Still reeling from the ugly day? You should be. But, here's the good news: after the algo footrace to sell the market off the inverted yield curve, if the Fed does one and done then we might be able to get some inflection. If we don't and the economy stays allegedly strong, like the Fed thinks, then there should be some lift to the ten year yield.
Now you know I think the economy is headed into a weak path. The upper end of the consumer retail spend has come down in part because of the decline in housing prices and the lack of new home sales/trade up given the change in rates and the end of the state and local deductions which is becoming a bigger and bigger housing headwind. Plus, remember, on aggregate, the war between Amazon (AMZN) and Walmart (WMT) is keeping prices down which will further tamp retail sales.
Plus, I believe the drilling budgets will not be aggressive because of the collapse in oil. The auto build should go down a bit and the strong dollar is crimping tourism and hotel spend.
All of these reasons add up to one and wait as does the possibility of a negative CPI given the commodity collapse and the soon-to-come-down freight rates as the spot market is telling us.
So you have a situation where you might have the Fed be done for a big and the curve not get even more inverted.
Let's not forget we have a heavy debt load and if Treasury Secretary Mnuchin is as at all savvy he would sell ten year to thirty year paper to a thirsty market. Boy do I long for a Treasury Secretary who understands bonds. How can this man not be one of them?
So, you can't sell down the market on an inversion endlessly even if we get a strong employment number, which is what I am betting on, with 3.5% wage growth, which will show us why the Fed has to tighten this month. That's the justification the Fed acolytes are giving us.
Now if the Chinese would just place some orders with Boeing (BA) !