Market Stalls Amid Conflicting Signals
JOLTS data came in weaker than expected today, though that shouldn’t have been a surprise following May’s sharp increase. The JOLTS figures continue to track closely with Indeed data, suggesting that last month’s surge in job openings didn’t carry over into June.
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Still, the JOLTS data, combined with a strong 7-year Treasury auction, pushed rates lower across the curve, sending the 10-year yield down nearly 8 bps. However, the 10-year remains just above critical support at 4.33%, a level that has held firm for several weeks.
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It didn’t stop the dollar index from rising for a fourth consecutive day. The index faces considerable resistance around 99, suggesting we might see a day or two of consolidation ahead. However, the RSI indicates that the DXY likely has further room to climb.
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Meanwhile, the divergence between the US 5-year and Japan 5-year rate spread versus USDJPY continues to widen. The rate spread is currently testing key support, raising questions about how much longer USDJPY can sustain its opposing move. The last notable divergence of this magnitude occurred in August of last year.
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Another notable divergence is occurring between the 10-year Treasury rate and the 1-year CPI inflation swap—a scenario that’s relatively uncommon historically.
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Also notable is the divergence between the S&P 500 and high-yield credit spreads. Interestingly, the HY CDX Index hasn’t confirmed the recent highs in the S&P 500 and has, in fact, been moving in the opposite direction lately.
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There are numerous mixed signals in the market right now, with various indicators hovering at critical inflection points. As it stands, nothing appears to be breaking decisively or giving a clear signal—leaving us stuck in a holding pattern. By most accounts, rates should be higher, spreads wider, and stocks lower—yet here we are, with no meaningful moves.
It’s unclear what exactly the market is collectively waiting for at this stage.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. ...
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