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“Learn to take losses. The most important thing in making money is not letting your losses get out of hand.” – Marty Schwartz
After yesterday’s shockingly high headline readings in CPI, it was a tentative picture in markets ahead of the April PPI. While consensus expectations called for a m/m increase of 0.3% at the headline level and an increase of 0.4% on a core basis, the actual numbers once again came in higher than expected although not to the same degree as Wednesday’s CPI (0.6% headline, 0.7% core). Like the movies, the sequel is never as exciting as the original. PPI wasn’t the only report on the calendar this morning, though. Jobless claims came in a bit lower than expected on an initial basis and a bit higher on a continuing basis.
Futures were indicated flat to higher into the report with the Nasdaq leading the way, but they are also off overnight highs as well. Commodities are trading heavy this morning, while bitcoin is plunging following a tweet by Elon Musk that Tesla would no longer accept payment in bitcoin until it was mined in more environmentally friendly ways.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of overnight earnings reports and economic data, a look at some key commodities, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Over the last three trading days, the Nasdaq is down over 5%, and while that is a steep decline for such a short period of time, it’s hardly unprecedented in the Nasdaq’s history. What is unique about the current decline is just how steep the losses have been in the US Treasury market. While higher rates are bad for growth stocks, normally, when you see a decline so large in the equity market, bonds provide a cushion. Along with the 5%+ decline in the Nasdaq, long-term US Treasuries are also down over 2%. Going back to 1987, there have only been eight other three-day periods where the Nasdaq was down over 5% and long-term US Treasuries dropped more than 2% (highlighted in the chart below).