Good morning,
Debasement is likely the title of every weekly commentary and newsletter this week, and frankly, I wish I had something more original to cover.
But, it’s important, and I don’t.
There were really only two big stories last week: the Treasury intervention and the Moderna/Merck news that sent healthcare stocks soaring (even more than they already were).
We covered healthcare extensively in Stock Trends and will touch on it more today (TLDR: Still bullish), but the debasement trade deserves some attention.
A timely question for tomorrow’s Mailtime report that I’ll answer here was:
How are you viewing the recent Treasury announcement? Will the current trend in yields prevail, or is there enough behind this to be a catalyst for lower rates?
My answer is simple. I don’t view the Treasury announcement as anything because I only look at the charts. If the trend changes, I’ll change my mind, but despite the intervention, the 30-year yield was actually up 1 basis point last week.
And as much as people want to make this a US debt story, this is a global move higher in interest rates. And it’s being confirmed by the equity market.
So the play for fixed income remains simple: Stay out, or stay in cash/ultra-short duration proxies and clip the coupons.
As for what it does change, last week’s announcement definitely fueled some major breakouts in gold, crypto, materials, and energy that, importantly, were setting up prior to the surprise Treasury announcement.
We’ll look at the charts for all of those and more in today’s Playbook and cover:
Key levels to watch on semiconductors and Nvidia
Last week’s biggest moves and how to think about them going forward
Major index technicals
ETF movers
International opportunities
Rates and credit spreads
and more!
