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And Just Like That, The Bond Market Sell-Off Doesn't Matter (Technically Speaking For 3/1)

Mar. 01, 2021 7:55 PM ETDIA, IWM, TLT, SPY, QQQ, IEF3 Comments
Hale Stewart profile picture
Hale Stewart


Let's start this week by looking at the year-to-date performance of the major indexes and market sectors:After a mere two months, smaller-cap indexes have performed admirably. Micro-caps have rallied 21%, small-caps are up 11.25%, and mid-caps have risen 8.44%. Larger-cap indexes had increased far less while treasuries have sold off strongly.At this point, we should probably put the energy sector ETF into its own table, as it will either be at the top or bottom of the table with a disproportionately large increase or sell-off. Start at the bottom: three defensive sectors occupy the bottom three slots, which indicates just how aggressive traders have been. The recent sell-offs have greatly reduced the gains in other sectors.

This week, there are a few key economic releases. The most important is Friday's jobs market report. Keep your eye out for two key details. First, the pace of job creation, which has slowed noticeably in the last few months:Second, the labor force participation rate, which has also slowed during the last few months:Both of these numbers need to start increasing for at least several months to consider the jobs market as on the road to recovery. The Institute of Supply Management will release its latest manufacturing and service sector surveys this week. Both are very strong:The manufacturing index is near one of its highest levels in the last 15 years, as is... ... the service sector index.

Finally, keep an eye on Thursday's initial unemployment claims data, which meaningfully decreased last week for the first time in months. A second decrease would indicate further labor market healing.

Congressional Democrats are dropping the minimum wage complications from the stimulus bill:

Senate Democrats are jettisoning a proposal to use the tax code to penalize corporations that don't raise the minimum wage for their lowest-paid workers

This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (3)

Excellent data and commentary.
there's no reason to think bonds are affecting stocks, stocks were just simply too stretched.
Hale you have made this statement in the last few days"Thursday's initial unemployment claims data, which meaningfully decreased last week for the first time in months." I just wanted to mention some people explain that drop in the freeze in Texas and in other places that prohibited people getting out to file such claims, but we should see if the trend continues.
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