NASDAQ Sharp Drop Along with Other US Indices. T-Bill Yields & Weak CB Index Lead.
Tuesday 20, saw the NASDAQ feel the worst of a wave of risk-off sentiment, down 1.25%, as the 6-month T-bill yield today was higher than expected. To add to the negative view was the CB Leading Index released today at 10am NYT.
Forecasts for the CB Leading Index were for a lower print than the previous -0.2% at -0.3%, but the final number came in at -0.4%. This isn’t usually a number that’s heavily looked at, but it’s worth mentioning given the current all-time highs of US indices.
The short-term treasury market has seen yields back on the rise over the past month. In the secondary market, 6-month yields were around 5.10% on Feb 1st, while the latest quote was around 5.33%.
Later on in the day we also got the results from the weekly T-bill auction. The 3-month yield was unchanged at 4.23%. While the 6-month yield rose to 5.10% from the previous week’s 5.065%. Yields are proving to be very sticky. Most selloffs in US equities are down to macro factors that could keep interest rates higher for longer.
The image above shows the monthly chart for the NASADAQ 100, with 7 trading days left there’s still some time to go to complete the last candle in the chart. But we’re getting close to seeing an upside-down hammer.
What to Expect
Things might get more volatile on Wednesday at 2pm when the Fed releases the FOMC minutes from the previous meeting. The market will be looking for clues as to just how close the pivot point might be.
For next week eyes will turn to GDP Growth to be released on the 28th. Forecasts are for the 3.3% preliminary number to be confirmed. Which is a sharp drop from the previous number of 4.9%. But it also means it might start getting the Fed closer to the pivot point.
And that’s something the equities markets like; steady growth and a near future of lower interest rates. We could see the broader stock market recuperate some ground after GDP numbers, which could also cancel the upside-down hammer.
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