The Bank of Japan Steals Christmas. The central bank’s decision to raise its effective cap on 10-year government bond yields adds an extra dollop of uncertainty to global markets. The Japanese central bank surprised nearly everyone in the market on Tuesday by raising its effective cap on 10-year government bond yields to 0.5% from 0.25%.
The Dow Jones Industrial Average and European indexes continue Bullish status; the S&P 500, Russell 2000, NASDAQ Composite, NASDAQ 100, flipped to Bearish. China and US Treasury Bond are Bull alert. Weekly Market Breadth indicators flipped to Bearish for NASDAQ 100, S&P 500, and NASDAQ Composite.
Bull Alert: none; Bullish but signs of weakening: Industrials, Staples, Utilities, Health Care, and Energy. Bear Alert: Materials, Financials; Bearish: Real Estate, Communication Services, Technology, and Consumer Discretionary.
The 10-year US Treasury Yield closed today at 3.581%. The yield's fall since its October 21 peak of 4.333% is showing signs of slowing and ending. Rates are likely to rise.
The 2-year US Treasury Yield closed today at 4.25%, down from its November 7 peak of 4.71%. The 2-year yield rate of rise is slowing.
The 10-2 year Yield Curve remains inverted, with the closing spread narrowing to -0.68 from last week's -0.78.
The Australian Dollar and the Yen are Bull alert but the uptrend weakened slightly while the Euro and British Pound are Bullish and strengthening, all vs. US dollar.
The US Dollar Index continues Bearish, closing at 104.50; down from Sep 26 peak of 114.75. Gold's trend continues Bullish; Base Metals and Copper continue Bullish; West Texas Light Crude continues Bearish downtrend.