Key Takeaways with Craig
As of mid-day trading, US Equities were near steady after a stronger than expected March Employment report was released this morning. Implied volatility in the Equity Index options was similarly little changed on the day.
The big news after the Jobs number was released was the jump in US Treasury yields, particularly at the short end. We’ve written extensively lately about the flattening yield curve, and, at the time of this writing, the Micro 2-Year Yield futures contracts was trading nearly 10 basis points higher than the 10-Year. Historically, these “2s vs 10s” inversions have oftentimes been followed by a recession. So far, though, the Equity market has had a relatively muted reaction. Additionally, CME’s Fedwatch tool continues to show more aggressive Fed tightening over the coming months.
Perhaps associated with the jump in Treasury Yields, the US Dollar was stronger versus most major currencies in CME futures markets and the price of Gold futures dipped.
Below is the same excerpt from the FedWatch tool that we included a couple of days ago of the September FOMC rate hike probabilities. As you can see, rate hike expectations have increased, even from what we saw yesterday.
So, as we look toward the 2nd Quarter, there remains no shortage of potentially market moving news. Have a happy and safe weekend and we’ll see you on Monday.
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