Coffee With Greta: Stocks Bounce, Bond Yields Dip


DJIA Futures: +331 (+1.1%)

SPX Futures: +53 (+1.4%)

NASDAQ Futures: +191 (+1.7%)

Good morning friends!

Futures are up as the market bounces back from a severe sell-off. 

Let’s get right to it!

Chicago Fed President Nervous About Going Too Far

Chicago Fed President Charles Evans told CNBC today that he’s a bit nervous about going too far, too fast on interest rate hikes. 

He said he’s still “cautiously optimistic” the U.S. can avoid a recession through the Fed’s battle against inflation. 

His comments come after the Boston Fed President, Atlanta Fed President, and Cleveland Fed President all spoke at different events on Monday. 

They all signaled the Fed will continue prioritizing aggressive action on inflation even if it causes pain for the economy. 

Evans said he is “a little nervous” the Fed is not waiting long enough to assess the real impact of its interest rate hikes so far. 

He said, “There are lags in monetary policy and we have moved expeditiously. We have done three 75 basis point increases in a row and there is a talk of more to get to that 4.25% to 4.5% by the end of the year, you’re not leaving much time to sort of look at each monthly release.”

Treasury Yields Take a Breather

While stocks are bouncing higher, U.S. Treasury yields are pulling back.

The 2-year yield is down 6 basis points today to 4.24%, after hitting a fresh 15-year record on Monday. 

The 10-year yield is down 9 basis points to 3.83%, after soaring to the highest level since 2010 on Monday.

Durable Goods Orders Dip

U.S. durable goods orders fell less than expected in August, dipping for the second straight month. 

The Census Bureau reported durable goods orders fell 0.2% last month to $272.7 billion. 

That was smaller than economists’ expectations for a 0.5% decline. 

Durable goods are products manufactured in the U.S. that are meant to last three years or more. 

Transportation equipment led the overall decline, dropping 1.1% to $92 billion. 

Excluding transportation, new orders rose 0.2%. 

Excluding defense, new orders fell 0.9%. 

Oil Bounces From 9-Month Low

Oil prices are bouncing back after hitting a 9-month low on Monday. 

West Texas Intermediate crude futures are up 1.6% to just under $78 bbl while Brent crude futures are up 1.8% to over $85.50 bbl.

The jump comes as oil production in the Gulf of Mexico has been shutdown as Hurricane Ian approaches Florida. 

Prices are also getting support from expectations that OPEC+ will cut its supply targets when it meets next week. 

Coming Up: Home Price Data, New Home Sales, Consumer Confidence

The upcoming economic data of the day is focused on the slowing U.S. housing market. 

The S&P Case-Shiller U.S. home price index and the FHFA U.S. home price index for July will both be out just after 9:00 a.m. ET. 

The pace of home price growth has slowed dramatically in recent weeks as mortgage rates surge, putting pressure on 

The Census Bureau will then report August new home sales at 10:00 a.m. ET. 

That’s expected to show the pace of new home sales slowed to 500,000 units last month from 511,000 in July.

The Conference Board releases its September consumer confidence index at 10:00 a.m. ET. 

That survey is expected to show an improvement to 104.5 from 103.2. 

In Case You Missed It

  • The Dow Jones became the last major index to officially close in a bear market on Monday. The index closed 1.1% lower at 29,260.81, down more than 20% from its most recent record high. It’s the first bear market for the blue-chip index since March 2020. The S&P 500 meantime, notched a new closing low for the year dropping more than 1% to close at 3,655.04. 

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