Market Turnaround: Stock Indices and Precious Metals Surge on Falling Treasury Yields, Growing Inversion, and Surprising Claims Data.
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Good afternoon, traders. It’s Chris Chavez with the Blue Line Futures and it’s your daily midday market minute stock indices are bouncing back here today despite the hawkish comments from Fed Chair Powell at yesterday’s Fed press conference. Before we get to it, if you’re watching this video like it, subscribe or view on our website, there is also a link to direct you to YouTube.
You can subscribe that way. We would love for you to follow us. We would love for you to help us build our following. Yes, Stock indices bouncing back here today. The Nasdaq is leading the way higher, followed by the S&P. They’re really neck and neck. The Russell really lagging behind, but still in positive territory. Now, the real picture today that we’re seeing in the equity markets and financials is yields.
Yields are sharply lower here. The ten year is now trading in a 380 basis point range or so, and the 2/10 spread is even more inverted at about a -30 basis point inversion. Now, what kind of fueled that? We got some data this morning, jobless claims, initial and continuing claims, and they came in higher than expectations. We also got an upward revision to last week’s number 1000 upwards revision or so, which is typically common to see.
But you did get a slight uptick here in jobless claims today, which is definitely a little concerning. We have started to see jobless claims tick up a bit in these releases. And it does look like there’s a little bit of labor market weakness. But, you know, the comments from Fed Chair Powell yesterday is that the labor market is still relatively tight and they’re getting inflation under control, but they want further confidence that they’re really bringing inflation back down to 2% before they give that go ahead in that green light on cutting rates.
Now, the big thing that we saw yesterday was Powell’s comments specifically regarding the March meeting. And he said that it wasn’t likely that they would implement a rate cut in March. Now, yesterday, we saw those odds as high as 60% after we got ADP and some of the other employment data. And those odds completely dropped off. You know, less than 30% or around 30% of a cut now in the March meeting.
But if you continue to see data really weaken and tomorrow’s data is going to be pivotal for the labor market and for interest rate yields. Despite what Powell said yesterday, the markets may continue to price in cuts and kind of bully the Fed, if you will, into a cut, especially if you’re really seeing a labor market. Data Fed Chair Powell might be saying one thing, but the economy in the labor market may be saying something else.
So I really want to pay attention to that. And I think the big risk definitely is real interest rate yields and they’re hovering right at around pre financial crisis. Global financial crisis of 2008, hovering it at the 2007 levels. So the data is going to be pivotal tomorrow. What we’re getting average hourly earnings nonfarm the unemployment rate, participation rate and a tremendous amount of Michigan data.
That’s consumer sentiment, inflation expectations, one year and five year, all of which going to be really important. Some of these support and resistance levels, stock indices are bouncing back. This is really encouraging to see, but we need a close above major resistance. So for the S&P three star resistance level 49, 29 and three quarters to 49, 30 and a half, NASDAQ three star level is going to be 17 484 to 7 to 17, five 5519 excuse me, and crude oil to star level that we need to get through 7741 to 77, 64.
And Silver really bouncing back sharply off of the lows definitely looks pretty positive. But we want to close above 2334 to 2345. If you have any questions, reach out to our trade desk. We’re here for you. Remember, futures trading involves substantial risk of loss and is not suitable for all investors.