Treasuries remained under pressure as the jumbo sized $70 billion 5-year Treasury auction was met with demand slightly below expectations. Some had anticipated strong demand given the recent back-up in yields that are around multi decade highs.
How will today’s $44 billion 7-year Treasury auction bet met?
Some are beginning to publicly question whether the Treasury market is close to an inflection point, unable to handle the massive supply of debt that will continually occur in the foreseeable future. While no one expects an auction to fail [unable to raise the money], the yield required may be higher than most have anticipated.
Many including FRB Chair Powell have warned that current spending is unsustainable, summoning Congress to act now to avert a crisis tomorrow.
Equites were relatively flat even as Magnificent Member TSLA surged over 11% on hopes of a more affordable car in the intermediate future. Equites were perhaps weighed down by rising Treasury rates.
After yesterday’s close META posted results. Even though earnings exceeded expectations, META warned of the massive cash burn as it enters the next phase of its corporate life sending shares down over 15% wiping out over $200 billion in value. The loss in its shares is more than the capitalization of most S & P 500 companies. There are only 34 S & P 500 companies that have a capitalization greater than $200 billion.
Today after the close both GOOG and MSFT release earnings.
Initial estimate of first quarter GDP is released today. Growth is expected to slow to 2.5% from the fourth quarter’s pace of 3.4%. The GDP price index is expected to increase by 3.0% up from 4Q23 2.0% rate. The core PCE is expected to increase by 3.4% from the 2.0% clip of last quarter.
Markets may closely scrutinize the components of growth as well as the underlying pricing pressures.
Last night the foreign markets were mixed. London was down 0.65%, Paris up 0.67% and Frankfurt down 0.82%. China was up 0.27%, Japan down 2.16% and Hang Seng up 0.48%.
Dow and NASADQ futures are down 0.35% and 1%, respectively because of META’s results and nervousness over MSFT and GOOG’s earnings as well as the pricing pressures that may be evident in today’s release of 1Q GDP. The 10-year is off 2/32 to yield 4.65%.
