Yesterday, the U.S. Treasury auctioned $40 billion of 10-year government bonds. Initially, the market rebounded on this, but it was not an excellent bond auction:
The CBOE 10-Year U.S. Treasury Yield moved lower on the day toward that mythical 4.50% level. There’s no doubt this number excites folks, but from a technical point of view, I think filling the gap right below 4.40% (see circle) and testing 4.10% are more meaningful tests.
Citigroup (C) notes that since the start of 2022, bond auctions have moved the market on average more than the monthly jobs report.
The 30-Year Bond auction has the most significant impact; the U.S. Treasury will auction $24.0 billion worth of them today.
It all boils down to finding buyers, as foreign purchasers haven’t kept pace with the surge in issuance.
Technology (XLK) led the way (surprise), paced by software and semiconductors.
Nothing has changed – growth rocks, incredible tech, and Communication Services (XLC). While Energy (XLE) continues to slide, and Utilities (XLU) keep melting down.
They aren’t going to lead the market, but this underperformance relative to the overall market for Utilities is mind-boggling.
Disney (DIS) missed on revenue but beat on earnings and posted strong free cash flow. The stock was higher on the news but has a long way to go to reclaim a market leadership role.
Jay Powell speaks at 2PM and that might put a lid on any upside. That said, the market is looking for any glimmer of hope this rate hiking cycle has ended.
Individual investor sentiment surged back to 32% as bearishness plunged almost in half. It’s fine to be wrong, but it’s a mistake to be stubborn. The market is on the verge of a major breakout and most stocks haven’t moved this year after being down last year.
There is gold in them hills.
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