The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
European concerns
European stocks fell early and then recovered during our premarket. Our futures traded slightly higher. Our yield curve rallied on the front end and sold off on the back. Crude was slightly higher. The mix of movements wasn’t too interesting. During the last couple of hours of European trading, Europe started to worry. Their stock market fell considerably and worries about credit spreads in France spilled over to over sovereign bond markets. This led to a fight to safety here and Treasury yields came down across the curve. Our stock market reacted positively to the decline in yields and rallied modestly. Whatever underlying issues spooked Europe, did not spook US stocks.
I don’t have conclusions to share with you at this point. The worry in Europe caused a flight to safety but not a risk-off behavior in US risk assets. That’s strange. I can wonder whether the fears are warranted or not. If they are, they will most surely hammer US stocks. If not, then our stock market saw things quite clearly today.
All we can do is watch and wait.
That said, outside of European concerns, we have nonfarm payrolls data (+88k est vs +162k prior) publishing tomorrow. With the Fed in a new hiking cycle, weakness in the labor market will be taken as a justification to lessen or halt the expected cycle. Strength will be cause for a reinforcement of expectations. I wonder how close the number will have to be to the consensus estimate to allow the market to trade calmly?
See you tomorrow.
-Mike
Visdom Market Commentary
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