That appears to be what markets are doing re/ future rate cut expectations as treasuries extended their selloff and equities continued to decline as traders re-priced the possibility of fewer rate cuts from the Fed this year. 10 Yr yields rose to a 4 month high (~4.37%) when data showed an expansion in US manufacturing for the first time since Sep '22. This print is forcing the hand of traders to re-forecast and dial back bets on Fed policy easing as the odds of a June cut briefly slipped below 50% yesterday. Jerome Powell is set to speak once more on Wednesday this week and we expect him to stand firm on his message that more evidence is needed before there is a thought of cutting rates.
Futures are currently down about -6.5% in premarket trading as 1Q delivery numbers missed estimates (Deliveries 386,810 vs Estimated 449,080). Their commentary suggests that the decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict, as well as an arson attack at its Berlin factory.
Apple’s stock is coming off of its poorest quarterly performance, relative to the S&P 500, in over a decade as traders are looking for signs that the torment is over. The stock has dropped roughly -12% since the start of the year, a slide that has erased more than $300 b-b-billion in market value this year. The drop was spurred by declining sales in China, scrutiny of its App store, and concern of its long-term growth outlook. Despite some of these challenges, though, Apple’s massive buyback plans mean its shares may continue to have upside potential in the long-term, according to some.
World Central Kitchen, a US-based group that has helped oversee the delivery of food aid over the years to those in need during wartime or disaster situations across the world, reported that 7 aid workers were killed in an airstrike by the Israeli military in Gaza. White House National Security Council spokesperson Adrienne Watson is calling on Israel to investigate quickly.
Bloomberg reports that the Congressional Budget Office is warning that the US federal government’s debt is on a path from 97% of GDP last year to 116% by 2034, topping out the record set during World War II. The actual outlook is likely worse, according to Bloomberg, noting that “Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook. In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path — defined as an increase over the next decade.”
The WSJ notes that state government officials from Texas, Indiana, Ohio, and New York are concerned that traffic will snarl across the expected path of the solar eclipse on April 8th. The eclipse is expected to draw an unprecedented amount of “eclipse tourists” along the 115-mile wide path of totality—when the moon entirely blocks the sun.
Nippon Steel pledges “No Layoffs Before 2026,” as a formal commitment on spending and jobs to the Unites Steelworkers union as it looks to build support for its $14.1 billion acquisition of United States Steel Corp.
As stocks and bonds are taking a massive hit this morning, the Global Economic Surprise Index (which measures the difference between actual releases and analyst expectations) continues to move up and up as there has been seemingly constant flare-ups in geopolitical risks in recent news.
