This is getting out of hand
The one-month US Treasury yield is 3.67%, down 0.617%. In bond speak, that is a decline of '62 basis points.' That is a monumentally large move lower in interest rates. This is significantly below the US Federal Reserve Bank Fed Funds Rate, or Policy Rate.
The one-year US Treasury yield is down 0.442% to 4.079%, or down 44 basis points. This is another significant move lower in interest rates.
The ten-year US Treasury note is yielding 3.407%, down 0.283% in yield, or down 28 basis points on the day. This is another significant move for an important, benchmark interest rate. This rate is used to set US residential mortgage rates.
There is a big meeting at the Federal Reserve Bank where they set interest rates and determine the size of the asset register at the Fed. These market moves take interest rates back down to below the Fed policy rate, and in a way undo the work of the last year.
We have seen high inflation in the US, with the CPI-U up 6% over the past year and a strong rise in January and February. On the other hand, the Producer Price Index was down slightly in February after a rough rise in January.
And the anomaly in the system is that while interest rates are declining, which is bullish for stocks, the stock market is declining. Bonds and stocks declining together is like cats and dogs living together. It rarely happens, and normally indicates something is wrong.
We made a detailed video today about the markets, and here were our take-aways. This should provide more context to you.
1. Interest rates are falling aggressively. Large moves to make bonds more valuable, and interest rates to fall.
2. Energy and industrials / hard side of the economy are down.
3. Financials are still falling, almost down 3%
4. The US Dollar is stronger, despite falling UST interest yields.
The world is doing worse?
The US is a safe haven?
5. The Chicago Quantum Net Score would be (most likely, and on an ad-hoc basis) outperforming the S&P 500 today, on this risk-off day.
6. Bitcoin is up to $24,700, and it was recently at $20k, so it is up 25%.
7. European weakness in their banking sector weakens the Euro / USD exchange rate.
Mixed overall stock results, with significant weakness in large, industrial, energy, financial and to a lesser extent, technology stocks. This is when you get your shopping list dusted off.
CQNS best answer is 65 stocks to have a better risk-return tradeoff than the S&P 500 Equity Index ETF. This is a very large answer, and reflects a need to diversify holdings. The individual stock picking approach is not in alignment with our Chicago Quantum Net Score model.
For tomorrow...if interest rates stay low tonight, we will run or model with a lower risk free rate, which increases the relative benefit of equities. Let's see what happens.
Good luck to all! GLTA!
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Full-time investment advisor and student of the financial markets.