decline in inflation, that will make a September rate cut even more likely and help support stocks.  If inflation bounces back, that’s a real surprise negative and don’t be shocked if the S&P 500 falls 1% or more.

Other notable events today include Jobless Claims (E: 239K) and one Fed speaker, Bostic (11:30 a.m. ET), along with the start of earnings season (notable reports today include PEP ($2.15), DAL ($2.37) and CAG ($0.56)).  Each of these events are important in their own right but the morning will be dominated by CPI and as that goes, so likely goes the market today.

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Fed Expectations has hopes for a June rate cut dashed by the hot CPI report

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Fed Expectations has hopes for a June rate cut dashed by the hot CPI report: Tom Essaye Quoted in Blockworks

Cryptos slip as Powell doubles-down on delaying rate cuts

“Fed Expectations has hopes for a June rate cut dashed by the hot CPI report and now the market must deal with the possibility of just two — or even fewer — rate cuts in 2024,” Tom Essaye, founder of Sevens Report Research, said. “Remember the market started the year expecting seven cuts.”

Also, click here to view the full Blockwork article published on April 16th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

A Return to Reasonable Valuations? April MMT Chart

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A Return to Reasonable Valuations? April MMT Chart: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Return to Reasonable Valuations? April MMT Chart
  • Dip-Buying Becomes Riskier in Late-Cycle Environments
  • Housings Starts Plunge in March – Chart

Futures are higher this morning as the geopolitical situation in the Middle East is tense but stable, inflation data was largely as-expected, and good consumer-focused earnings are helping offset soft sales from chip-maker ASML.

Economically, EU Core CPI met estimates at 2.9% while the U.K.’s Core CPI figure was “warm” at 4.2% vs. (E) 4.1% but neither report is materially impacting the general “higher for longer” central bank policy stance in place right now.

There are no notable economic reports today and just two late-day Fed speakers: Mester (5:30 p.m. ET), Bowman (7:15 p.m. ET).

That will leave trader focus on the Treasury’s 20-Yr Bond auction at 1:00 p.m. ET as weak demand would add upward pressure on yields and pressure stocks.

Additionally, earnings season continues with TRV ($4.75), CFG ($0.75), CSX ($0.45), and DFS ($2.98) reporting today, however, none of those names should have a significant impact on the broader market unless there is a glaring disappointment or upside surprise.

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

CPI Preview: Good, Bad, Ugly

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CPI Preview: Good, Bad, Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview: Good, Bad, Ugly
  • Where to Find Rate Cut Probabilities

Stock futures are modestly higher this morning as the bond market steadies ahead of tomorrow’s key inflation data while financial newswires were mostly quiet overnight.

Overseas, Taiwan’s headline CPI fell sharply from 3.1% to 2.1% vs (E) 2.5% in March. Domestically, the NFIB Small Business Optimism Index dropped to 88.5 vs. (E) 89.9.

Looking ahead to today’s session, there are no economic reports today and no Fed officials are scheduled to speak which is setting up a fairly quiet morning in the markets.

The one potential catalysts on the calendar today is the 3-Yr Treasury Note auction at 1:00 p.m. ET. Equity markets are watching yields closely here, so if today’s auction is weak and yields move higher this afternoon that will weigh on stocks and other risk assets. However, moves should be limited as traders position into tomorrow’s inflation data.

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.