Euclid Investment Advisory Blog

Review & Analysis at Close September 28, 2021

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10-YEAR Treasury Yield Hits 3-month High
The steep rise in Treasury yields that started last week continued again today. The 10-Year Treasury yield climbed 5 basis points today to 1.53%. That puts the TNX at the highest level in three months. Yields are being pushed higher by a) inflation concerns, b) prospects for a more aggressive Fed to combat that inflation, and the most likely trigger for today's spike, Treasury Secretary Janet Yellen told Congress today that the government could reach its borrowing limit by Oct. 18. Today's jump in yields is pushing stocks lower.

NASDAQ Composite Leads Today's Sharp Decline
Rising bond yields usually take a bigger toll on tech stocks, and that's what happening today. While ten of eleven stock sectors are dropping today, technology is the day's weakest sector. That's also weighing on the NASDAQ market which is leading the day's decline. QQQ undercut last week's low and trading well below its 50-day moving average. The S&P 500 is the second weakest stock index. The S&P 500 gapped down today and is bearing down on last week's low. The Dow Industrials fell sharply as well. Both are well below their 50-day averages. Nevertheless the NASDAQ Comp. made a double bottom today. This may hold.

Banks, Energy Stocks Hold Up
Energy stocks are the day's strongest sector. That's based mainly on the recent rise in energy prices which makes energy stocks a primary beneficiary of rising inflation. Energy sector gained ground today and trading at a two month high. Although financial stocks are pulling back today, they're a prime beneficiary of rising bond yields. That's especially true of banks. The S&P Bank index is trading modestly lower today after experiencing a bullish breakout yesterday. Despite today's pullback, the bank chart still has a positive look to it.

Note: today's broad base pullback is not being confirmed by the indicators and measurements we use. The Market usually throws a tantrum when it wants to send a signal to the Fed or Congress.

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