It was as I feared, yesterday the 30-year bond auction was a dud.
Pulling the Plug
The sloppy auction pulled the plug on efforts to extend the market’s winning streak.
The drawdown feels ‘long in the tooth’ but is still short compared to the dot.com and the Global Financial Crisis (GFC) crashes.
“Just close the f*cking door!”
Jay Powell had some choice words when climate protestors gave his speech the bum’s rush.
His other comments were also biting enough to keep the market down after the bond auction:
FED CHAIR POWELL: WE ARE NOT CONFIDENT WE'VE ACHIEVED SUFFICIENTLY RESTRICTIVE STANCE -
POWELL: IF IT BECOMES APPROPRIATE TO TIGHTEN POLICY FURTHER, 'WE WILL NOT HESITATE' -
POWELL: WE WILL CONTINUE TO MOVE CAREFULLY, DECIDE MEETING BY MEETING
POWELL: ATTENTIVE TO RISK THAT STRONGER GROWTH COULD UNDERMINE INFLATION PROGRESS, WHICH COULD WARRANT A MONETARY POLICY RESPONSE
POWELL: INFLATION HAS COME DOWN, REMAINS WELL ABOVE 2% TARGET
POWELL: GRATIFIED BY INFLATION PROGRESS, BUT STILL 'LONG WAY TO GO'
POWELL: LABOR MARKET REMAINS TIGHT, BUT MOVING INTO BETTER BALANCE -
POWELL: WE EXPECT GDP GROWTH TO MODERATE IN COMING QUARTERS, BUT REMAINS TO BE SEEN
POWELL: A GREATER SHARE OF PROGRESS ON INFLATION AHEAD MAY HAVE TO COME FROM TIGHT MONETARY POLICY, NOT JUST SUPPLY-SIDE IMPROVEMENT -
POWELL: TOO SOON TO KNOW IF POLICY CHALLENGES OF 'EFFECTIVE LOWER BOUND' WILL BE A THING OF THE PAST -
Stocks and bonds are picking up on momentum derailed yesterday after the bond auction and Powell’s comments.
A report that China was blocked from the auction is easing concerns that there are no buyers of US debt (that’s a little hyperbolic but makes the point).
I’ll unpack those Powell comments even more in the Payne’s Perspective (ask your rep or email Info@wstreet.com).
For now, we wait for the Consumer Sentiment read – consensus estimate is 63.7 from 63.8.
I continue to think a close above 4,400 changes a lot of minds and triggers some short covering. Above 4,600 and we are off to the races!
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