April 25, 2019 Bonds Tread Water While Stocks Sink by Lester Murray

Renewed concerns over global economic vitality is being blamed for today's rather significant sell-off in domestic equity markets. The picture is clouded somewhat by a blizzard of quarterly earnings reports from all the big corporate players; some better than others. The behavior of bond prices is pretty low key by comparison with only the very long end showing much price slippage. Yields are within a basis-point or two from where they spent most of yesterday.

Data-wise, Initial Jobless Claims came in at 230k for last week and that was higher than expected and the highest since late in 2017. Analysts blame the extended Easter weekend for that. Okay. Preliminary capex numbers look much better. The Census Bureau reported this morning that Durable Goods orders rose by a much higher-than-expected 2.7% in March. The other good news was that Non-defense Orders (excluding Aircraft) rise by 1.3%; also better than expected. But, in what's becoming a pattern, a regional manufacturing report from the Kansas City Fed showed some deterioration. It's Index of Manufacturing Activity fell to 5 from its previous value of 10; it was only "supposed" to fall to 8. The Treasury is selling $32B of seven-year Notes today and Q1 GDP comes out tomorrow. The consensus expectation of 2.2% has been outdone by the Atlanta Fed's model's forecast of 2.7%.