Today’s Trading Activity – Stocks Fell and the Treasury Curve Flattened…Rinse and Repeat
Nov 15, 2017
Wednesday’s stock trading pattern looked a lot like the path taken during Tuesday’s session. Stocks sold off early after another bout of global trepidation had again pushed futures lower ahead of the U.S. session. The S&P dropped as much as 0.83% in the first 30 minutes of trading before quickly reversing to its highs of the day in mid-morning trading. There was little net movement over the next several hours before a report that a Republican Senator opposed the current tax plan pushed the index back lower in the final hour of trading. On the day, the S&P fell 0.55% in its biggest single-day drop since September 5 (the day after North Korea successfully tested a hydrogen bomb). The Dow fell a steeper 0.59% and the Nasdaq dropped 0.47%. Treasury yields were also lower before solid U.S. CPI and retail sales data and a quick stock recovery helped briefly boost them off their daily lows. However, that bounce disappeared as quickly as it came and yields spent the remainder of the day drifting back towards their overnight lows. The 2-year yield dropped 0.4 bps while the 10-year yield settled down 5.0 bps at 2.32%. The daily flattening moved the spread between the two yields down 4.5 bps to 63.5 bps; the flattening trend continues across the curve.