https://www.zerohedge.com/news/2018-...ops+to+zero%29
Global stocks stumbled on Monday ahead of an avalanche of earnings in this season's busiest reporting week but the big story overnight was the spike in 10Y Yield which climbed as high as 2.9957%, the highest level since January 2014, and nearing the psychological 3% level which has triggered market spasms and more than one tantrum in the past. The move was catalyzed by Treasury Secretary Steven Mnuchin saying over the weekend that he is planning a trip to China, an indication the US is considering a truce in its trade war with China.
https://www.zerohedge.com/sites/defa...eld%204.23.jpg
Citi's technical team repeats the key highlights, pointing out that we're 1bp away from the psychological 3% level in the Treasury 10y yield. "The benchmark is trading at levels not seen since 2014, and we are continuing to make fresh YTD highs. The 10s now trade at 2.99% while the 2s10s trades on the 51 mark."
If we break 3%, major levels come in here that extend up to 3.05%: this is the level where we have the 2014 high which is also the long term double bottom neckline and the long term channel top:
https://www.zerohedge.com/sites/defa...citi%2010y.jpg
Not everyone is convinced that the 10Y will soar once it blows through 3% (especially not in a world which both the IMF and IIF said has record debt): "Ultimately it’s hard to see a move sustained above 3 percent on the U.S. 10-year,” Mitul Kotecha, a strategist at TD Securities, told Bloomberg TV from Singapore. “Some of the dialing down in tensions, in risk aversion, may be having some impact there as well as expectations of continued strong growth in the U.S.”
Meanwhile, rising yields are capping other risk assets and the recent sell off in Treasuries is being closely eyed by other markets, and supporting a pretty aggressive USD bid and VIX is rallying.
Mostly as a result of rising yields and a stronger dollar, S&P 500 Index futures turned lower, tracking moves in the Stoxx Europe 600 Index which failed to capitalize on an unexpected beat in the April PMI prints, while earlier the MSCI Asia Pacific Index also started off the week in the red.
https://www.zerohedge.com/sites/defa...ets%204.23.jpg
In global stocks, MSCI’s world index fell 0.25% after Asia shed 0.5% overnight and Europe then slipped 0.2% as results from Switzerland’s biggest bank, UBS, disappointed. S&P futures also pointed to a modestly lower open.
Meanwhile, traders are on edge because in addition to earnings - more than 180 companies in the S&P 500 are due to report results this week, including Amazon, Alphabet, Facebook, Microsoft, Boeing and Chevron - traders also received the latest round of advance economic surveys that should show in the coming days if economic softness in the first quarter was just a passing phase linked to wintery weather and the Lunar New Year holidays in Asia. Readings from Japan, France and Germany were all relatively reassuring. Japan’s PMI data firmed as output and domestic demand picked up, France got help from its services sector, while Germany came in above forecast despite weaker new orders numbers.
Global stocks stumbled on Monday ahead of an avalanche of earnings in this season's busiest reporting week but the big story overnight was the spike in 10Y Yield which climbed as high as 2.9957%, the highest level since January 2014, and nearing the psychological 3% level which has triggered market spasms and more than one tantrum in the past. The move was catalyzed by Treasury Secretary Steven Mnuchin saying over the weekend that he is planning a trip to China, an indication the US is considering a truce in its trade war with China.
https://www.zerohedge.com/sites/defa...eld%204.23.jpg
Citi's technical team repeats the key highlights, pointing out that we're 1bp away from the psychological 3% level in the Treasury 10y yield. "The benchmark is trading at levels not seen since 2014, and we are continuing to make fresh YTD highs. The 10s now trade at 2.99% while the 2s10s trades on the 51 mark."
If we break 3%, major levels come in here that extend up to 3.05%: this is the level where we have the 2014 high which is also the long term double bottom neckline and the long term channel top:
https://www.zerohedge.com/sites/defa...citi%2010y.jpg
Not everyone is convinced that the 10Y will soar once it blows through 3% (especially not in a world which both the IMF and IIF said has record debt): "Ultimately it’s hard to see a move sustained above 3 percent on the U.S. 10-year,” Mitul Kotecha, a strategist at TD Securities, told Bloomberg TV from Singapore. “Some of the dialing down in tensions, in risk aversion, may be having some impact there as well as expectations of continued strong growth in the U.S.”
Meanwhile, rising yields are capping other risk assets and the recent sell off in Treasuries is being closely eyed by other markets, and supporting a pretty aggressive USD bid and VIX is rallying.
Mostly as a result of rising yields and a stronger dollar, S&P 500 Index futures turned lower, tracking moves in the Stoxx Europe 600 Index which failed to capitalize on an unexpected beat in the April PMI prints, while earlier the MSCI Asia Pacific Index also started off the week in the red.
https://www.zerohedge.com/sites/defa...ets%204.23.jpg
In global stocks, MSCI’s world index fell 0.25% after Asia shed 0.5% overnight and Europe then slipped 0.2% as results from Switzerland’s biggest bank, UBS, disappointed. S&P futures also pointed to a modestly lower open.
Meanwhile, traders are on edge because in addition to earnings - more than 180 companies in the S&P 500 are due to report results this week, including Amazon, Alphabet, Facebook, Microsoft, Boeing and Chevron - traders also received the latest round of advance economic surveys that should show in the coming days if economic softness in the first quarter was just a passing phase linked to wintery weather and the Lunar New Year holidays in Asia. Readings from Japan, France and Germany were all relatively reassuring. Japan’s PMI data firmed as output and domestic demand picked up, France got help from its services sector, while Germany came in above forecast despite weaker new orders numbers.
- EU Markit Manufacturing Flash PMI (Apr) 56.0 vs. Exp. 56.6 (Prev. 56.6)
- EU Markit Services Flash PMI (Apr) 55.0 vs. Exp. 54.8 (Prev. 54.9)
- EU Markit Comp Flash PMI (Apr) 55.2 vs. Exp. 54.9 (Prev. 55.2)
“It’s a good reading, it’s still encouraging,” said Chris Williamson, chief business economist at IHS Markit, of the combined euro zone numbers, which he said pointed to quarterly GDP growth of 0.6 percent.