Here is what you need to know on Thursday, October 28:
More data just out juxtapositions the seemingly endless optimism of the stock market against the more qualified reasoning of bond and currency markets. The growth rate for the US economy slowed to 2%, while the yield curve continues to flatten across the globe. There has been a surge in short-term yields practically overnight as bond traders know the game is up for ultra-loose monetary policy and are adjusting accordingly.
The bond market may take longer to move, but it is the driver of financial markets and possesses a huge wall of money, dwarfing equity volumes. The chart below shows 2-year yields for the main blocs: UK, EU, US and adding in the move in the aussie overnight as well, as it has been the most dramatic. The aussie 2-year yield has almost doubled overnight, while the yield on the US 2-year is up 13% today alone.
While everyone in the equity market was too busy fixating on the 10-year yield, the flattening yield curve has crept up to serve everyone a warning. For now, equities remain bullish due to a wall of money flowing in as new highs attract new money, and equities move into a massive buyback phase after the Q3 earnings season. Seasonality is also favouring a strong end to the year. Q4 is historically a positive one for equities, but rising short-term yields will make high growth names less attractive going forward. It may be time to reshuffle the sectoral distribution of your portfolio.
See forex today.
Wall Street (SPY) (QQQ) news
President Biden proposes a 1% tax on stock buybacks.
US GDP Advance reading 2% growth rate.
Caterpillar (CAT) up 1% on strong earnings.
JNJ, tens of millions of vaccines sit idle at the Baltimore factory waiting for regulators to give the go-ahead to ship.–Reuters
Merck (MRK) up 2% premarket on earnings beat and outlook raise.
Nokia (NOK) up 5% on strong earnings.
Ford (F) up 8% after yesterday's massive earnings beat, nearly 100% ahead on EPS.
Comcast (CMCSA) beats on EPS and revenue.
Stellantis (STLA) reports fall in revenue on semiconductor issues.
eBay (EBAY) just beats on EPS by 1 cent, revenue ahead but poor guidance sees stock slip in premarket.
Anheuser Busch InBev (BUD) raises 2021 earnings forecast, up 10% premarket.
Lending Club (LG) up 30% on earnings, Credit Suisse ups price target.
WPP Group (WPP) up 6% premarket on earnings beat.
Twilio (TWLO) down 11% on poor guidance.
Apple (AAPL) and Amazon (AMZN) to report earnings after the close.
Upgrades, downgrades earnings and premarket movers
Source: Benzinga Pro
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.