STATE OF THE MARKETS

Stocks mixed amid falling yields. US stocks closed mixed on Monday as investors fully digested last week jobs and wage data that showed the Fed’s rate hikes were starting to slow the economy. Nasdaq (+0.63%) and Russell (+0.17%) climbed higher while Dow (-0.34%) and S&P (-0.08%) closed in the red as yields continue to fall in response to demand in bonds. The shorter 2Y yields dropped to 4.19% while the 10Y benchmark dipped to 3.51% as the Dollar index broke the 103 barrier.

In the commodity markets, crude oil held steady above the $74/bl mark as China reopened borders to boost demand expectation. Falling Dollar continues to push gold higher past $1,880/oz as investors speculate that the Federal Reserve might have to ease at some point this year. Elsewhere, iron ore benefits from weaker Dollar and China reopening helped buoy the commodity above $117.40/tn.

In the FX space, King Dollar was sold-off across the board and alongside the Yen and Swiss in the medium term. Short term traders were keen to demand more Euro, Swiss and Sterling while dumping Kiwi, Yen and Aussie. Sentiments were mixed.

On Tuesday, markets expected to be in choppy waters as investors geared up for the consumer price index this Thursday. Earnings releases to watch include Albertsons (ACI), TD Synnex (SNX) and Bed Bath & Beyond (BBY) as well as small business optimism index and wholesale inventories.

OUR PICK – No New Pick

We stay on the sideline for now. Markets don’t seem to favor our setup for now as we were stopped out on Gold and NZD/USD. We stay on the sideline for now.