Working from the Senate
Dow futures are up 80 points in pre-opening trading after yesterday’s win than wasn’t a win. Bond prices are slightly lower after a day that saw bond prices recover from early losses to close almost unchanged.
While the Dow closed with a gain of 58 points, it fell like more of a loss. The Dow reached an early high of +303 points, but traders sold into the market as they realized they had gotten all they could from the Senate rally. Tech stock holders could only wish they had given back most of a rally.
The NASDAQ closed down 1% yesterday as the Senate bill had a nasty surprise buried in the late-night scribbles. The Senate threw in an alternative minimum tax on corporations, and the way it works will negatively impact the tech sector the most. That will likely be taken out in conference, but it gave traders an excuse to take more profits. NASDAQ futures are pointing toward a lower opening again this morning.
Bond market snapshot
The bond market’s unchanged close yesterday felt more like a win than a tie. The bond market came back from steep early losses simply on the long-held belief by the bulls that trouble, in some form, is just around the corner. That’s their story and their sticking to it. It doesn’t to matter to bond bulls that the economy’s performance for years has far exceeded their dire forecasts, and the tax bill will get done and boost next year’s. The only thing that will break the bull crowd’s stranglehold on the market is real inflation, and that is not in the immediate future.
Bond prices are lower this morning, but don’t be surprised to see bond bulls bring them back.
Economic reports calendar
The Non-manufacturing ISM index will be released later today. I would expect a dull trading day unless some news breaks from Washington.
Opening market reads
- The 2-year is 1.825%
- The 5-year is 2.16%
- The 10-year is down 6/32s to yield 2.395%
- The 30-year bond is down 12/32s to yield 2.78%