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Why the Falling Yen Matters to Your Clients

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Why the Falling Yen Matters to Your Clients: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Falling Yen Matters to Your Clients
  • ISM Manufacturing Index Takeaways
  • 10-Yr Yield Testing Key 2024 Resistance – Chart

Stock futures are modestly lower and Treasury yields are testing YTD highs this morning amid new multi-month highs in oil and better-than-feared EU economic data.

Economically, the final EU Manufacturing PMI for March was revised up from 45.7 to 46.1 which is still in contraction territory but adding pressure to global bond markets.

Looking into today’s session, we will get data on Motor Vehicle Sales early (E: 16.0 million) but trader focus will be on two more important reports for the outlook for the economy and critically Fed policy: Factory Orders (E: 1.0%) and JOLTS (E: 8.8 million).

If either of the latter two reports come in “hot” expect the 10-Yr to extend pre-market gains and stocks to remain under pressure today.

Additionally, there are a few Fed speakers on the calendar with: Bowman (10:10 a.m. ET), Williams (12:00 p.m. ET), Mester (12:05 p.m. ET), and Daly (1:30 p.m. ET). Any pushback on the case for a summer rate cut and a total of three cuts in 2024 will add to hawkish money flows with yields rising and stocks likely extending the so-far-modest weekly declines.

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Stock Rally, 1o-Yr Treasury Yield, and Fed Policy

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Stock Rally, Treasury Yield, and Fed Policy: Tom Essaye Quoted in MarketWatch on MSN

Dow ends nearly 400 points higher as tech rally leads stocks to highest close since September

But the subsequent rally for stocks after the Nov. 1 Fed meeting, with the S&P 500 jumping more than 6% over eight days, and a 50 basis point drop in the 10-year Treasury yield were “overdone and not governed by facts,” said Tom Essaye, founder of Sevens Report Research, in a note.
“Meanwhile, if we think about what the Fed said last week, namely that the rise in the 10-year treasury yield was doing the Fed’s work for it and as a result they may not have to hike rates, then the short/sharp decline in the 10-year yield we’ve seen could essentially remove the reason for the Fed not having to hike rates — and that could put a rate hike back on the table!” he wrote. “That’s essentially what Powell reminded us of yesterday and that, along with the poor Treasury auction, pushed yields higher,” setting up pressure on stocks.

Also, click here to view the full article published by MSN on November 11th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Treasury Yield

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Treasury Yields To Continue To Drive Short-Term Trading

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Treasury Yields To Continue To Drive Short-Term Trading: Tom Essaye Quoted in Barron’s

Stocks Extend Rally After Best Week of the Year

“Today there are no notable economic reports and just one Fed speaker, [Lisa] Cook (11:00 a.m. ET), so look for Treasury yields to continue to drive short-term trading,” writes Sevens Report Research’s Tom Essaye.

The 10-year Treasury yield ticked higher on Monday but was still at 4.614%. The 10-year yield was trading around 5% in October, which weighed on rate-sensitive stocks.

“If the 10-year yield continues to decline then the S&P 500 can extend last week’s rally.”

Also, click here to view the full Barron’s article published on November 6th, 2023. 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 Rally

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Important To Watch The S&P 500 Index’s Support Zone

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there’s no way The Fed Can Get Dovish: Tom Essaye Quoted in MarketWatch on MSN

Fed day is here. Here are important technical levels to watch for stocks, bonds, and VIX

It is important to watch the S&P500 index’s support zone from 4,050 to 4,170, where the index spent most of April and May, according to Tom Essaye, founder and president of Sevens Report Research. 
On the other hand, “if policy makers deliver a dovish message and signal the hiking cycle is indeed ‘over’ then a relief rally could see stocks rise rapidly back towards the October highs,” according to Essaye.
The first important technical resistance level to watch is 4,225, while beyond that, investors should keep an eye on the level of 4,330, where the index saw a mid-October reversal. For the 2023 stock market rally to resume, the S&P 500 has to beat its October high of 4,377, Essaye wrote. 
“There is growing evidence that the VIX may be forming a near-term top as the ‘fear gauge’ did not close at new October highs last week despite the S&P 500 falling to new multi -month lows,” Essaye wrote.

Also, click here to view the full article published by MSN on November 2nd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Index’s Support Zone

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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.

Yields Are Rising – Tom Essaye Quoted in Barron’s

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Yields Are Rising: Tom Essaye Quoted in Barron’s

Stocks Gain as Concerns About Conflict in Middle East Ease

Sevens Report Research’s Tom Essaye told Barron’s that reports President Joe Biden is weighing a visit to Israel have sent stocks higher and oil prices lower. WTI crude oil futures were down 0.7%, to $86.93 a barrel.

“Yields are higher but that’s likely by nervous investors reversing ‘fear based’ positions. That came last week as a result of the Israel/Hamas conflict,” Essaye wrote. “Point being, yields are rising as investors get more comfortable with the geo-political environment.”

Also, click here to view the full Barron’s article published on October 16th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Yields Are Rising

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.

Upward Pressure in Treasury Yields

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Upward Pressure in Treasury Yields: Tom Essaye Quoted in Barron’s

Stock Futures Slide as Bond Yields Keep Rising

Firstly, “Markets want to see Congress take some actual steps towards curbing spending and addressing the long-term fiscal issues facing the country,” wrote Tom Essaye, president of Sevens Report Research. “In order for that to happen, the Congress needs to function relatively normally, and that’s in doubt.”

“That doubt is adding to the upward pressure in Treasury yields. While that is not the only reason yields have risen, it is a contributing factor that the sooner the markets get more confidence in Congress being able to function properly, the sooner it removes a tailwind on Treasury yields (that will be good for stocks),” he continued.

Also, click here to view the full Barron’s article published on October 3rd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Upward Pressure in Treasury Yields

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.

Why Are Yields Rising?

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Why Are Yields Rising? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Are Yields Rising?
  • What the Removal of Speaker McCarthy Means for Markets (We Didn’t Need This Right Now)
  • JOLTS Data Takeaways
  • OPEC+ (JMMC) Meeting Preview

U.S. stock futures are rebounding from overnight losses as European markets turn positive following mixed economic data while yields are stabilizing after this week’s rapid rise.

Markets are continuing to digest the implications of the removal of McCarthy as Speaker of the House. Yields were initially higher overnight, likely on worries of a more pronounced threat of a government shutdown next month. They have since stabilized and are only little changed in morning trade, helping support steady stock futures in the pre-market.

Economically, the September EU Composite PMI came in at 48.7 vs. (E) 48.4, while Retail Sales fell -1.2% vs. (E) -0.2% in August and PPI fell a steep -11.5% vs. (E) -11.7%. On balance, the data was not a reason for the ECB to become more hawkish. Which is helping global bond markets (and equities) stabilize this morning.

Today, focus will be on economic data early with the ADP Employment Report (E: 150K), ISM Services Index (E: 53.5), and Factory Orders (E: 0.2%). The “hot” JOLTS headline roiled markets yesterday so markets are likely to welcome any cooling labor market indicators and look for easing price measures in the ISM release as those developments could help bonds bounce back and stocks recover some of this week’s losses.

Later, the focus will turn to central bank speak with several Fed officials scheduled to speak including: O’Neill Paese, Schmidt, Bowman, and Goolsbee. A lot of hawkish rhetoric has been digested in recent sessions. So any more dovish-leaning commentary would also be welcomed by stocks and other risk assets.

Why Are Yields Rising

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The Outlook for Stocks

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The Outlook for Stocks: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Has the Outlook for Stocks Really Turned More Negative?
  • Weekly Market Preview:  Will Treasury Yields Keep Rising?
  • Weekly Economic Cheat Sheet:  Key Inflation Data This Week

Futures are slightly lower as negative Chinese real estate news offset the end of the Writers Guild of America strike.

Also, Chinese property firm Evergrande hit a setback in its restructuring deal. And that’s increasing liquidation chances (which would weigh on the Chinese economy).

Positively, the WGA struck a deal with Hollywood studios and ended their strike. Although two other major strikes remain in place (SAG-AFTRA and the UAW).

Today should be a generally quiet day in the markets from a news and volume standpoint, as it’s the Yom Kippur holiday and there are only two notable events on the calendar:  Chicago Fed National Activity Index (E: 0.15) and a speech by Fed member Kashkari (6:00 p.m. ET).  So, we should continue to expect Treasury yields to drive trading today, and if yields move steadily higher (as they are this morning) then that likely will weigh further on stocks.

the Outlook for Stocks

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Focus Remains on Treasury Yields Today

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Today’s Focus Remains on Treasury Yields – Tom Essaye Quoted in MarketWatch

Dow edges up as stocks look to rebound ahead of coming inflation, retail sales data

U.S. stock indexes were up as of Monday afternoon, with consumer discretionary shares and several technology companies leading the broader market higher, as traders braced for a busy week of economic data releases.

“No major U.S. economic data is set for release on Monday, so the focus will remain on Treasury yields”, said Tom Essaye, president of the Sevens Report Research. 

“If yields are relatively stable, then stocks can rebound from last week’s losses”, Essaye said in an email.

Also, click here to view the full MarketWatch article published on September 11th, 2023. However, to see Tom’s full comments on today’s market insights sign up here.

Treasury Yields

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.

How to Explain the Current Pullback to Clients & Prospects

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What’s in Today’s Report:

  • How to Explain the Current Pullback to Clients & Prospects
  • Weekly Market Preview:  Will Treasury Yields Stabilize? (That’s the Key to Ending This Pullback)
  • Weekly Economic Cheat Sheet:  Important Growth Updates and Powell Speech on Friday

Futures are modestly higher thanks to more evidence of global disinflation and despite another round of underwhelming Chinese stimulus.

German PPI declined -6.0% y/y vs. (E) -5.1% y/y and that’s serving as a reminder that inflation is still falling globally.

In China, officials cut the Loan Prime Rate less than expected (-10 bps vs. (E) -15 bps) and while that will provide stimulus, it’s not alleviating concerns that the Chinese economy will be a headwind on global growth.

Today there are no economic reports and no Fed speakers (the Jackson Hole Fed conference is this week, so speakers will increase throughout the week culminating with Powell on Friday).  As such, Treasury yields will remain a short-term influence on stocks.  Yields and futures are higher this morning but if yields extend the rally throughout the day, don’t be surprised if stocks give back these early gains.