North Korea did not respond last night to Trump’s second round of fire and fury comments, and stock and bond prices were little changed before the CPI report. The CPI report is now out, and headline CPI and the core both rose by .1%. These are .1% less than expected, but the core year-over-year rate was unchanged at 1.7%. While a slightly favorable report for bonds, it did not move bond prices. The 10-year yield was 2.19% before the number is still 2.19%. Rates are just too low for bonds to rally on any economic data.
Locked and Loaded
While North Korea did not respond to Trump yesterday, Trump is egging them on today. In an early morning tweet (4:33 a.m. PDT), Trump said U.S. military plans were “locked and loaded” should North Korea choose to act unwisely. “Fire and fury” and now “locked and loaded.” Did not know Trump was such a fan of alliteration. So far at least traders aren’t responding to that, but this is pre-opening trading.
Economic reports calendar
Next week’s economic calendar includes Retail Sales, Industrial Production, and Housing Starts. These are all relevant numbers, but the North Korean situation will likely continue to eclipse everything else.
Where the markets close today will be interesting. Big-time weekend risk is back. Bonds should see more buying, but yields are already so low that weekend “insurance” is very expensive. Stocks could fall again, but the selloff yesterday was pretty steep. How much is the sabre rattling worth? So far this is all silly salvos.
Opening market reads
- The 2-year is 1.32%
- The 5-year is 1.76%
- The 10-year is up 2/32s at 2.19%
- The 30-year bond is off 1/32 at 2.775%