Before The Bell: S&P 500 Rally, But 10YR Continues Bullish Trend

The S&P 500 rallied into the close to finish a 0.13% gain. The Dow was fractionally higher. The markets will continue to assess recent developments and are likely to be choppy and consolidative near term.

Fed Chair Powell’s dovish testimony provided a modicum relief to Treasuries, and the slip in yields helped assuage some of the worries on Wall Street. The belly of the curve outperformed slightly, with the wi 5-year finishing 2.5 bps lower at 0.590%. The 10-year dipped but is continuing a bullish trend. (This should worry investors due to inflation)  The NASDAQ pared hefty, near -4% losses, to close with a -0.5% decline.

Key market drivers:

  • U.S. calendar has new home sales, MBA mortgage, and oil inventory data
  • Canada data calendar thin; IPPI is due on Friday
  • Pound and New Zealand dollar surged while the yen underperformed
  • EGB yields have moved higher with Treasury rates, stocks stabilized
  • German Q4 GDP growth unexpectedly revised up to 0.3% from 0.1%
  • European calendar focuses on German Q4 GDP, French confidence data
  • RBNZ maintained policy settings – as expected

Fed Chair Powell reprises his testimony to the House Financial Services Committee today, but we don’t expect and new insights. There is also Fedspeak from VC Clarida, Brainard, and Bostic, who will all parrot Powell’s views.

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Data will feature January new home sales, which are seen rising to a 0.870 mln pace from 0.842 mln previously. Weekly MBA mortgage and oil inventory figures are also on tap. The Treasury will auction $61 bln of 5-year notes, and $26 bln of reopened 2-year FRNs.

The earnings calendar features reports from NVIDIA, Lowe’s, RBC, Booking Holdings, TJX, Teladoc, Exelon, CIBC, ViacomCBS, American Water Works, Cheniere Energy, Entergy, NetApp, and Weibo.

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