Lending markets

Daily Markets: Treasury Yields Rise on Recent St. Louis Fed Bullard Comments on Interest Rates and Recession

The big picture today

Asia-Pacific stock indices ended today’s session mixed on various reactions to China’s pledge to support sectors of the economy affected by Covid, a still-strong dollar and anticipation of a an increasingly aggressive US Federal Reserve. China’s Shanghai Composite ended the day nearly flat, down 0.05%, while India’s Sensex and Hong Kong’s Hang Seng closed down 1.23% and 2.28%, respectively. Taiwan’s TAIEX rose 0.56%, Australia’s ASX All Ordinaries gained 0.58%, Japan’s Nikkei advanced 0.69% and Korea’s KOSPI led the way closing 0.95 higher. % over the day. By midday, European equity indices are down across the board, and US futures are pointing to a weak open market later this morning as Treasury yields and oil prices rise again.

Comments from St. Louis Fed President James Bullard, calling for interest rates to reach 3.5% by the end of the year, contributed to this latest rise in Treasury yields. Yesterday he reiterated his desire to see a 50 basis point hike at the next meeting in May, but also said that if “more than 50 basis points is not [his] base case” that he “wouldn’t rule it out”. Bullard played down short-term recession fears and sees the US economy growing above its long-term trend (around 2%) through 2022 and 2023 and sees unemployment tighten to less than 3%.

As investors and traders wonder how the Fed will navigate a soft landing, today we have a noticeable spike in March quarter earnings reports as the earnings season overtakes financials, offering a broader look at how the first quarter of 2022 has unfolded as well as the outlook for the current one. When we listen to corporate earnings conference calls and review the corresponding transcripts, we suspect that words such as “inflation”, “cost pressure”, “price escalation” and “supply chain” will be used quite frequently. . We’ll see how often those words are used and what that means for earnings expectations for the rest of 2022.

Data download

International economy

The World Bank lowered its forecast for annual global growth for 2022 by almost a percentage point, from 4.1% to 3.2%, citing the pressure that Russia’s invasion of Ukraine has put on the economy. ‘Mondial economy.

Domestical economy

8:30 a.m. ET will see the release of U.S. housing starts and building permits in March, which are expected to fall slightly to 1.748 million from the 1.769 million previously reported in February. Similar to yesterday’s housing market index, meeting expectations would put this figure below the January 2022 release, but aside from the post-2020 rebound in activity, it still represents a 10-year high .

Markets

The S&P 500 closed little changed yesterday as investors faced upward pressure from interest rates and oil prices as well as growth concerns attributed to the Fed, China’s COVID restrictions and to the situation between Ukraine and Russia. The Nasdaq Composite fell slightly, as did the Dow Jones Industrial Average, while the small-cap Russell 2000 fell 0.7%. Five of the 11 S&P sectors finished in the green. Energy is in the lead with an increase of 1.5%. Health care was the biggest decliner of the session, falling 1.1%. Including yesterday’s moves, here’s how the major market indicators are doing so far in 2022:

  • Dow Jones Industrial Average: -5.3%
  • S&P 500: -7.9%
  • Nasdaq compound: -14.8%
  • Russell 2000: -11.4%
  • Bitcoin (USD-BTC): -14.6%
  • Ether (ETH-USD): -19.0%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Halliburton (HAL), Hasbro (HAS), Johnson & Johnson (JNJ), Lockheed Martin (LMT) and Truist (TFC) are supposed to publish their quarterly results.

China Easter Airlines (CEA) announced that its passenger traffic volume in March (measured by revenue passenger kilometers) fell 69.32% year-on-year amid a sharp rise in Omicron cases in many Chinese provinces and cities.

Reports suggest Apollo Global Management (APO) plans to support a bid forTwitter (TWTR) by Elon Musk or another suitor.

Netgear (NTGR) issued a lower guidance for its March quarter with revenue of $202 million to $212 million from its previous guidance of $225 million to $240 million and consensus of $233.4 million. According to the company, the US consumer Wi-Fi market, which left 2021 about 15% above 2019 levels, declined in the first quarter of 2022, ending roughly flat at 2019 levels. NetGear’s factory component supply was severely disrupted in March due to COVID-induced lockdowns in Shenzhen, resulting in a significant lost opportunity to generate higher revenues for SMBs in the quarter.

Equity Lifestyle Properties (ELS) raised its full-year 2022 guidance after first-quarter results beat the consensus estimate, with base portfolio motorhome and marina rental revenue increasing 21.4% and revenue rental prices for prefabricated houses increased by 5.4%.

Taiwan Semiconductor Manufacturing (TSM) predicted that global semiconductor industry sales would grow 11% to 13% in 2022.

BMW (BMWYY) shared that it has resumed full production at its two factories in Shenyang in Liaoning after a nearly month-long shutdown as Robert Bosch GmbH (BSWQY), the world’s largest auto parts maker, said its components plant in Changchun, the provincial capital of Jilin, reopened last week. Reports say Shanghai officials are encouraging some 600 businesses to restart production after pandemic shutdowns confined a population of about 25 million to a virtual home or neighborhood isolation for weeks.

The Biden administration yesterday issued guidelines to federal agencies requiring equipment purchased for projects funded by the infrastructure spending program passed in 2021 to be produced in the United States, while setting out a process to waive requirements. in case there are not enough domestic producers or the material is too expensive. Potentially related steel producer inventories include US Steel (X), Cleveland-Cliffs (CLF), Nucor (NUE), Commercial Metals (CMC)and Steel Dynamics (STLD).

Power socket (PLUG) announced an agreement with Walmart (WMT) for an option to deliver up to 20 tons per day of liquid green hydrogen to power material handling forklifts at Walmart’s U.S. distribution and fulfillment centers

AppTech Payments (APCX) announced the acquisition of Hothand Inc., a patent-holding company that owns the intellectual property rights to a wide range of mobile credit/debit transaction technologies and search, locate, offer and payment fields mobiles.

IPOs

No company is expected to price its IPO offerings this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

IBM (IBM), Interactive Brokers (IBKR), and Netflix (NFLX) will be among the companies expected to release their latest quarterly results. Investors should be on the lookout for companies that announce their March quarter results in advance. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

Wednesday April 20

  • Germany: PPI – March
  • Euro zone: trade balance – February
  • US: Weekly MBA Mortgage Applications
  • United States: existing home sales – March
  • United States: EIA Weekly Crude Oil Inventories

Thursday April 21

  • Euro zone: Consumer price index – March
  • Eurozone: Consumer Confidence (Flash) – April
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: Philadelphia Fed Index – April
  • United States: Leading indicators – March
  • United States: EIA Weekly Natural Gas Inventories

friday april 22

  • Japan: CPI – March
  • Japan: Markit/JMMA PMI Manufacturing (preliminary) – April
  • United Kingdom: Retail sales – March
  • Eurozone: S&P Global Manufacturing & Services PMI (preliminary) – April
  • UK: CIPS Manufacturing & Services PMI (preliminary) – April
  • United States: S&P Global Manufacturing & Services PMI (preliminary) – April

Thought of the day

“Thinking is hard, that’s why most people judge.” ~Carl Jung

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.