The Dow made a run towards 27,000 in the early part of yesterday’s session and despite slipping back from intra-day highs, the benchmark index still managed another record close – it’s 15th of the year so far. However, a steep jump on treasury yields with 10 year bills hitting their highest yields since 2014 acted as the catalyst for the reversion. Markets are convinced that he Fed will be in a position to maintain the policy tightening regime for some time yet, as the economy continues to grow whilst inflation remains in check.
Final US Durable goods order data for August is due for publication shortly after the opening bell so this will be in focus to see how those trade tariffs are implicating matters, but the real number to watch for will be tomorrow’s non-farm payrolls. In the wake of yesterday’s ADP reading there’s going to be an expectation that we see an upbeat print here, but anything that’s too hot will have the potential to drive treasury yields even higher, taking a simultaneous toll on stocks.
Ahead of the open we’re calling the DOW down 113 at 26715 and the S&P down 16 at 2910.
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With the Fed content to frame rising US treasury yields as an echo of economic optimism, bond markets take a breather while oil prices have blown off course