The Nasdaq 100 (NDX) pushed to record highs on lower bond yields. The index pulled back with the SPX on rising Delta variant concerns, but the NDX has been and should be a beneficiary of lower bond yields, specifically lower real yields (nominal 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.
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.
The S&P 500 (SPX) closed last week at a record high after seven consecutive days of gains added +2.6%.
Longer-dated bonds (10+ years) have declined since the spike in US April CPI data on concerns for a Fed policy mistake.
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.
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.
Consensus for Friday’s release of June Non-farm payrolls ticks higher to +700,000 from +685,000 yesterday.
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.
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%.
