Bonds & Stocks
Stocks trimmed losses after hitting a key support level, with traders awaiting earnings from a handful of big tech companies. Oil and gold retreated as Israel appeared to hold off on a broader ground invasion in Gaza. The S&P 500 dropped for a fifth straight session, heading toward its longest losing streak this year. The gauge briefly breached its key 4,200 mark — which represents a 50% retracement of the rally off the lows seen in the banking turmoil in March.
Economy
The most important recent macroeconomic development has to be the run up in longer-dated Treasury yields. Both Fed Chair Jerome Powell and Bloomberg Economics see a higher term premium as the key driver of the increase, which we estimate could substitute for about 50 basis points of Fed rate hikes. In his latest remarks, Powell didn’t close the door on further rate hikes, saying that signs of strength in the economy “could warrant further tightening of monetary policy.”
World
Israel’s currency and bonds extended their declines even after the Bank of Israel kept its policy interest rate unchanged as investors worried over the war’s hit on the economy. The shekel declined as much as 0.15% to 4.0635 per dollar, extending its run of losses to an 11th day, the longest since 1984. Ten-year dollar bonds tumbled for an eighth successive day, while credit default swaps surged to the highest level in 11 years.