This week only a few but crucial economic releases coming out. The U.S job report on Friday is always an exciting day for traders, which could be an indication of inflation data in the minds of bond traders. But after last week the tech benchmark was under pressure, as Facebook and Amazon were hit hard, while of Tesla’s nosedive also weighed on sentiment. Trade war fears continued to cause unease
Benchmark 10-year Treasuries are coming off their biggest rally of 2018, with yields at seven-week lows. This time, it wasn’t geopolitical risk fueling the gains, or even weak inflation figures (the Federal Reserve’s preferred gauge, in fact, beat analysts’ estimates). Of course, part of why payrolls have lost some of their oomph is because they’ve been strong for so long. March looks to be no different: Employers probably added 189,000 workers, around the average for the past year. With that steady jobs market in mind, the start of April gives traders a chance to assess the Treasuries market after its most punishing quarter since 2016. Bond bulls have ample cause for hope: Yield curves are the flattest in a decade, and that 3 % mark on the 10-year yield is just getting further and further away.Inc. and Tesla Inc.
The last week of the quarter was not only short, but the economic calendar was also empty, leaving the market alone to deal with technicals and regulatory speculations, as the few indicators that came out were mixed. The final GDP print was revised significantly higher, and weekly jobless claims fell unexpectedly, boosting the outlook for the labor market. On the negative side, the CB Consumer Confidence Index was much weaker than expected, and the Chicago PMI signaled a slowdown in activity. Despite the lack of catalysts, the bond market was very active, as Treasury yields, especially at the long-end of the curve, reversed their recent gains and turned sharply higher. The “collapse” of the yield curve continued because of those factors, and the bond-gauge is now the flattest it has been in 11 years, as long-term growth prospects are being questioned.
The volatile consolidation left the technical picture virtually unchanged, with the conflicting long- and short-term signals still in place with regard to the major indices. The Dow, the S&P 500, and the Nasdaq are below their declining 50-day moving averages, but well above their 200-day indicators, signaling a bearish short-term and a bullish long-term trend. Small caps performed in-line with the broader market after a period of encouraging strength, and the Russell 2000 is now in a similar position to the majors relative to moving averages too. The Volatility Index (VIX) reflected the hectic price action, as it remained close to the line-in-the-sand 20 level, finishing way off the previous week’s high near 25.