Morning Notes — Bond Yields
The S&P 500 held technical support in the 4200-4250 range yesterday, supporting our inclination to add cyclical/value exposure on the pullback.
Morning Notes — S&P 500 at Support
The S&P 500 (SPX) trades to predetermined initial support in the 4200-4250 range after price trend deceleration early last week signaled a pullback.
Morning Notes — Yields Lower/Curve Flatter
The S&P 500 (SPX) closed last week at a record high after seven consecutive days of gains added +2.6%.
Morning Notes — Jobs, Real Yields and Tech Multiples
Longer-dated bonds (10+ years) have declined since the spike in US April CPI data on concerns for a Fed policy mistake.
Morning Notes — Feedback Loop
Bond yields move lower and the yield curves flattens late in an economic cycle. But late cycle dynamics also include lower commodity prices, specifically for industrial metals and crude oil.
Morning Notes — Sectors
The recent advance in the Nasdaq 100 (NDX) to ~14,550 has exceeded pattern objectives of ~14,400, driven largely by a flattening of the Treasury yield curve.
Morning Notes — Catalysts Ahead
Consensus for Friday’s release of June Non-farm payrolls ticks higher to +700,000 from +685,000 yesterday.
Morning Notes — Early Cycle
Global economic growth in the first half of the year will probably come in up +4.6%, which is a full 2 percentage points higher than consensus forecasts at the beginning of the year.
Morning Notes — Value Sectors
Headline and core May PCE (Fed’s favorite inflation gauge) fell short of expectations on a month-over-month basis, up +0.4% and up +0.5%, respectively vs. consensus for +0.5% and +0.6%.
Morning Notes — Back to Curve Flattening
Optimism for a bipartisan/White House infrastructure package could be premature, but the headlines return markets to the ‘inflation/Fed policy mistake’ narrative.