Apart from the Leading indicators which have been forecasting a downturn for over 2 year now (there has only been one month that was positive since April 2022), the day was void of economic data.

Yields were the focus today as they continued their move to the upside. The 10 year yield moved up 12.1 basis points at 4.195%, and is closing above its 200 day MA at 4.187% (see post here). The yield is also above the 50% of the 2024 trading range at 4.172%. The 10 year yield reached a low of 3.605% in September just before the Fed cut rates by 50 bps. Since then, the yield is up 59 basis points.

A look at the yield curve shows:

  • 2 year 4.0317, up 7.7 bps
  • 5 year 3.958%, up 10.7 bps
  • 10 year 4.195%, up 12.1 bps
  • 30 year 4.994%, up 11.7 bps.

The USD moved higher today as well with the:

  • EURUSD: THe EURUSD is falling away from its 200 day MA at 1.0870 after testing it in the Asian Pacific session, and is extending toward the low from last week at 1.0810. A move below that level will have traders looking toward the swing low from August 1 at 1.0776.
  • GBPUSD: The GBPUSD is also heading and testing the low from last week at 1.29729. The next target comes in at the 100 day MA and the 61.8% at 1.2958. If that level is broken in the new trading day, it will increase the bearish bias. The 200 day MA is much lower, however, at 1.2797. There is interim support targets at 1.2938 and then a swing area at 1.2844 to 1.2867.
  • USDJPY: The USDJPY is closing near highs for the day and in the process is moving above the 50% midpoint of the move down from the July high to the September low and also the 100 day MA. Both are at 150.76.
  • USDCHF: The USDCHF was lower and testing the 38.2% near the start of the US session at 0.86318, but found willing buyers near the level and is closing at 0.8661. The highs from last week reached 0.8669 on three separate occasions. Get above it in the new trading day and traders will be looking toward 0.8700.

There was some Fedspeak:

Lorie Logan, President of the Boston Federal Reserve, highlighted the need for the Fed to remain flexible with monetary policy decisions as the economy evolves. She noted the current strength and stability of the economy but acknowledged downside risks to the job market and challenges in achieving the inflation target. Logan expects gradual rate cuts if economic forecasts are met, with balance sheet reductions and rate cuts working in tandem. She emphasized that liquidity remains abundant in money markets and over time aims for minimal balances in the reverse repo facility, possibly adjusting the repo rate if needed. Logan shared that her business contacts are optimistic but mindful of potential risks, and she closely monitors financial conditions indexes.

Meanwhile, Minneapolis Fed President Kashkari stated that inflation wasn't driven by the labor market. He emphasized the importance of avoiding a recession and noted recent labor market weakness as a reason for previous rate cuts. He also commented that consumer savings are dwindling, and delinquencies for lower credit score borrowers are rising. Kashkari mentioned that monetary policy has mainly anchored inflation expectations rather than reduced demand. He sees modest rate cuts ahead, with faster cuts possible if labor market weakness escalates.

IN the US stock market today, the first day after a week that closed higher for the 6th consecutive week, the market was mixed. The Dow was hit the hardest. The Nasdaq rose modestly. The S&P close in between:

  • Dow INdustrial average down -344.31 points or -0.80% at 42931.60
  • S&P fell -10.69 points or -0.18% at 5853.98
  • Nasdaq rose 50.45 points or 0.27% at 18540.01..

Nvidia traded to a new all time high and was up 4.14%.

Amex, Merck, Travelers, HomeDepot, Goldman Sachs all Dow stocks and all fell more than 2% on the day.