2 Year Yield – Treasury Yields Soar

In the 2 Year Yield, The treasury market reacted to the jobs report which I will review later in this article. The 10-year yield increased 7 basis points to 2.94%. The 2-year yield increased 7 basis points to 2.7% which is the highest yield this cycle. The curve stayed the same as the difference between the two bond yields is still 24 basis points.

Healthcare was the only green sector as it was up 0.15%. The two worst sectors were utilities and telecom which were down 1.2% and 1.24%. These are interest rate sensitive sectors.

We now have clarity on the Fed’s likely decision on rates in December. There is a 79.8% chance the Fed will raise rates at least two more times this year. It’s great to see the 10-year yield rising near 3% as it makes an inversion less likely by the end of the year.

2 Year Yield – Stocks Fall Every Day This Week

The S&P 500 is down 1.45% since its record high on August 29th. It’s getting close to the point where I can claim victory for my short-term bearishness as it was down every day this week.

This is the first week where stocks fell every day since the 2016 presidential election. I still think it will fall further as these have only been very small declines.

To be clear, I’m not bearish because September is the worst month of the year. I’m bearish because stocks were technically overbought at the end of August, there are some inklings of economic weakness, and the trade war threat is back on in a big way.

The Nasdaq was only down 0.25% as the tech sector fell in line with the market instead of vastly underperforming it. The Facebook stock increased 0.31%, but the Twitter stock was down 1.04%. I think both are oversold.

Nasdaq was down 2.6% this week which was the worst start to September since 2008. This is quite the turnaround as the Nasdaq had its best August since 2000.

There is certainly silliness to comparing each month to predecessors instead of every other month, but it’s illustrative to show how the Nasdaq was overbought and is now correcting.