The Treasury complex is certainly aiding the rebound as the 10-year Note backs off to 1.53% from a high of 1.62%, ahead of a deluge of auctions through the next 3 days.
Congress will certainly garner headlines as the Senate works to pass President Biden’s lauded $1.9 trillion spending package, but with a deadline next weekend, it’s job data that will steal the show.
Ultimately, it was the speed at which Treasuries rose that cratered investors’ risk appetite last week and we further believe such a reprieve is bullish equity markets.
U.S. benchmarks surged in the second half yesterday. The momentum carried into the evening hours, but weakness in the Treasury space overnight halted the rally, putting stocks once again on their backfoot ahead of the opening bell.
Powell noted that the Fed is committed to using their full range of tools, adding that inflation is soft and price pressures aren’t a threat. He continues his testimony today.
Powell’s been dovish: he even brought bullish tailwinds 2 weeks ago that set the markets on pace for last week’s surge. Can Powell be even more dovish than he has been?
Although last week’s push and pull held a floor of support, both the S&P and Nasdaq came to an unenthusiastic finish after decisively breaking below our momentum indicators again midday Friday.
