Yielding Anxiety.

U.S. stocks finished mixed on Monday as the 10-year Treasury yield crossed a key threshold but then retreated ahead of Big Tech earnings this week.

?? DJIA -0.58%, S&P 500 -0.17%, ?? NASDAQ +0.27%

Daily Market Commentary will be off on Tuesday.

It was a volatile day on Wall Street, stocks started on a sour note after the 10-year Treasury yield pushed above the dreaded 5% mark early in the day. For a moment, the 10-year yield reached its highest level in 16 years.

Stocks reversed course to the upside, while U.S. Treasury yields started retreating after Pershing Square’s Bill Ackman tweeted on X that he covered his bond shorts due to underlying weakness in the U.S. economy, saying it was too risky to remain short bonds at current long-term rates.

In simple terms, Ackman, who is a famous hedge fund investor, took gains today after betting in August that Treasury yields were going to rise and bond prices were going to fall. U.S. Treasury yields finished lower across the yield curve on Monday.

Economic data was very light on Monday, but investors will parse through several data points that could have an impact on the future path of monetary policy, namely the Fed’s favorite inflation gauge, the PCE Deflator on Friday. More details on this week’s economic calendar below.

Oil futures pulled back on Monday as there were no new major developments over Israel’s anticipated ground invasion into Gaza. Bloomberg reported on Monday that concerns over the invasion were discussed over the weekend at a meeting of Israeli Prime Minister Benjamin Netanyahu’s war cabinet. In addition to these fears, the possibility of Hezbollah in Lebanon entering the conflicts were also discussed. ??

In other markets: gold futures settled lower, while the U.S. dollar fell on Monday.

Finally, investors move past Monday looking ahead to earnings results from Big Tech companies as Microsoft and Google parent Alphabet Inc. report Tuesday, with Meta Platforms reporting Wednesday, and Amazon on Thursday.

Looking Ahead

We all need a break from time to time, a fresh start while leaving last week’s dismal performance for financial markets. As we headed into the close, investors had a tougher time shrugging off overarching issues particularly over rising Treasury yields.

It will certainly be a week to be attentive to economic data and perhaps most importantly, Big Tech earnings as we roll through the week. When coupled, this data is going to offer a significant pulse on where the U.S. economy, U.S. monetary policy, and financial markets are headed.

Looking ahead, we are bearish as we feel the current risk-reward environment calls for serious caution and risk management.

Stay Tuned! ?

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?? What We’re Also Following Today

• [15:51 ET] The US has intelligence that Iranian-backed militia groups are planning to ramp up attacks against US forces in the Middle East - CNN
• [15:21 ET] Biden: We can talk about a ceasefire when the hostages are released.
• [15:14 ET] Gaza hostage talks held up over Hamas demand for fuel - WSJ.
• [14:11 ET] Hamas Armed Wing Spokesman Ubaida: We have released two captives in response to a Qatari-Egyptian mediation.
• [13:56 ET] US Defense Department Spokesman Kirby: More military forces will be coming to the Middle East.
• [13:39 ET] US State Department: The US is concerned about an increase in attacks by Iranian proxies in the region.
• [13:26 ET] Israel is making efforts to release hostages - Army Spokesman.
• [11:47 ET] Pentagon: The US has not seen a direct order from Iran for its proxies to increase attacks against US troops in the Middle East.
• [11:18 ET] US troops in Syria attacked by drones, no injuries were reported - Officials tells Sources.
• [10:26 ET] Israel military returns fire after shots fired from Lebanon.
• [08:48 ET] China's Foreign Minister Wang Yi is to visit Washington this week - WSJ.
• [05:57 ET] Iran foreign minister calls Hamas and Islamic Jihad leaders.
• [03:46 ET] US and allies held talks on concerns that the Israel-Hamas war will spread - Sources.
• [OCT 22, 19:54 ET] China's Middle East Special Envoy: In the next phase, China will continue to maintain close communication with all parties in the international community, including Arab countries - Chinese State Media … China's Middle East Special Envoy: China has provided and will continue to provide emergency humanitarian assistance to Palestinians through the UN and bilateral channels to help alleviate the humanitarian crisis - Chinese State Media.

Newswire reports from FinancialJuice

Geopolitical Analysis

• Behind the Curtain: Biden fears wider war in Middle East (Axios)
• How the Israel-Hamas War Allows Iran to Corner the Arab States (Kamran Bokhari - Geopolitical Futures)
• Hezbollah holds key to a wider Israel-Hamas war (Asher Kaufman - Asia Times)
• The Last War (George Friedman – Geopolitical Futures)

?? Key Events This Week:

• Tuesday (Oct. 24): S&P Case-Shiller home price index (20 cities) (August), S&P flash U.S. services, manufacturing PMIs (October).
• Wednesday (Oct. 25): New Home Sales (Sept.)
• Thursday (Oct. 26): Q3 GDP, Initial Jobless Claims, Durable Goods Orders, advanced U.S. trade balance in goods, advanced retail inventories, advanced wholesale inventories, pending home sales.
• Friday (Oct. 27): PCE index, Personal Income, Personal Spending, University of Michigan Consumer Sentiment (Final)

?? Last Week’s Chart

Chart Source: Wells Fargo Investment Institute, “Looking Ahead,” October 20, 2023.

OUR FIRM

MCF Capital Management, LLC is an independent, family-run, financial advisory firm that manages investment portfolios for individuals and businesses through Quantitative Market Data Analysis.

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THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INVESTMENT ADVICE.?

???SOURCES:?LSEG Workspace, Dow Jones NewsPlus, MarketWatch, Wall Street Journal, Barron’s, FinancialJuice, Investing .com, CNBC, Wells Fargo Investment Institute, TradingView