YWR: 10 Year Time?
Disclosure: These are personal views and market commentary. These are not investment recommendations. For investment guidance seek professional help.
Should we be buying 10 Year Treasuries here?
A lot of bearishness has been unwound since we launched our series of bullish charts in October (10 More Bullish Charts, 15 Charts say the market goes higher.
S&P’s IMI Survey has been negative all year, but in November made a surprisingly bullish turn.
After a strong rally investors are now highly positive on the US market returns. Not good.
The ‘Everything Rally’. Stock and Bond’s both rallied strongly.
The set-up for a short squeeze was there given excessive hedge fund/CTA shorting and investor sentiment.
But the fundamental justification for the pain trade was lower yields in the interest rate swap market on expectations the Fed might be softening its hawkish talk.
Despite the fact the Fed hasn’t really said anything dovish yet.
FEDSPEAK - BOWMAN SAYS SHE EXPECTS FED WILL NEED TO INCREASE RATES FURTHER - “I continue to expect that we will need to increase the federal funds rate further to bring inflation down to our 2% target in a timely way,” Bowman said in prepared remarks Tuesday at an event hosted by the Ohio Bankers League. Bowman said the federal funds rate, “appears to be restrictive, and financial conditions have tightened since September.” (BBG)
We’ve had a good rally, but is now the time to be cautious?
On the earnings front, there have been sharp cuts to 4Q 2023 EPS. The biggest earnings cuts have been in healthcare and materials.
On the positive side there haven’t been changes to the 2023 and 2024 full year estimates.
Are the Q4 cuts 1-off kitchen sinking?
Or the start of a concerning trend?
Is Big-Tech going ex-growth? This question continues to nag.
Yes, tech earnings have stabilised from 2022, but are they going ex-growth?
Or slow growth?
Or ‘ex-growth relative to the market’?
Or ‘very expensive for not much better growth’?
