The Morning Call--Only a crash in equities can rescue the bond market

The Morning Call

 

10/6/23

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/stocks-erase-losses-bonds-flatline-oil-slumps-ahead-fridays-jobs-report

 

Note: the long Treasury has reset its long term trend from a trading range to a downtrend---not good (see below); while the S&P has reset its short term uptrend to a trading range.  There is still close in support: the 200 DMA (~4205) and the 23.6% Fibonacci retracement level (~4198).  As you can see, they are very close to each other, so there should be considerable support in that area.  Let’s hope.  Because if that level breaks, it is a long way down to the next major support level.

 

            A potential target for yields.

            https://allstarcharts.com/a-potential-target-for-yields/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                         

September nonfarm payrolls grew 336,000 versus forecasts of 170,000; the unemployment rate was 3.8% versus 3.7%.

                          https://www.zerohedge.com/markets/jobs-shock-september-payrolls-unexpectedly-soar-336k-biggest-jump-january-and-6-sigma-beat

                                                   

                        International

 

August Japanese household spending rose 3.9% versus estimates of +0.9%; the August leading economic indicators came in at 109.5 versus 109.0.

 

August German factory orders were up 3.9% versus predictions of +1.8%.

 

                        Other

 

            Fiscal Policy

 

              The author is a bit heavy on the sarcasm but spot on on the point he makes.

              https://www.realclearmarkets.com/articles/2023/10/05/matt_gaetz_took_away_congresss_cell_phone_984017.html

 

              There is no ‘free stuff’.

              https://www.realclearmarkets.com/articles/2023/10/05/the_economics_of_free_stuff_is_that_theres_no_free_stuff_983923.html

 

   More equality or more regulation?

  https://www.adamsmith.org/blog/so-whadda-ya-want-more-equality-or-more-regulation

 

                        Inflation

 

              New homes less affordable than during housing ‘bubble’.

              https://politicalcalculations.blogspot.com/2023/10/new-homes-more-unaffordable-than-during.html

 

Recession

 

  WTO warns of global trade slowdown.

  https://www.zerohedge.com/markets/wto-warns-broad-based-global-trade-slowdown-slashes-forecasts

 

The Bond Market

 

            Only a crash in equities can rescue the bond market.

https://www.bloomberg.com/news/articles/2023-10-05/only-a-stocks-crash-can-rescue-bonds-for-barclays-as-fed-won-t?utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277130641&_hsenc=p2ANqtz-8jypnb-5gFQwDg7_I8QmQh7EmwpURIt5dYFnNtM5Gvmo_diSIEEN9_gv9vr9KniGs8iBU9Fe7bMNSK1Qr2x8EGbKrIhg&utm_content=277130641&utm_source=hs_email&sref=loFkkPMQ

 

Bondmageddon looms.

https://www.zerohedge.com/the-market-ear/bondmageddon-looms

 

Bond selloff might force Fed to rethink QT.

https://www.wsj.com/economy/central-banking/bond-selloff-might-force-fed-to-rethink-shedding-assets-305d2a26?mod=hp_lead_pos3&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277130641&_hsenc=p2ANqtz-_mUrWs_bxfDMENlVHk3KOpWsZrcSn2IZtjnouJzqYio8fD0pQ4ftMmlYUQgrzzD5AuYtULWVXjldsuUy6SGy_2xH6wMA&utm_content=277130641&utm_source=hs_email

 

 

High yields challenging the Fed’s attempt to avoid recession.

https://www.bloomberg.com/news/articles/2023-10-05/recession-risk-grows-with-surging-bond-yields-fed-rate-hike-in-play?srnd=premium&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277130641&_hsenc=p2ANqtz--vN51V7kv0Yi3-Mykg5wUCcFG_0irx3bvdn1s1eoJbU9wIjd5uwdHLZJ3yaxMT-MvZmegDvjrzXMIEqPCv4fhqgBxWOA&utm_content=277130641&utm_source=hs_email&sref=loFkkPMQ

 

Yield curve un-inverting raises risk of hard landing.

https://www.capitalspectator.com/is-hard-landing-risk-rising-again-for-the-us-economy/

 

Rising interest rates mean deficits finally matter.

https://www.wsj.com/economy/central-banking/rising-interest-rates-mean-deficits-finally-matter-74249719?mod=economy_lead_story

 

            Who feels the pain from a bond selloff?

            https://www.ft.com/content/144c541a-1109-40c9-b74a-7d176ba90fc6

 

What is the bond market telling us?

https://www.zerohedge.com/markets/if-tuesday-was-market-chaos-wednesday-was-chaos-trampoline-drugs

                              

Six charts.

https://www.zerohedge.com/markets/switch-was-thrown-year-markets-most-important-correlation

 

           

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2023/10/quotation-of-the-day-4409.html

 

            Friday morning humor.

            https://babylonbee.com/news/genius-frugal-family-poses-as-illegal-immigrants-to-get-free-hotel-oom-in-nyc

 

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