The 10-year yield has moved up seven of the last nine trading days. During that time, the yield has moved from a low of 4.51% to the current yield at 4.780%. Prior to that move, the yield had moved up from a December 6 low of 4.126%. Since mid-September, the yield is up from 3.60%. These are pretty big increases.
The result today is the highest going back to October 31. The high yield for 2023 reached up to 5.021% back on October 23rd. Is the market giving returns to 5%?
If so, that will likely keep the pressure on stocks as they continue their reaction to the outcome and avoid the things that sent stocks higher after Trump's victory:
- Tax deductions
- Less regulation
- Lower energy prices
- A trade policy that does not get to the point of a “trade war”, but gets preferential concessions.
On the other hand, if the yield turns lower with 4.74%, and 4.64%, the next targets, that would take some of the pressure off the stock and could move the story to more optimistic conditions.
Looking at some of the big cap winners from the past few years, recent declines are pretty big:
- Apple -11.7%
- Nvidia -15.3%
- Microsoft -9.3%
- Amazon -7.09%
- plants -25%
- Tesla -20%
This week we have the PPI tomorrow and the CPI on Wednesday which could be instrumental one way or the other.
PPI is expected to rise 0.3% for headlines and concept. The YoY is expected to rise to 3.4% from 3.0% and 3.8% from 3.4% which is not particularly encouraging.
CPI is expected to rise 0.3% for the headline and 0.2% for the core. The YoY is expected to rise to 2.9% for the headline from 2.7% while the core is expected to remain unchanged at 3.3%.
Also ahead is the start of the earnings calendar with the finance front starting on Wednesday.
