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Market Brief – Tuesday 3/12/19

U.S. equities are once again making a run at the coveted 2,800 price level on the S&P 500, which the Bulls are hoping will be broken and the Bears are hoping will continue to hold. Trading volumes are higher in early trading, as sellers are taking advantage of the market is at a price level where they want to cash in. Treasury yields continue to ignore the broad stock market as 10-year Treasury yields once again are flirting with breaking below 2.62%

The Consumer Price Index fell to 1.5%, the lowest level since 2016, while Core CPI, or CPI less food and energy, is at 2.1%, its lowest level since February 2018. While most experts have predicted and bet on rising inflation, a decelerating money supply that is running at half its normal growth rate cannot create lead to high inflation. Low inflation leads to lower bond yields and keeps the Fed on the sidelines

Today’s reopening of last month’s 10-year Treasury auction saw strong foreign demand, who picked up 69.4% of the auction, leaving direct bidders with 9.1% and dealers with 21.5%. Yields dropped across the board after the auction.

Less than an hour following today’s 10-year Treasury auction, 10-year yields broke support at 2.62% and closed at 2.6%, which is setting up a short squeeze. Thirty-year Treasury yields closed below 3% and are soon to retest their critical support level at 2.96%.

The API posted crude inventories as Crude -2.6M, Cushing -1.1M, Gasoline -5.8M, and Distillates +195k. Crude oil Bulls will be hoping these numbers hold as the EIA reports the official levels tomorrow morning.

Famed bond guru Jeffery Gundlach of DoubleLine Funds stated, “we are in a Bear market” and that the S&P 500 will take out its December lows in 2019, during his most recent live webcast.