Economist's Insights

Today’s Trading – Equity Waters Calm, 2s/10s Spread Flattens by the Second Most Since 2016:

Feb 13, 2018

Tuesday’s equity trading was a tale of two halves as first-half losses gave way to after-lunch gains which helped nudge the major U.S. indices higher for a third consecutive session. For all of Tuesday, the Dow added 39 points, or 0.16%, while the S&P rose 7 points, or 0.26%, and the Nasdaq advanced 32 points, or 0.5%. Despite the intraday ups and downs, the Dow and S&P both traded within their tightest daily range since the recent turmoil started on February 2. The S&P 500 rose on relatively broad sector participation as 9 of 11 of the Level 1 groupings managed daily gains. Energy companies fared the worst, falling even as a weakening Dollar helped buoy oil prices. However, a larger-than-expected build in U.S. inventories knocked crude prices in after-hours trading. The Dollar leveled off in U.S. trading but a negative daily result was well cemented thanks to a steep overnight decline. Even with equities stabilized, longer Treasury yields moved lower with the 10-year yield dropping roughly 2.9 bps to 2.83%. The 2-year yield, however, rose 2.9 bps to 2.10%, flattening the curve between 2s and 10s by the second most in a single day since 2016.