Strong Dollar Optics, Less Clear-Cut Details

US Rates

The US 10-year yield is consolidating and was virtually unchanged last week, a little below 1.60%. It was confined to roughly a 10-tick range of 1.54%-1.64%. The technical indicators of the March note futures contract favors lower yields (higher prices). A move above 131-08 in the futures contract warns of a retest of the highs seen at the start of the month (~132-00, around where it peaked last October too). In yield terms, that means a return to 1.50%. Even after Powell's testimony before Congress and a number of other Fed officials noting how well the economy is doing, the market continues to price in more than one rate cut this year. The implied yield of the December fed funds futures contract is 1.25% compared with the average effective rate of 1.58-1.59%.  

S&P 500

A small gap still exists after the S&P 500 gapped higher on February 11. The gap is only pennies (3352.26-3352.72) but seems indicative of the strength of the market. Of the past 19 weeks, the S&P 500 has fallen in four, and three were last month. The MACD has been trending higher since early this month, but the Slow Stochastic is flattening near where is has peaked previously. The 3385 area may need to be surmounted to sustain the recent momentum. It is interesting to note that the S&P 500 dividend yield is 1.78% at the end of last week.  


1 2 3 4
View single page >> |

Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.