Stocks sank at the open on weaker economic data, but quickly recovered on hopes of another Federal Reserve rate cut. The Dow is currently up 50 pts and the SPX is up .5%. Lower interest rate expectations immediately drove the real estate sector higher (+1%), and the financial sector lower (-.4%). Commodities are following recent trend, with gold up .6% this morning and WTI crude oil down 1% to $52.10/barrel. We’ve seen significant volatility in oil this year, with a wide trading range of $46-$66/barrel. In the face of increased US oil production and the trade war, geopolitical events—Iran-sponsored terrorist attacks—haven’t been able to prop up oil they way they used to. Bonds are trading higher again this morning. The 10-year US Treasury yield fell back to 1.54%. Believe it or not, the yield curve has steepened. That is, the difference between the 10-year and 2-year Treasury yields has risen to +15 basis points, from -5 basis points five weeks ago. Steepening has been caused by falling short-term interest rates (i.e. Fed rate cuts).
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