We see a wait-and-see market as the sideways movement continues ahead of a record $42 billion 10-year Treasury auction and investors continue to look for clues on the direction of interest rates.
Wall Street is trading cautiously higher in pre-market US trading. After solid demand for 3-year Treasuries yesterday, investors are hoping for solid demand for 10-year Treasuries, which could end the current sideways movement and put more money back into stocks. Eyes are also on a number of central bank speakers, including Adriana Kugler, Susan Collins, Thomas Barkin and Michelle Bowman. Fed Bank of Philadelphia President Patrick Harker expressed optimism that a “soft landing” is still the likely outcome (I agree) and that inflation can continue to decline even if the labor market remains strong.
While rate cut expectations have fallen dramatically – especially since Friday's strong NFP data – optimism that the strong US economy can continue to grow has not changed and could lead to further gains even at very high levels in an economy with tight monetary conditions.
Global markets continue to receive a slight tailwind from China – while the stimulus measures are likely to be short-lived, Beijing is now showing signs of taking more forceful action to halt the weakness in Chinese equity markets, including drastic personnel changes. However, the China factor will soon pause as Chinese markets will soon enter the week-long Lunar New Year vacation.
We continue to see little movement on all markets. Wall Street is showing signs that it can rise a little further – which will also help the global markets. The main focus will be on the US Treasuries. If demand for US Treasuries is solid at current yield levels then the bulls could continue to gain the upper hand. The recent USD strength has gone a bit too far too fast. I expect a small correction in the USD, which would also have a slightly positive effect on Wall Street.
👁 ROB'S MARKET OVERVIEW:
February 07, 2024
🌐/🇺🇸 Global/US Markets ➡️/↗️ (markets stuck in sideways but with cautious signs that bull takes upper hand again)
Cyclical Stocks ↗️/➡️/↗️
Tech/Growth Stocks ↗️/➡️/↗️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ↗️/➡️
Materials Stocks ➡️
EUR, GBP ↗️/➡️
⚒ Commodity Markets ↕️
Oil prices ↗️/➡️ (slight further gains – more resistance in range $74.00 – $75.00)
Natural Gas prices ↗️/↕️
Metal prices ↘️/↕️
Gold ➡️/↕️ (depending on yields but still under pressure – if the US Treasury auction sees solid demand, gold could move back towards $2,040)
⚡️Cryptos ➡️ (stuck in sideways movement $43K – $44K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)