Chart of the Day – It’s (One of) the Most Wonderful Time of the Year
Fixed Income Weekly: 6/28/23
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed-income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation, and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1-year return profiles for a cross-section of the fixed income world.
In this week’s report, we discuss high yielding investment grade bonds.
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Bespoke’s Morning Lineup – 6/28/23 – Waiting on Powell
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“It is better to be roughly right than precisely wrong.” – John Maynard Keynes
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
Futures are mixed with a negative bias as the Nasdaq is leading the losses on reports that the Federal government will expand export curbs on certain semiconductors to China. Apart from China, most global equity markets have been rallying overnight in follow-through from yesterday’s US rally. Chinese stocks were more subdued and that comes after reports that industrial profits well 18.8% on a YTD basis as the government cited ‘insufficient demand’. Even after the PBoC intervened in markets overnight, the yuan was under pressure and fell to a seven-month low versus the dollar.
In the US, mortgage applications increased 3% last week, and just in time for the opening bell, Fed Chair Powell will speak at an ECB panel in Portugal at 9:30 AM.
We’ve discussed the rally in the Nasdaq a lot in recent days, and through the fourth to last trading day of the first half, it is up 29.5% which ranks as the third-best first-half performance through this point in the first half trailing only the 39.6% rally in 1983 and the 44.3% surge in 1975. If there’s one thing we’re confident of, it is that this year won’t overtake those two years between now and the end of the week. As wild as this year’s first half seems, it’s even crazier when you consider the fact that last year’s performance through this point in the year was the second worst in the Nasdaq’s history.
Given the strong gains so far, we were curious to see how the Nasdaq performed in the last three trading days of the first half after rallying 10% YTD. In the 24 prior years when the Nasdaq was up by double-digit percentages YTD heading into the last three trading days of the first half, its median rest of month performance was a gain of 0.89% with positive returns 79.2% of the time. That’s a pretty impressive three-day average, but compared to all years in the Nasdaq’s history, it’s actually right in line with the norm.
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The Closer – Analysts Got It Right, Not Started Surge, 5 Fed Finale – 6/27/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a look at analyst ratings and performance based on analyst ratings (page 1). We follow up with a dive into the latest new home sales data (pages 2 and 3) and housing affordability (page 4). We switch over to the latest manufacturing data with a final update of our Five Fed Manufacturing Composite for the month of June (pages 5-7) and durable goods (page 8). We close with a look at today’s 5 year note auction (page 9).
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Daily Sector Snapshot — 6/27/23
Bespoke Stock Scores — 6/27/23
Chart of the Day – The Long Stock Market Nightmare is Over
Bespoke’s Morning Lineup – 6/27/23 – Durable Goods Rally
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“College isn’t the place to go for ideas.” – Helen Keller
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
While stocks have traded heavily over the last several trading days, the weakness hasn’t been enough (yet) to move the Nasdaq out of overbought territory (one or more standard deviations above its 50-day moving average). As shown in the chart below, Monday was the 34th consecutive trading day that the Nasdaq closed at overbought levels.
That sounds like a long stretch, but for the Nasdaq it is not especially uncommon to trade at overbought levels for an extended period. Since the start of 2013, for example, there have been six other periods where it traded at overbought levels for at least six weeks, and the longest was over ten weeks back in early 2021. For the Nasdaq’s entire history, there have been even longer streaks. In 1997, for example, there were 69 straight days of overbought readings, and back in September 1980, the Nasdaq traded at overbought levels for 95 straight trading days- that’s almost five months!
Naturally, when you see such an extended streak of overbought readings, it’s natural to expect a pullback. After all, stocks can’t go up forever. But if all it took to anticipate a pullback was an extended streak of overbought readings, we’d all be rich. In the chart below, we show a chart of the Nasdaq since the start of 2013 and have included red dots to show each time it traded at overbought levels for 30 straight trading days. In a number of these periods, the market kept rallying with little in the way of a pullback, and the only period where a significant pullback was almost immediate was after the January 2021 streak. But even then, the streak lasted more than another month before the Nasdaq was no longer overbought again.
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The Closer – Last Week of Q2, Bitcoin 52-Week Highs, 2 Year Note Auction, Positioning – 6/26/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a look at the S&P 500’s performance in the final week of the second quarter (page 1) as well as a look at Bitcoin’s recent 52-week highs (page 2). We then check in on homebuilders and some recent housing data from Redfin (page 3) as well as an update of our Five Fed Manufacturing Composite (page 4). We then preview this week’s Treasury auctions including a recap of today’s 2 year note sale (pages 5 and 6). We finish with a look at the latest speculator positioning figures (pages 7-9).
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