The 10-year-2-year yield spread has more than reversed all of its gains since the U.S. election, while regional banks have held up better. This divergence is unlikely to hold for long: in our view, either the yield curve will start steepening again, or regional banking stocks will drop sharply to "catch down" with the recent drop in interest rates.
As we noted earlier this week, a Fed rate hike in less than two weeks' time was basically a "done deal" heading into today's Non-Farm Payrolls report (see"Sector showcase: The utility of utilities for handicapping the Fed" for more). When the jobs figures were released, at least a few traders had to reevaluate that outlook.
Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3%, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.
Ford Motor Co is replacing Chief Executive Officer Mark Fields with James Hackett, the head of the unit developing self-driving cars, the U.S. automaker said on Monday, responding to investors' growing unease over its stock price and prospects.
The Chicago Federal Reserve said on Monday its gauge of U.S. economic activity strengthened in April to its highest level since late 2014, suggesting an acceleration in production and hiring activity following an anemic first quarter.
The CPI unexpectedly fell 0.3% month-over-month in February, which brought the year-over-year rate down to 2.4% from 2.7% previously. In March, CPI is expected to have rebounded by 0.3%, thus making back the fall witness in the month before. In the event CPI actually prints a higher number, this will further cement a June interest rate hike expectations and may provide some support for the dollar. However, if the CPI comes in weak once again then doubts may grow about the pace of future interest rate rises.