The pop in longer-dated rates on Friday weighed on the tech-heavy NASDAQ, but the increasing optimism over the recovery helped propel the Dow and the S&PS 500 to new highs. The 10- and 30-year maturities closed 9 bps cheaper at 1.628% and 2.386%, respectively, the highest in over a year. The break of the February 25 peaks added to the selling and will keep trading jumpy.
Looking at the chart above, we can see that the 10YR is on a very bullish trend, but so is the S&P 500. Other than a few dips, we have yet to see any real sign of reversed correlation. That being said, if the 10YR continues to climb, we fully expect the S&P 500 to dip.
Rates will be a key topic for the markets this week with the FOMC meeting and Fed Chair Powell’s press conference. There will be several interesting data reports too, though there may be too much noise in the numbers to glean much information. Data highlights this week will be retail sales, production, regional manufacturing PMIs, and trade prices. Today’s slate has the March Empire State index, seen dipping to 10.0 from 12.1. January Treasury TIC flows are on tap as well.
Key Drivers for the Week of March 15
TIP – This is a 1 minute brief bullet-point summary as a tool that gives them a fast and simple list of what to watch for and talking points for the week.
- Markets monitoring updraft in bond yields and response from monetary authorities
- FOMC expected to assure lower for longer, maintaining its rate and QE posture
- Fed Chair Powell can not improving economy, but pandemic still weighing on activity
- U.S. data on retail sales, production, regional manufacturing PMIs, housing starts
- Canada’s slate: CPI, retail sales, housing starts, existing home sales, new home prices
- BoJ expected to keep policy unchanged but could tweak for a more flexible posture
- Bank Indonesia and Taiwan Central Bank expected to keep policy unchanged
- European data on CPI, trade balance; German ZEW investor sentiment, PPI
- UK optimism picking up on vaccine distribution, sharp drop in virus, mortality
- BoE expected to keep policy steady by unanimous vote
Key Market Trends
Tip: Use this as a quick guide on the short-term direction of key markets. I once had a client that would call me nearly every day asking the direction of the markets. This is a quick cheat sheet to know the trend and help understand what is happening with the markets.
|US Dollar Index||91.815||0.15%||0.136||91.866||91.54||Bull|