Led by the mega techs, equities rallied on signs that tariffs will be more targeted than anticipated. Conversely bond yields rose as did oil. The Administration is increasing pressure on Iran/China as well as proposing a 25% tariff in nations buying crude and gas from Venezuela.
As noted, equites advanced on the back of a 2.9% gain in the Magnificent Seven. This cohort of companies were down over 14% YTD at the start of yesterday’s trading session. Bloomberg rhetorically asked that maybe the buy on dip strategy is not yet dead. Or it could be a bear market trap, an environment which sends shares ultimately lower.
Will one of the fastest declines on record be poised for a reprieve? Only history can answer this question
Long dated Treasuries sold off causing the yield curve to steepen.
Late in the day, Atlanta Fed Bank President Raphael Bostic stated he now believes that there may only be one interest rate cut instead of two this year, the effects of tariffs impeding progress on disinflation.
What will happen today?
Last night the foreign markets were up. London was up 0.70%, Paris up 1.31% and Frankfurt up 1.18%. China was down 0.05%, Japan up 0.46% and Hang Seng down 2.35%.
Futures are flat as the tariff environment has changed once again coupled with the possible likelihood of fewer interest rate cuts than expected. Wow! Talk about massive uncertainty. The 10-year is off 6/32 to yield 4.36%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
