Dow Futures higher, yield curve inversion narrows as stocks return

Tuesday's market minute

  • Global stocks are up slightly, with Asia rising for the first session in three, while investors continue to be guided by fluctuations in the fixed income markets.
  • The US Treasury Curve Remains Between 3-Month Treasury Bills and 10-Year Bonds after Tipping for the First Time since 2007 Last Week, Before a $ 40 Billion Key Bid at Two Years Later in the session.
  • British Prime Minister Theresa May is still losing a vote in Parliament on Brexit, which will see lawmakers vote for alternatives to the EU exit, as pressure builds to resign.
  • World oil prices are skyrocketing, with OPEC + production cuts reinforcing prices that remain close to the four-month highs.
  • US equity futures suggest a strong opening on Wall Street as investors focus on the impact of Apple's entry into several new markets, including video games, streaming and credit cards, as well as on the February housing data at 8:30. I am eastern time.

Market overview

Global equities rose on Tuesday as investors inspire fixed income markets, worries about the pace of growth of the world's largest economy, as well as political and trade uncertainties in Europe and in Asia, continue to dampen confidence.

Nevertheless, a slightly weaker US dollar as well as a tighter reversal of the Treasury yield curve have contracts related to the Dow Jones Industrial Average suggesting a gain of 185 points to give the go-ahead. sending to the trading day, while those related to the S & P 500, which yielded about 2% since a large number of manufacturing data indicated a weakness in the global economy last week, should post an advance of 19 points.

The US Treasury will auction about $ 113 billion of new bonds this week, including a $ 40 billion sale of new notes at 2 years later in the day, which could help understand the magnitude of the investor demand for fixed income securities in an unfavorable economic environment.

The market's reaction to the Apple Inc. (AAPL) launch event last night in Cupertino, California, which unveiled plans for the world's largest technology company to break into new markets in the United States. video games, streaming entertainment and credit cards, could also disrupt the valuations of many investors are adapting to the undeniable influence of Apple on competitors' business models.

Apple stocks rose nearly 1% in pre-market transactions, indicating an opening price of $ 190.30 each, which would have the effect of bringing the gain since the beginning of the year. at around 21% and valuing the largest company in the world at more than $ 900 billion.

The US Treasury yield curve remained inverted for the third consecutive session during the overnight transaction, providing investors with a reliable – but by no means foolproof – signal of a short-term recession. Federal Reserve studies have shown that every US recession in the last 60 years has followed a reversal, with short-term rates rising higher than the longer-term document, but also noting that not all reversals have been reversed. leads to recession.

While the debate over the nature of the current move, which resulted in a 17.5-basis-point decline in 10-year benchmark US Treasury yields, to a low of 2.317% in December 2017, Following last week's Fed press release, equity investors reduced risk positions in order to measure the impact of the slowdown in manufacturing data around the world, the complexity of Brexit's protracted drama in Britain, and the potential outcome of the US-China trade negotiations.

The 10-year reference notes were last seen at 2.441%, while the 3-month notes were marked at 2.459%, bringing the inversion level of the yield curve to only 0.018 basis points .

Asian equities advanced for the first day on Tuesday, posting a strong 2.15% gain for the Nikkei 225, partly related to the weakness of the yen, but only managed to increase by less than a tenth. per cent, with investors preferring to stay on their positions. the sidelines ahead of key US housing data and a bid two years of obligations later in the session.

Early indications from US equity futures suggest at least a solid start to Tuesday's talks, but with market volatility indicators starting to rise, opening bell movements are unlikely to define the whole negotiation session.

European equities were also generally firmer at midday: the Stoxx 600 in the region as a whole rose 0.42% in Frankfurt, while the euro was close to 1.13 against US dollar and that the British FTSE 100 gained 0.27% in London.

The pound sterling was marked at 1.3229 as the session approached as investors had well assimilated the impact of last night's parliamentary session in London, during which legislators had decided to take control of the Wednesday agenda, in defiance of Prime Minister Theresa May, and had scheduled a series of "indicative measures". vote "on alternatives to Brexit in order to break the stalemate that forced the country to extend its deadline for release beyond March 29.

May, however, said she probably would not recognize the results of the vote, which are not legally binding, but they could at least allow her to get a better idea of ​​the type of agreement – or no agreement – lawmakers ready to build a majority around.

World oil prices rose slightly in the night, bringing crude prices close to the four-month highs, the combined impact of a slightly weaker US dollar, the extension of OPEC production and ongoing sanctions on the sale of Venezuelan crude have offset fears for global economic growth and energy demand in the near term.

Brent contracts for delivery in May, the global benchmark for oil prices, rose 61 cents from closing at Monday in New York and changed hands at $ 67.82 a barrel during the first few days. European transactions, while WTI contracts for the same month, which are more closely related to gasoline prices in the United States, were seen 75 cents lower at $ 59.57 a barrel.

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