The major stock indexes opened strong, with the exception of the , which is still leading by far YTD, enough so that the Russell now leads the LTM (+16.4% vs 15.7%), albeit a much smaller index, primarily on the outperformance of microcaps (+30% LTM). Utilities lead today, though it remains in the red YTD, followed by tech, which has moved back into the green YTD, helped by having 4 of the Magnificent 7 reporting earnings this week.
The concerning situation in Japan, where their interest rates have been soaring, putting upward pressure on global yields, is being dealt with by a currency intervention by the US, which is costing the , which has fallen to 96.7, the lowest in 8 months.
The weaker dollar has added fuel to the roaring fire of precious metal prices, where is up another 12% on the day, to above $113/oz, now up over 45% in a month. has rolled past $5K, now $5,130, up over 12% in a month. Energy prices are mixed, with hit $6/mcf on the heels of the massive winter storm, though the future price for March settlement has fallen to $3.71. has dropped back to $60.58/bbl, up 5.8% in the month, and gasoline is flat at $1.83/gal but still up over 7% in a month.
Interest rates are modestly lower with the down 1bps to 3.59%, and the down 3bps to 4.21%. International yields are lower as Japanese yields have fallen in response to the currency intervention. US corporate credit spreads remain historically tight.
A new concern on the table is the possible shutdown of the US government at the end of the month. The House has passed a $1.2T funding package, but if the Senate doesn’t approve it by the end of the week, there will be another shutdown. It needs 60 Senate votes to avoid a filibuster. Senate Democrats are against the proposed Dept Homeland Security funding, asking for reforms in DHS. The big difficulty for investors in a shutdown is the blackout of economic data, where we are still getting delayed data from the record 43-day shutdown that ended last November.
The market looks forward to Jerome Powell’s comments this Wednesday, with nearly zero expectation of a change in the Fed Funds rate. Likewise, the earnings for , , and come Wednesday, and on Thursday. Next week, we get on Wednesday and on Thursday. isn’t until Feb 25th, along with dozens of other major companies during the next 2 weeks. The trend remains positive.
