Bloomberg, United States, Federal Reserve discussed on Bloomberg Surveillance
Up twenty four thirty seconds. The yield two point four four percents. West Texas intermediate crude oil is down over two percent at fifty seventy eight a barrel. Comex gold's up a half a percent at thirteen thousand nine hundred eighty announced the dollar-yen is one ten fourteen the euro dollar thirteen sixty British pound to dollar thirty one eighty four. That's a Bloomberg business flash. Bloomberg markets is underway with Lisa and Paul Greg. Thank you so much kind of a weak opening here to the Friday trading here. We've got the three US indices off about point nine to one percent. So very weak up. And let's see where the action is across the board in equities. And we welcome Michael Regan, America's team leader for Bloomberg markets live blog, Michael Paul as you mentioned earlier, obviously, this disappointing German manufacturing PM. Data really set the tone, and it looked like one of the at the beginning of the futures trading. Look like, maybe it'd be one of those days where there's a clouds over Europe sort of lift as the US session goes on. But it certainly doesn't seem like that's the case. Now, the US market manufacturing PM, I came out. In the meantime, that also missed the services PM I missed and there's one report that's kind of gone under the radar that I would point out too, and that's semiconductor billings, the semi billings report showed that a drop of twenty three percent year over year in February. So if you look at the major leaders on the downside in the stock market a lot of financials financials is a group the S and P five hundred down about two point four percent. They've really gotten hammered this week even during yesterday's sort of giddy rally. The KYW Bank indexes off almost nine percent since the close on Monday. Obviously the those flattening and invert. In some cases, yield curves are playing wreaking havoc on the banks there. But also, the semiconductor stocks are getting hit Western Digital advance micro. You name it all sort of under pressure as are most industries of the eleven industries. It's really those defensive you'll proxy stocks like utilities consumer Staples. And real estate are the only ones up everything else is down a pretty solidly in the red again, led by financials energy commodity industrials. I gotta say the tone is really being set by the bond market today. When you talk about yield curve inversions, the one that a lot of people are paying attention to today is the gap between ten year and three months. Treasury debt basically yields on those two maturity's have contracted. Basically. Investors are earning more now to own three month treasury bills T-Bills then ten year treasuries, which raises a question does this indicate recession coming up, and that sort of seems to be fueling this pessimism. And the. Other thing. That's so interesting right now is that the Federal Reserve is actually holding off on rate hikes impart because this is the yield curve that they watch they didn't want to infer. Exactly, right. They were hoping for a steeping in. They're getting sort of the opposite end as you point out that three months ten-year curve is I think the only input in the New York Fed's recession model, which they do on a monthly average basis. So to see an inverted really raises that risk of recession up into that. I think we'll probably see it in the mid to high twenty percent. For March at if it remains at these levels, and that doesn't sound like a slam dunk, but that's high as far as probability index goes above. I think twenty five to twenty eight percent, it's it's almost a slam dunk. At least according to history that you do see a recession in the next twelve months. I believe it is. So at least you're absolutely right. Everyone is watching that three months tenure very closely. Will a close inverted? I don't know. But it's looking pretty grim right now. It's interesting. You mentioned the Bank index Katie w Bank index and we've seen that across the board of if you have the right pressure with a net interest margin, which is obviously a key driver for these banks. But also the the week capital markets activity. We saw weak fourth quarter capital markets coming into the banks, and then UBS warned of a very tough first quarter. So it's really tough for the banks to make any kind of case here. Yeah, I agree. And from sort of macro standpoint, I think it's hard to make a really bullish case for the stock market writ large when the banks are are week like this again, you're looking and they might be down eight to ten percent on the week. I mean, that's that's a nasty turn of events for banks. Even when the general market rallied yesterday. So there is a lot of pessimism here. And there's a question is it too much especially because right now. Minutes ago. He got US existing home sales data showing that it surged nearly twelve percent the fastest pace the biggest gain since twenty fifteen. I just raising a question that perhaps things aren't as bad as they seem depends. What you home in on? Right. Exactly. I mean that is definitely a bright spot those home sales data, and that was sort of like two seconds because it hasn't been for the month prior. Right. Right. So maybe some of these lower yields are working their way into the real estate market, which would be. I mean, I think we obviously everyone was kind of bracing for this nasty. I quarters worth of data any sign that you see that it's bleeding into now into March data and further I think it's sort of definitely offsets overwhelms that impulse to buy because the fed is on hold. It goes back to that initial kneejerk reaction. He saw after the fed meeting which was to sell stocks people taking well, what does the fed? No, we don't. No. The answer's probably nothing. But, but it does make you wonder, you know, with the fed on hold if the data's still keeps coming in week. It's enough to make you nervous for. Sure. That's I mean, we're still looking at a stock market. That's up thirteen percent year to date. I mean a blockbuster year so far so it's kind of this pushing pull it's not too surprising. See some volatility, I think if you look at the you can look at the fundamentals two ways the economy and the the companies in the stock market, and then sort of the investor fundamentals and with unemployment as low as is job growth good. You know, there's still people willing to invest Michael Reagan. Thank you so much. Michael is the America's team leader for Bloomberg markets live giving us a sense of what is going on in the equity markets coming up, Mary Barra. The CEO of General Motors. We'll speak with Bloomberg anchor. David Westin about the company's new. Investment in Michigan. So the auto industry remains in focus as they continue to make investments. Both in the us and abroad, but certainly focused on. EV and just making investments in the US to continue to drive I think growth in their core business now, let's head over to Nathan Hager ninety.