Indices Closed Lower Friday After New Highs, Yields Digest the Fed Meeting, and Are Commodities Overextended?
March 22, 2021 | FIRESIDE CHARTS
The Dow and S&P snapped a two-week winning streak on Friday, but not without touching new highs during the week. All sectors weren’t pulling their weight equally though… GameStop meanwhile reports its Q1 earnings tomorrow—a first since the Reddit-sparked stock rally—in what’s sure to be a snapshot of the state of retail investing. Chairman Powell has another busy week coming up and will follow last week’s Fed meeting with additional testimony before Congress tomorrow and Wednesday, this time accompanied by Treasury Secretary Yellen. Last week’s meeting pushed yields and inflation expectations higher; will we see more of the same this time around? Similar to commodities, yields already appear overextended… Could both soon meet some resistance?
1. While most major U.S. averages touched new highs last week, interestingly, only 4 of 11 S&P 500 sectors did so.
Source: The Chart Store, from 3/22/21
2. A quick quiz: Since 12/31/99, which major U.S. stock Index has done the best? Like March Madness, this is a bracket-buster!
Source: The Chart Store, from 3/22/21
3. Shall we stop the games?
Source: The Daily Shot, from 3/22/21
4. There is no doubt that the Treasury yield curve has steepened and “normalized” its shape (the inversions are gone and the near-zero policy only holds to the FED’s 2023 timeline).
Source: The Chart Store, from 3/22/21
5. Treasury yield gains look overextended. Will the bond vigilantes take a break?
Source: The Chart Store, from 3/22/21
6. Will yields find some resistance on the way up?
Source: The Chart Store, from 3/22/21
7. Junk bond yields also edged higher, but their spread over Treasuries is near historic lows…
Source: The Chart Store, from 3/22/21
8. Now that voluntary refinancing no longer makes sense for most borrowers, the duration on mortgage-backed bonds is extending significantly…
Source: The Daily Shot, from 3/22/21
9. Commodities also look technically overextended…
Source: The Chart Store, from 3/22/21
10. Is it ~2006 in China? Households there continue to borrow at a faster rate…
Source: The Daily Shot, from 3/22/21
11. Cracks in the central bank unified response? Russia joined Brazil and Turkey in raising rates:
Source: The Daily Shot, from 3/22/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.