Stocks paused Tuesday after a strong start to the week and second quarter. Positive sentiment has spilled over from the first quarter and global equities began this week building on the best start to the year since 2010. Still, numerous risks still linger, including Europe’s slowing growth, difficulties surrounding Brexit, and the ongoing trade talks between the U.S. and China.
Bond prices fell slightly, and the 10-year treasury is yielding 2.48%. Treasury yields are likely to move higher in the new quarter as Powell’s dovish tone fades and the global data begins to stabilize. It is possible 10s will soon be back in the 2.6% to 2.8% range. The global economy seems to be in a holding pattern with low inflation and low unemployment. This should be enough to get yields back to previous ranges, but not much further without a significant shift in global outlook.
U.S. durable goods orders fell 1.6% in February. The manufacturing sector has been strained the past few months, reflecting the global outlook and rising trade tensions which have hurt U.S. exports. The biggest component to this headline is the 31.1% plunge for civilian aircraft and parts. Specifically, Boeing Co.’s orders fell in February.
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