Flatter Yield Curve Makes Fed’s Job Harder – Rally In Financials In Limbo

Ten-year Treasury yields are not going along with the Fed’s tightening posture.  This could be because of a technical reason or yields could be sending an ominous message. Yields reached a historic low 1.34 percent last July, and have been … Continued

Fed May Have Missed Opportunity – Again!

posted in: Credit, Economy | 0

In late 2014/early 2015, U.S. economic data began to either stall or decelerate. Take capacity utilization, for instance.  It peaked at 78.9 percent in November 2014, peaking before tagging 80 percent (Chart 1).  The Fed funds rate was still near … Continued

Stocks’ Path Of Least Resistance Up Near Term, Not So Medium Term

As of last Friday, only 32.6 percent of S&P 500 stocks were above 50-day moving average, earlier having dropped to 29.8 percent on Wednesday.  This compares to 22 percent on June 27 (orange arrow in Chart 1) when the S&P … Continued

Markets Dance To Fed’s Tune Way Too Much … Matter Of Time Before This Backfires

posted in: Credit, Economy, Equities, Technicals | 0

Markets are under the influence of the Fed’s rate hike talk – or a lack of it – a little too much … to such an extent that it can potentially backfire someday. Last Thursday, we learned that the ISM … Continued

Low Capacity Utilization Dissuades Businesses From Aggressive Capex Plans

posted in: Credit, Economy | 0

U.S. capex continues to let down. May’s revised figures for new orders for non-defense capital goods ex-aircraft – proxy for business capital expenditures – were published on Tuesday, and there was not much change in the trend. Orders fell 0.5 … Continued

4-Session, 5-Percent Rally On S&P 500 Bodes Well, Will History Repeat Itself?

posted in: Credit, Economy, Equities, Technicals | 0

As far as U.S. stocks were concerned, Brexit was just a bad dream.  A footnote, so to speak.  On the S&P 500 large cap index, the intra-day high of 2113.32 in the session before Brexit hit stands, but last Friday’s … Continued

Amidst S&P 500’s 3.6% Fri Tumble, Looking For Signs Of Reversal N/T On Spot VIX

Last Friday, post-Brexit win, the 10-year Treasury yield declined 16 basis points to end the session at 1.58 percent.  It fell as low as 1.53 percent at one point during the session.  The drop ensured 10-year yields remained below support … Continued

Fed’s Hawkish Desire Versus Uncooperative Macro Data

posted in: Credit, Economy | 0

The Fed is in a tight spot. Yesterday, on the day it told us it continues to have a slight tightening bias it published capacity utilization and industrial production for May.  Utilization dropped 0.4 percent month-over-month to 74.9 percent, a … Continued

XLF, Rallying Along 2-Year Treasury Yield, Likely To Offer Opportunity To Shorts In Due Course

posted in: Credit, Economy, Equities, Technicals | 0

The correlation between financials and the two-year Treasury yield is tight.  The latter tends to be sensitive to Fed action. In recent months in particular, the two-year has been on a roller-coaster ride trying to keep up with FOMC members’ … Continued

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