The DC Today - Thursday, November 9, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 9 November 2023
⏱️ 9 minutes
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Summary
Today's Post - https://bahnsen.co/40yBPwn
We started off todays session in another quiet day, until about 1PM ET when we had an abysmal 30-year treasury auction on $24B of notes that moved rates higher across the curve that gave us our first down day in November for the SP500. With an increased supply in new issuance to fund a $2T budget deficit and a dearth of large buyers like our own Federal Reserve and other large Sovereigns it took higher rates to get this auction to close with the lowest bid to cover ratio in weeks. 2’s are back over 5% and 10’s were up 11 bps.
Oil was flat on the day but down 7% this week back to pre-war levels, and while energy stocks have given up some gains as well keep in mind that the sector in large remains in an uptrend with 94% of the energy name complex has a 50 day moving average above its 200 day. I am far more focused on fundamentals like the increase in CAPEX in our names recently than technicals like this, but note worthy of its relative strength amongst other sectors nonetheless.
Powell’s comments today at the IMF cited that Fed officials were ‘not confident’ they were restrictive enough with rates to bring inflation back to 2%, which added to todays give back in stocks. So, the market tea leaves yesterday read his statement as dovish and today hawkish, and so there you go. I get into why this day-to-day Fed obsession shouldn’t matter to investors, and more in todays video podcast link below.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:15.0 | Good evening and welcome to D.C. today. I am with you at Brian Saitel. It's November the 9th. And good to be with you here on D.C. today. I am with you at Brian Saitel. It's November the 9th. And good to be with you here on |
| 0:24.5 | DC today. We actually had a little bit of a market sell-up. The market opened up. I actually |
| 0:28.5 | thought I was going to write something like Groundhog Day. It seemed very similar to yesterday. |
| 0:32.8 | It was just sort of benign, low volatility. And then around 1 o'clock or so, we had a treasury auction on 30s. |
| 0:40.2 | It was $24 billion go out at, and it was just sort of a dismal or abysmal, really, auction |
| 0:47.3 | result. The bid to cover ratio was in the low twos, meaning two to one. It was something like |
| 0:53.8 | two and a quarter, I believe. We've been in this sort of the two and a half range for a long time, including the past couple months. It just means the amount of bidders that are coming in versus the amount that's being auctioned. And so it was a lower amount there. And then so the rates have to close higher in order to get the deal done. So rates kind of went up on the day around 1 o'clock. |
| 1:13.6 | Initially, 30s were up 20 basis points. |
| 1:15.1 | They came down from there. |
| 1:17.5 | They ended up up maybe 12 basis points on the day. |
| 1:19.2 | But twos went over 5%. Tens were up 11 basis points. |
| 1:21.5 | And so bad treasury auction clearing price was higher than expected. |
| 1:29.3 | Sorry, lower than expected amount of price, higher than expected on the yield to get it done. |
| 1:31.4 | And that sent markets lower. |
| 1:32.5 | And then he also had comments from Jerome Powell today from the IMF. |
| 1:36.8 | There was a panel that he spoke on today that was deemed more hawkish. |
| 1:40.2 | He basically said he wasn't confident. |
| 1:42.7 | This was sort of during back and forth, but he said he wasn't, that Fed officials weren't necessarily confident that they had done what they need to as far as restrictive policy to get the fit to get inflation back to 2%. |
| 1:53.6 | Which is a which is a hawkish tone. |
| 1:56.6 | You know, it alludes to maybe having to raise more if they're not confident about it. |
| 2:00.4 | I don't know if that was the best choice of words as far as the word confidence goes, |
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