Investors are just a day away from an inflation report that could provide some direction in a year in which markets have meandered with brief declines and partial rebounds.
More action could come as Wall Street banks open their earnings season on Friday.
Alastair Pinder, global equity strategist at HSBC, said global stock markets were likely overshooting fundamentals and a temporary pause should be expected, but it appears to be happening almost immediately. , he said. “The market is increasingly pricing perfection, and the risk and reward look less attractive to us,” he says.
That sentiment seems to be in the air these days, as the pullback at the start of the year vindicated some of last year's bearish strategists.
come to us today's call Charlie McElligott, strategist at Nomura Securities International, said stocks could receive an unexpected boost from Treasury Secretary Janet Yellen with the next quarterly repayment announcement (QRA) expected on January 29. Ta. Government borrowing plans, i.e. bid size and debt duration, will become an increasingly monitored event.
“Many clients I speak to believe that both stocks and bonds are overextended or ‘too fast’ heading into early 2024, and that a healthy rebound will occur soon. There are widespread expectations that .
And he reminded traders of the “binary” risk for the Treasury QRA late this month and early next month, when many expect coupon increases to resume. The results predict that “UST will fall/long-term rates will rise and financial conditions will tighten again, overall a headwind for currently 'highly valued' stocks.”
As a side note, coupon refers to the interest that a bond pays to investors, and as interest rates have risen over the past few years, bond coupons have increased. Treasury bills, on the other hand, do not carry coupons and are sold at a discount to their face value.
Now, let's get back to Mr. McElligott. He suggests alternative scenarios for investors to consider regarding Treasury events.
“However, on that “consensus path'' of the QRA, Yellen's Treasury's “political interventionism/activism'' appears again, with Yellen again offering “more coupons'' with “less coupons'' increases than currently expected. What happens if we start to rely on 'paper money'? But what then? And isn't this a very clear signal to the market that this is the last coupon increase going forward?”
“This is how you get the 'right tail',” the strategist said, adding that such “shockers” help ease financial conditions and lead to a flattening of the yield curve, meaning long-term rates fall faster than short-term rates. explains the decline—and real and nominal yields fall, driving a rise in risky assets.
It's a bit of a strong voice in a sea of bears.
read: 'Goldilocks thinking' can cost stock market investors money: Howard Marks
market
stock futures
ES00
NQ00
It has struggled for traction primarily as Treasury yields have fallen to BX:TMUBMUSD10Y BX:TMUBMUSD02Y.crude oil price
C.L.
flat and golden
GC00
has risen and remains at $2,037/oz.
| Key asset performance | last | 5d | 1m | YTD | 1 year old |
| S&P500 | 4,756.50 | 0.29% | 2.43% | -0.28% | 21.36% |
| Nasdaq Composite | 14,857.71 | 0.62% | 2.23% | -1.02% | 38.31% |
| 10 year treasury | 4.004 | 8.38 | -2.12 | 12.28 | 46.27 |
| Money | 2,037.00 | -0.61% | -0.30% | -1.68% | 8.37% |
| oil | 72.34 | -0.93% | 3.54% | 1.42% | -6.91% |
| Data: MarketWatch.Changes in government bond yields expressed in basis points | |||||
buzz
The SEC announced Tuesday that the X account was compromised, leading to fraudulent postings that it had approved the launch of an exchange-traded fund that invested in Bitcoin.cryptocurrency
BTCUSD
After a volatile day of trading, the stock rose slightly to $45,569.
hewlett packard enterprise
HPE
Announces $14 billion deal with Juniper Networks
JNPR.
taiwan semiconductor manufacturing
TW:2330,
The company, which makes chips for Apple and Nvidia, reported that fourth-quarter sales rose, contrary to analysts' expectations for a decline.
Aehr test system
AEHR
Sales have been sluggish as manufacturers of sensor and semiconductor inspection systems have revised their sales forecasts downward as slowing growth in EV sales has weighed on orders.
U.S. mortgage refinancing demand has soared by nearly 20%, data shows. The wholesale inventory deadline is 10 a.m., and New York Fed President John Williams is scheduled to speak at 3:15 p.m.
A barrage of missiles and drones fired by Yemen's Houthi rebels into the Red Sea was shot down late Tuesday.
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“Asian markets continue to be depressed, with China in particular trading near 2019 lows. Many important levels have broken in the CSI 300 index, and it remains to be seen how far the index will fall and how China's economy is doing. “Some people wonder how bad things are getting,” said Michael Kramer, founder of Mott Capital. in a blog post.
And if China struggles, the rest of the world could follow suit, Kramer said, noting that China's woes are hurting oil and could also impact manufacturing and services. said. “It seems Nike's weakness has emerged.”
NKE
“I don't think Nike is the only company that is expected to face these struggles when it comes to earnings reports in the coming weeks,” he said.
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