Equities Tumble as 10-Year Yield Reaches 3%

 

Stocks Fell and Couldn’t Get Up

Major US stock indices dropped sharply this afternoon after trending higher during the early part of the session, led lower by the industrial and technology sectors.  Shares of Caterpillar Inc. (-9%) provided the largest downward shock to industrials after disappointing investors in its earnings conference call by stating that Q1 would represent its “high water mark” for the year.  In the technology arena, losses were headlined by Alphabet Inc. (Google), whose shares declined more than 4.25% on concerns over rising expenses, and Facebook (-3.7%), who is set to report quarterly earnings tomorrow.  Apple’s stock also remained in the headlines, as it declined for a fifth consecutive day with persistently low guidance from key IPhone suppliers.  Overall, the S&P 500 shed 1.35%, while the Nasdaq and DJIA plunged roughly 1.7%.

 

 

Crude oil futures fell from a three-year high, down 1.3% on the day to $67.75/barrel.  Much of the decline was attributed to the pro-negotiation rhetoric of French President Emmanuel Macron, who spoke encouragingly regarding restructuring the existing sanctions on Iran.  Also in commodities, gold climbed 0.5% to $1,330/ounce.  Bitcoin and other cryptocurrencies represented one of the few asset classes to have an encouraging trading day.  The price of Bitcoin jumped more than 5% to $9,430, matching its highest level in over a month.

 

 

10-Year Yield Crosses 3% (Briefly)

This morning financial markets were captivated by the 10-year Treasury note yield breaching the psychologically significant 3.00% level, if only briefly, for the first time since January 2014.  It touched as high as 3.0014% before settling 1-2bps lower for the remainder of the session.  The next “important” technical level to cross is 3.05%, a level not recorded since 2011 during the infamous “taper tantrum”.

 

 

Purchases of New Homes Rise

New home sales for March highlighted today’s key economic data releases, where a solid 4.0% MoM increase to a seasonally adjusted 694,000 pace was reported, along with upward revisions to the prior two months (+71,000).  The March figure was a four-month high and exceeded median forecasts of a 630,000 rate, as purchases in the West rose a robust 28.3% and outweighed slight contractions in the Midwest and Northeast.  New homes available on the market held steady at 301,000 in March (near 9-year high), and the outstanding inventory declined to a 5.2-month supply.  Also detailed in the data, the median new home sales price increased to $337,200, a 4.8% YoY gain.