Friends
As soon as the yield curve inverted (3 month yields higher than 10 year yields) this morning, stocks took a tumble. One might even be led to believe that algorithms were in place to sell stocks instantly as soon as the yield curve inverted. Indeed, stocks tumbled early, recovered some and tumbled again into the close. Very weak economic news from Europe sent global rates lower overnight, and domestically the 10 Year Treasury note’s yield tumbled to less than 2.42%. As we discussed earlier in the week after the dovish Fed statement, a global slowdown has caught not only the Fed’s attention, but also apparently the attention of market participants. Today, the bond market and stock market were telling the same story. That has not been the case very often over the past several years.
For the day, the Dow Jones Industrial Average was down 460 points to finish the day at 25,502. The S&P 500 was down 54 points to close at 2,800. Gold was up $5 to trade at $1,312 per ounce, while oil was down $1.05 to trade at $58.93 per barrel WTI.
As we finish up the 1st quarter and work our way into the Spring, investors will be watching corporate earnings and economic data to decipher whether the global slowdown story that bond markets around the globe are telling means that stocks have seen their highs for the year, or will low interest rates once again fuel P/E expansion, sending stocks higher in a TINA (there is no alternative) frenzy? We’ll chew on that over the weekend.
Have a great weekend everyone.
