Market Brief – Tuesday 10/9/18

Outside of the tech-heavy Nasdaq-100, most sectors closed in the red today. Asian stocks were down big and European stocks were up slightly.

The S&P 500 bounced off its February highs and managed to close just over its 50-day moving average. The Nasdaq-100 bounced off its 100-day moving average and the Russell 2000 bounced off its 200-day moving average. All major indices fell going into the closing bell.

Treasury yields fell as buyers came in over the past few days to mop up the heavy selling. I expect yields to fall and bond prices to rally. Treasuries are heavily oversold and there are no indications inflation is about to burst higher.

This week $230 billion of new debt is being auctioned off by the U.S. Treasury. Treasury bears believe higher deficits should drive yields higher, but if that were true, yields should already be double-digits. After all, the United States is the largest debtor nation in the history of the world.

President Trump said today that he doesn’t like what the Fed is doing, although he is going to stay out of their business. He is a self-proclaimed fan of low-interest rates and wishes the Fed would back off. Clearly, President Trump is aware the Fed is going to tighten the economy into a recession. President Trump’s remarks should be seen as the foundation for blaming the Fed for the next recession, which will be accurate.

Physical gold was unable to make much of a move higher today. The large gold and silver miners continue to see a wave of continued selling as both took losses today. The mining bears appear to have the upper hand for the moment. Once all the sellers have exhausted themselves, the bulls will have their day.

Tomorrow all eyes will be on the API oil inventory data, the 3-year Treasury auction and the reopening of last months 10-year Treasury auction.