Rising Treasury Yields Put Election Rally on Pause
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Welcome to the show market update podcast, where each trading day we recap key market results and statistics. I'm collet to clear, and here's a summary of what happened today, tuesday, november twelve. For the first time since the election, U.

S. Stocks had itself tuesday burdened by climbing treasury yields, profit taking and overseas weakness. Yields returned nearly to last week's four month highs, a sign of investors anticipating tiger monetary conditions in a changing fiscal policy climate.

Two inflation reports in retail sales between tomorrow and friday could also explain some of today's cautious trading. The october consumer Price index, or CPI, is to at eight thirty A M eastern time. Tomorrow and thursday features the producer Price index or ppi. The september CPI reports surpassed expectations, and recent economic data other than the weak october jobs report shows little sign of a slowdown that would keep the lid on Price growth.

The treasury market closed monday for veterans day seemed eager to make up for last time as the bench market ten year treasury no yield rapidly added a dozen basis points to four point for three percent, with yielders rising chances for a december federal reserve rate cut fell. Though futures trading still puts odds above sixty percent, there is likely more upside to yields following the outcome of the election, said Cooper Howard, director, fixed incomes strategy at the swab center for a financial research. The potential for tariff s tax cuts, raising the deficit and fewer than originally expected federate cuts are all risks to hire yields.

There is likely a floor of four percent for the ten year treasury, assuming growth and inflation continue as expected. As a reminder, the fed's last set of projections issued in september pegged to the median fed funds rate at three point four percent for the end of twenty twenty five. Much has changed since then, including solid economic growth and the election.

The next projections are due in mid december. Rising yields can hurt a variety of stocks and sectors, including dividend prayers and small cap firms that rely more on borrowing. The U.

S. Dollar showed no signs of flagging and carped, its highest day reading since early may. Like rating, financials, industrials and consumer discretionary sectors, the dollar drew strength from ideas that U.

S. Domestic growth could improve due to policies including lighter regulation, lower taxes and more terraces. Crypto also continued to limb with bitcoin briefly topic ninety thousand dollars. Here's where the major benchMarks ended. The S N P five hundred index, or the S P X, fell point three six points, or zero point two nine percent, to five thousand nine hundred eighty three point nine nine.

The Jones industrial average lost three hundred and eighty two point one five points, or zero point eighty six percent, to forty three thousand nine hundred ten point nine eight, and the NASA composite decreased seventeen point three six points, or zero point zero nine percent, to one thousand nine thousand two hundred eighty one point four zero. The ten year treasury no yield added twelve basis points to four point four three percent, and the sea bob volatility index of the vics fell to fourteen point eight one unusual on a day when stocks lost ground. since the election the best performing sectors have been tech financials and communication services while the legends have been materials utilities and consumer staples essentially procne sectors are primarily seeing the money flow unsurprisingly as markets anticipate higher fiscal spending looser regulation and lower taxes all perceived as conducive to growth sydney and peterson director of derivatives analysis at the swap center for financial research signal sectors are those the tender perform best in an advancing economy today saw rate sensitive stocks like home builders and small caps struggle as yields climbed semiconductors had another tough day amid concerns about trade with china and only a hand full of sectors managed to close in the green two were infotech communication services helped by general outperformance from mega caps other than tesla the following companies had stock price moved driven by analyst ratings quarterly earnings or other news tyson foods climbed six point five five percent after IT beat wall streets a p s expectations and forecast improved adjusting operating income for physical twenty twenty five better beef demand and lower animal feed costs as soybean and corn prices fell contributed to the company's results tesla dropped more than six percent after its parodic post election rise shares are up forty percent this month alone shop fy surged twenty one percent after its earnings beat estimates and IT provided friendly holiday season guidance its strong e commerce platform could bode well for larger companies like walmart with major e commerce platforms first solar fell almost six percent as the carnage continued for alternative energy stocks following republicans triumph in the election though third quarter reporting is ninety five percent done several giants are on tap including cisco tomorrow afternoon and while disney thursday morning cisco has wide exposure across the tech sector making IT a good parameter but it's struggled to grow revenue recently home depot at endless ibs and revenue estimates and provided better than expected guidance today but shares pulled back amid general weakness today for the home industry amid rising rates the company struggles in a tough housing and home innovation market continued last quarter with comparable sales at stores open at least a year down one point three percent and operating margin also lower still total sales rose six percent year over year while macro o economic uncertainty remains our third quarter performance exceeded our expectations said home depot CEO ted decor in a press release one supporting factor was whether as hurricane damage raised demand checking technicals the major index is all appear near term over bot according to swap peterson consolidation and profit taking wouldn't be a surprise especially if tomorrow's data look barris h the big round six thousand number has been tough for the s p x to overcome but the same was true earlier this year when the s p x first flooded with five thousand Wednesday brings the october C, P, I, and thursday features the P, P I.

C, P, I will likely get more attention after september's report came in slightly warm. It's possible, however, that last months storms might affect the data. Here are analysts estimates for wednesday's C P I report.

According to trading economics, october monthly C P I, zero point two percent versus zero point two percent in september. October monthly core c pi, zero point three percent versus zero point two percent in september. October annual CPI two point six percent verses two point four percent in september and october annual core C P I three point three percent versus three point three percent in september.

Keep in mind, with all inflation data ahead, that annual readings have of comparisons due to fast sinking inflation this time a year ago. As fed chairman Powell said last week, it's important not to simply look at the twelve month picture, but the three to six months trend as well, which is where the fed continues to see improvement. Still, first impressions count for a lot, and that's why the market could be nervous heading into CPI.

A worse than expected print has the potential to alter the feed. Thinking on the path of inflation swap, Howard said the decline in inflation has recently stalled out, and if wednesday's report shows a lack of progress on the inflation front, IT may cause the fed to move to a more cautious approach with rate cuts. Power speaks thursday on the economic outlook g, but it's unclear if he'll make any reMarks about CPI and ppi.

Last week, he declined to discuss the next administration's physical policy, which the fed doesn't control. Trumps win has potential implications across the market as twenty twenty five looms with complex policy issues such as a debt ceiling fight and major tax legislation, said Michael towns, managing director, legislative and regulatory affairs at b. In his latest analysis, which you could see, una com today's fed quarterly senior loan officer opinion survey on bank ending practices showed the net share of lenders tightening standards for large and medium firms, with animal sales of fifty million dollars or more falling to zero.

That's down from a peak of just over fifty percent last year during the brief crisis when several banks went under. However, the report also showed commercial and industrial loan demand weakening in the period after a steady reading. The previous period investment grade credit spreads, which measure how easy IT is for large firms to borrows money, are at twenty six year lows, thanks partly to the resilient U.

S. Economy and strong fundamentals. However, this suggests less assistance might be needed, perhaps making IT easier for the fed to slow rate cuts without worrying about negative impact on economic growth. The treasury market has already spent the last two months building in expectations for less assistance from the fed. The yield gains partially reflect concerns about fiscal policy in the new administration that might make IT more difficult for the fed to stick to the projections that made in september.

As of late today, trader sees sixty two percent chances rates will fall twenty five basis points at the conclusion of the federal open market committee meeting december seventeen th to eighteen th, and the thirty eight percent chance of no move based on the C M, E that watch tool. This has been the swap market update podcast. To stay informed, visit swap dot com slash market update or follow the show for free in your podcasting up.

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