Daily Market Color February 20, 2018Stocks End Rally, Treasurys Slump with Auction Equities, Bonds Slide Major US equity indices struggled on the day, as the DJIA (-1%) was heavily weighed down by shares of Walmart (-10.1%), after earnings released by the company this morning failed to meet expectations. The tech-heavy Nasdaq finished marginally lower on the session (-0.1%) as gains in chip stocks and Amazon helped to combat the contagion from retailers that ultimately ended a six-day winning streak for equities. Today’s losses pushed the S&P 500 (-0.6%) below its technical-important 50-day moving average level. In bond markets, US Treasurys slumped following the government’s sale of $179 billion worth of securities, with another $79 billion set to be auctioned off later this week. Of the securities sold today, two-year notes and three- and six-month bills commanded the highest yields at their respective auctions since 2008. The sharp increase in debt follows last week’s suspension of the debt ceiling for more than a year. Overall, Treasury yields/swap rates climbed by 1-3bps across the curve, with the yield on the 10-year note settling near 2.89%. Other important market movements on the day included the US dollar, which rose to a six-day high against major currencies, up 0.7% for the trading session. In the crypto world, Bitcoin continued its recovery from the sub-$7,000 levels experienced earlier this month, rising more than 2.75% on the day to $11,460. In commodities, WTI crude gained 0.4% to a new two-week high of $61.90/barrel after a report of lower than expected crude inventories in the US. Gold futures posted their largest daily decline in the past four months, falling 1.8% to $1,331/ounce. Breaking Down the Minutes While this week will be light on key economic data reports, the minutes from the FOMC’s January policy meeting will be released tomorrow afternoon. The Fed made the decision to hold its benchmark rate unchanged at that meeting, but included hawkish language such as the addition of the word “further” to its “gradual adjustments” plan – Fedspeak which financial markets hope to get a better understanding of after the minutes from the meeting are released tomorrow. The final three days of this holiday-shortened week will also feature speeches from several Fed members, including Neel Kashkari (non-voter, dove), William Dudley (voter, dove), Raphael Bostic (voter, neutral), Loretta Mester (voter, hawk) and John Williams (voter, hawk).