Daily Markets: Bond Yields Continue Their Slide

A man looks at stock quotes in Beijing
Credit: Jason Lee / Reuters

Today’s Big Picture

Equity indices in Asia ended the day mostly higher led by the 1% move in China’s Shanghai Composite following better than expected economic data. The Hong Kong Hang Seng finished up 0.8% while South Korea’s Kospi gained 0.7% and Japan’s Nikkei fell 1.2%. By mid-day trading, equity indices in Europe were down across the board and U.S. futures point to a mixed market open later this morning.

Weighing on equity futures is the continued rollover in bond yields that is adding to questions surrounding growth prospects for GDP and earnings in the coming quarters. Those prospects are already on some shaky ground due to the spread in the COVID-19 delta variant. At the last count, the number of new U.S. COVID-19 cases per day has doubled over the past three weeks to 26,000, driven by this highly contagious variant.

As the pace of quarterly earnings picks up today, investors will be picking through the latest weekly jobless claims report, as well as Federal Reserve Chairman Powell’s appearance in front of the Senate Committee on Banking, Housing and Urban Affairs at 9:30 AM ET this morning. Yesterday, when asked about inflationary pressures, Powell told the House Financial Services Committee the U.S. economy is “a ways off” from where it needs to be for the Fed to tighten its easy monetary policy but “if expectations do move up in a way that is troubling, which we would say is materially above and for a persistent amount of time, we would be concerned and we would react to that." This is where we point out that despite its intentions, the Fed has a history of being behind the curve. Hopefully, this time when the time comes, it will be different.

Data Download

International Economy

China’s GDP in Q2 rose 7.9% YoY, slower than the expected 8.1% increase, and 1.3% QoQ after rising 18.3% YoY and a downwardly revised 0.4% QoQ respectively in Q1. Industrial Production rose more than the expected 7.8% YoY at 8.3% YoY in June from 8.8% in May. Retail Sales in the nation rose 12.1% YoY in June, slowing from the 12.4% pace in May, but above the expected decline to 11.0%. The country’s Unemployment Rate remained at 5.0% in June.

The UK’s Unemployment Rate edged up to 4.8% in May from 4.7% in April and the consensus forecast that called for 4.7%.

Italy’s Inflation Rate for June was unchanged with May’s 1.3% reading, matching expectations.

Domestic Economy

Yesterday’s Producer Price Index for June came in stronger than expected at 1.0% MoM, accelerating from May’s 0.8%, from which it was expected to decline to 0.6%.

Federal Reserve Chair Powell took some heat from a testy Congress yesterday over concerns that the Fed is not responding sufficiently to inflationary pressures. He told Congress, “I know people are very worried about inflation… We hear that loud and clear from everybody . . . it is really going through the economy and through every business,” but continued to assert his assessment that the pressures are transitory and will fade.

The Energy Information Administration reported yesterday that crude inventories fell by 7.9 million barrels for the week ended July 9, marking an eighth weekly decline in a row.

Today brings the usual weekly jobless claims, NY Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production, and Import & Export Prices.


The S&P 500 nudged ahead yesterday, adding 0.1%, as did the Dow Jones Industrial Average. By comparison, the Nasdaq Composite closed 0.2% lower and the small-cap heavy Russell 2000 dropped 1.6%.

Stocks to Watch

Before today’s U.S. equity markets begin trading, investors will be picking over the latest quarterly results from BNY Mellon (BK), Cintas (CTAS), Morgan Stanley (MS), Trust (TFC), and UnitedHealth (UNH) among others.

Taiwan Semiconductor (TSM) reported slightly lighter than expected June quarter results for both its top and bottom lines. Despite the modest top-line miss, revenue for the quarter rose 28% YoY. During the quarter, shipments of 5-nanometer accounted for 18% of total wafer revenue while 7-nanometer shipments accounted for 31%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 49% of total wafer revenue. The company issued upside guidance for the current quarter with revenue in the range of $14.6-14.9 billion vs. the $13.3 billion consensus, calling out strength in the smartphone, HPC, IoT, and Automotive-related applications.

With its hiring former Electronic Arts (EA) and Facebook (FB) executive Mike Verdu, Netflix (NFLX) is planning a foray into video games. Verdu was previously Facebook’s vice president in charge of working with developers to bring games and other content to Oculus virtual-reality headsets. Reports indicate the company is looking to offer video games on its streaming platform within the next year.

American International Group (AIG) and Blackstone (BX) reached a definitive agreement for Blackstone to acquire a 9.9% equity stake in AIG's Life & Retirement business for $2.2 billion in an all-cash transaction. As part of this agreement, AIG also agreed to enter into a long-term strategic asset management relationship with Blackstone to manage an initial $50 billion of Life & Retirement's existing investment portfolio upon closing of the equity investment, with that amount increasing to $92.5 billion over the next six years.

Apple’s (AAPL) manufacturing partner Foxconn (HNHAF) disclosed it will invest in Singapore-based SES, a maker of Li-metal batteries, a move in line with its ambitious deployments in the electric vehicle sector.

IBM (IBM) announced an agreement to acquire Bluetab Solutions Group SL to extend its portfolio of data and hybrid cloud consulting services.

Woven Planet, a subsidiary of Toyota Motor (TM) acquired CARMERA Inc., which specializes in sophisticated road-mapping updates made cheaper and faster by using crowdsourced information obtained in real-time from millions of net-connected Toyota vehicles.

Walmart (WMT) announced a new collaboration with the Justice brand, bringing its popular tween assortment to even more girls just in time for back to school.

Honeywell (HON) will replace Alexion Pharmaceuticals (ALXN) in the Nasdaq-100 Index, the Nasdaq-100 Equal Weighted Index, and the Nasdaq-100 Ex-Technology Index on July 21.

Sight Sciences (SGHT) priced its 10 million share IPO at $24 per share.

Women’s diagnostic health company Sera Prognostics (SERA) priced its 4.7 million share IPO at $16 per share.

The Mark Wahlberg-backed fitness-studio chain F45 Training Holdings (FXLV) priced its IPO at $16 per share.

After today’s market close, Alcoa (AA) and American Outdoor Brands (AOUT) are among the handful of companies expected to report their quarterly results, but we’ll be on the watch for positive as well as negative earnings pre-announcements. Those looking to get a jump on earnings reports in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

  • July 16: Retail Sales, Michigan Consumer Sentiment, Business Inventories, Net Capital Flows, Foreign Bond Investment
  • July 19: NAHB Housing Market Index
  • July 20: Building Permits, Housing Starts, API Crude Oil stocks
  • July 21: EIA Energy stocks
  • July 22: Weekly jobless claims, Chicago Fed National Activity Index, Existing Home Sales
  • July 23: Markit Manufacturing PMI (flash), Markit Services PMI (flash)

Thought for the Day

“Some of the best memories are made in flip flops.” – Kellie Elmore


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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