Treasury yields are lower this morning. The 2-yr note yield is down nine basis points to 4.87% and the 10-yr note yield is down eight basis points to 4.50. That is a good thing for stocks — or at least one would have reason to think that would be the case since rising yields this week have been a headwind for stocks.<\/p>\n\n\n\n
Equity futures, however, are pointing to a lower open for the major indices.<\/p>\n\n\n\n
Currently, the S&P 500 futures are down 42 points and are trading 0.8% below fair value, the Nasdaq 100 futures are down 182 points and are trading 1.0% below fair value, and the Dow Jones Industrial Average futures are down 270 points and are trading 0.8% below fair value.<\/p>\n\n\n\n
There appears to be a two-pronged disconnect for stocks and bonds at the moment. First, there are global growth concerns following some weaker-than-expected trade data out of China for March that featured a year-over-year decline in both exports (-7.5%) and imports (-1.9%). Secondly, there is geopolitical angst brewing amid press reports that suggest Iran could soon launch an attack on Israel.<\/p>\n\n\n\n
The latter concern is being corroborated with a 1.7% jump in WTI crude futures to $86.50 per barrel, a 10.2% increase in the CBOE Volatility Index to 16.43, and a 0.7% increase in the U.S. Dollar Index to 106.00. Of course, the rise in Treasury yields this week, coupled with the pushout of rate cut expectations, is dollar supportive in its own right based on interest rate differentials with other developed markets.<\/p>\n\n\n\n
Geopolitical worries have triggered some risk aversion, but worries about a growth slowdown have presumably triggered some residual angst about corporate earnings not living up to expectations.<\/p>\n\n\n\n