John Authers reports that both stocks and bond markets have entered a holding pattern as they await US political developments; how much of the Trump administration's ambitious economic agenda will be enacted?
March the 7th is in the books here on Wall Street. Here's the New York Minute. It's been another downbeat day for the stock market, which means, as you can see, that last week's apparent breakout day on Wednesday, following the president's speech to Congress, has now seen all those gains cancelled out. If those gains really were due to the president's well-received speech, then the benefits have been squandered over the last really bad political week that he's had.
Instead, we are in a pattern of waiting for Donald. If we take a look at the 10 year bond yield, you can see a very clear pattern of investors positioning for growth during the latter half of last year, but then getting into a holding pattern as they wait for political developments. You can see exactly the same pattern in inflation break evens. And you can see the same pattern to a slightly lesser extent in the dollar. Perhaps, most intriguingly you also see it in how cyclical stocks have performed compared to defensives.
At all levels, people need more news before this rally can go further. They're waiting for Donald. And that's the New York Minute.