US stocks struggled to hold onto early gains overnight as US bond yields edged ever higher but encouragingly the NASDAQ still closed positive even as US 2-year yields closed above 5%. Similar to Australia yesterday the Energy Sector was worst on the ground slipping -1%.
- No change, we believe tech stocks are holding up well with bond yields edging ever higher, although for the NASDAQ to hit our 13,500 target area we are probably going to need yields to stop their ascent.
- As a result, we believe growth stocks will outperform value over the coming months with “higher for longer” interest rates now largely built into the market.
MM remains bullish on the NASDAQ targeting the 13,500 area
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We have looked at copper prices a few times over the last few months but a quick glance at the base metals index, in general, illustrates the weakness they’ve experienced post their panic highs after Russia invaded Ukraine. The widening of the US 2 & 10-year bond yield illustrates how US markets are already pricing in a recession with the main question being for how long & how deep. Interestingly, some quantitative analysis recently conducted by Bloomberg shows a significant increase in the use of the phrase ‘ soft landing’ by CEO’s, a scenario that is clearly being priced into bond markets, but not so commodity markets.
- Base metal prices are factoring in a US recession as the Fed pushes interest rates higher to fight inflation but importantly markets look ahead at least 6 months.
MM is looking for a swing low in base metal prices
