Stocks went nowhere while the yield on US Treasury bonds surged higher on Tuesday, the first day of a holiday-shortened trading week. By virtue of a higher close, the S&P 500 made a new record high.
First, the scoreboard:
- Dow: 18,040.5, +21.2, (+0.1%)
- S&P 500: 2,099.9, +2.9, (+0.1%)
- Nasdaq: 4,899.3, +5.4, (+0.1%)
And now, the top stories on Tuesday:
1. Wall Street is really excited about Apple’s car. Reports have suggested that Apple is working on a car, which according to The Wall Street Journal will look like a minivan, and in a note to clients on Tuesday, Cantor Fitzgerald analyst Brian White asked if Apple’s car could be the next iPhone. “In our view, as more ‘things’ become computers,” White wrote, “we believe Apple is very well positioned to leverage its heritage in the industry developing hardware and software innovations together across a vast digital ecosystem, creating easy to use, aesthetically pleasing products.”
2. The big move in markets on Tuesday was in US Treasury yields. The 10-year yield moved to above 2.1% while the 30-year also spiked to 2.72%. These are up from year-to-date lows of 1.65% and 2.25%, respectively.
3. In our latest most important charts feature, Brean Capital’s Peter Tchir noted that the 10-year Treasury looks about as unattractive as it has in some time. And so perhaps, Tuesday’s rally shouldn’t have come as a total surprise. “Right now the combination of low projected income and HIGH volatility makes the risk/reward of owning Treasuries very dangerous,” Tchir wrote.
4. The New York Fed released its latest household debt survey, which showed household debt rose by 1%, or $US117 billion, in the third quarter. This is down from the $US12.68 trillion peak reached in the third quarter of 2008. “Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” the NY Fed’s Donghoon Lee said.
5. The ongoing saga in Europe may have made some progress on Tuesday, as a report from Bloomberg said that Greece’s government could request an extension of its loan agreement with its European creditors for four to six months. This report followed comments from Greek prime minister Alexis Tsipras in front of Greek parliament that said Greece will not compromise.
6. Morgan Stanley’s Martijn Rats said on Monday that there are signs the oil market is beginning to rebalance itself and could reach a real equilibrium in the third quarter of this year. But as the FT’s Tracy Alloway found out recently, people are still really sure oil prices are going lower.
7. On the economic data front, homebuilder sentiment in February declined to 55 from 57, a decline that was attributed to the harsh winter weather in the midwest by Pantheon Macro’s Ian Shepherdson. The New York Fed’s latest reading on business activity in New York showed that activity expanded in New York, but the outlook for conditions over the next six months fell to its lowest level in two years.
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