Several things worth mentioning on the technical front. First, the S&P ended below the lower boundary of its short term uptrend (now support; if it remains there through the close on Monday, it will revert to a trading range). Clearly, this is a potentially negative development; but it is too soon to get beared up.
Second, the long bond finished below the lower boundary of its very short term trading range. If it remains there through the close today, that trend will be negated. As I have tried to cover the last couple of weeks, if the trend in lower bond prices (higher interest rates/inflation) continues that would not be particularly helpful to stocks---especially with valuations as stretched as they are.
As always, follow through.
Thursday in the charts.
10 year yield now back in line with S&P yield.
Failed 7 year auction.
Four bond metrics to watch.
The relentless selling of bonds.
January pending home sales declined 2.8% versus forecasts of 0.00%.
January personal income was up 10.0% versus predictions of +9.5%; spending was up 2.4% versus 2.5%; the PCE price index was up 0.3% versus +0.4% in December; core PCE was +0.3% versus +0.2%; wholesale inventories rose 1.3% versus +0.5% in December; the trade balance was -$83.7 billion versus -$83.1 billion in December.
The February Kansas City Fed manufacturing index was reported at 26 versus the January reading of 22.
January Japanese retail sales declined 0.5% versus -0.7% recorded in December; construction orders were up 14.1% versus -1.3% in December; industrial production was +4.2% versus estimates of +4.0%; YoY housing starts fell 3.1% versus +2.5%.
February Japanese CPI was -0.4% versus expectations of -0.3%; core CPI was -0.3% versus +0.4%.
The Fed’s third great mistake (must read).
Globalization of inflation risks.
Keeping an open mind: What if this doesn’t end badly?
On the other hand: We are at the breaking point.
News on Stocks in Our Portfolios
What I am reading today
A history of the South Sea Bubble.
The 25 greatest art heists of all time.
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