IS THE STOCK MARKET WORRIED ABOUT RISING RATES?
The chart below shows the 10-year Treasury Yield in the main window and the S&P 500 in the indicator
window with five significant moves highlighted in yellow.

 

Overall, yields surged twice and the S&P 500 moved higher, and yields plunged twice and the S&P 500 moved lower. This indicates that there is a positive correlation between the 10-year Treasury Yield and the S&P 500. Notice the green and red arrows. The last yellow highlight marks 2015 and the current surge in the 10-year Yield. So, bottom line – the “market” has weathered previous rate hikes better than one might have expected.

Looking Ahead to This Week (Week 23)

In complete contrast to last week, this week will not be nearly as active or interesting. At least by what I can tell from the schedule.

Not Much Econ Data: In terms of econ data, the most important report will be on retail sales on Thursday and the Producer Price Index on Friday. There will be a lot of data from China particularly on Monday and Wednesday.

Very Few Earnings: We are at that point where earnings reports will be few and far between. Only one member of the S&P – H&R Block – is scheduled to report, on Monday. Other reports of interest will be Lululemon on Tuesday, Krispy Kreme on Wednesday and Restoration Hardware on Thursday. Really.

Fed Enters Quiet Period: The Fed will enter its quiet period ahead of the following week’s meeting and Yellen press conference June 17. The expectation is for no rate bump in June, but rest assured, the mid-June Fed meeting is the next major catalyst for the market.

Greece Extension: In typical fashion, while there was no Greek debt deal last week, we did see the deadline moved to the end of June. Indeed, the gift that keeps on giving.
Have a great week and as always, please call us if you have any concerns or questions.
Greg

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