E-mini S&P 500 (June): Settled at 3947.75, down 11.25
E-mini Nasdaq-100 (June): Settled at 12,878.25, down 66.25
It’s the last day of the first quarter and we believe U.S. benchmarks are composing themselves for higher prices in April. The S&P, Nasdaq, and Dow each lost ground yesterday, but in a very constructive manner, whereas the Russell 2000 rebounded by 1.7% from Monday’s bloodbath.
All things considered, we’ve seen terrific technical construction from last week’s low, higher for each index than that from the first week of March. With a melting pot of narratives, this quarter brought a lot of chop, but at the end of the day, the trend is higher, the fundamentals are supportive, and there’s no reason to believe either will dissipate, at least not through April.
Yesterday, the 10-Year Treasury Note hit a new 14-month high yield of 1.77% but backed off as the session unfolded. As of yesterday’s close, 10-Year futures are set to lose exactly 5% this quarter and the move has had an impact on all asset classes. The same goes for the 30-Year Bond, which has shed 10% this quarter. However, whereas 10-Years set a new low yesterday (high yield), the 30-Years held theirs.
The uptick in economic activity and vaccine rollout have been tailwinds to the yield story, all of which is favorable for the U.S. Dollar. The Dollar Index is set to gain nearly 4% this quarter and 2.7% in March alone.
Of course, lockdowns in Europe and a less effective vaccine rollout have supported the Dollar and the spread between the U.S. and German 10-year is back to pre-pandemic levels. With some construction in Treasuries over the last 24 hours and the Euro testing a critical technical support above 1.17, are we nearing a turning point? Regardless, April and this next quarter will certainly prove to be an inflection point.
The first glance at March job creation this morning via the private ADP survey underwhelmed at 517,000 versus 550,000 expected, however, February’s growth was revised higher by 59,000. Expectations for Friday’s official Nonfarm Payroll report are becoming lofty, and some whispers are calling for a 1 million print. True expectations are set at 650,000 jobs gained in March.
That said, yesterday’s early strength in the Dollar and weakness in Treasuries seemed to be pricing in the potential of such a blowout read. Chicago PMI came due at 8:45 a.m. CT, Pending Home Sales followed at 9:00 a.m., and EIA Crude Oil inventory data was released at 9:30 a.m.
President Biden is expected to unveil a more than $2 trillion infrastructure plan this afternoon. Friction is mounting as the plan will be paid for by a corporate tax hike to 28% from 21% and an increase on the personal tax rate to 39.6% for households earning more than $400,000.
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