April 11, 2022
Good morning,
Markets are on the move this morning, well before the U.S. exchanges get going. Most of the action is again in bond-land, the rise in yields has been relentless. The US 10yr, yielding under 2% only a month ago, jumped 8 more basis points overnight and put in a high print of 2.78% early this morning. Equities have been fairly resilient to the higher yields, but have been weakened of late as yields approach what most estimates suggest is where yields “bite” – 3.00%. Equity Futures are off 75 basis points this morning before the cash market open.
This week is a short one thanks to the Good Friday holiday but there is no shortage of market action with tomorrow’s U.S. CPI, Thursday’s ECB meeting, of most important for equities I think, the onset of earnings season.
We’ve been trying to give the short term rally that started last month the benefit of the doubt, but the evidence – last week was rough – is fraying one’s patience. Let’s get the market’s early reaction to earnings this week and then decide if its time to give up on this rally or not.
Be well,
Mike