Will the upcoming earnings releases from mega tech GOOG and AMZN stem the slide in Magnificent Seven and the technology/software sector? The NASDAQ declined another 1.5% while the broader market held steady. Is there any correlation between the continued rout in bitcoin to the tentative rotation out of tech?
Bitcoin fell another 3% yesterday with some suggesting further declines are very possible. The cybercurrency is down over 42% from its October peak.
The yield curve continued to steepen as the ISM Services Index expanded the most since October 2024, exceeding all estimates. As measured by this benchmark, service providers registered the strongest back-to-back monthly growth since 2024.
Next week there are three scheduled Treasury auctions; $58 billion of the 3-year notes; $42 billion of the 10-year and $25 billion of the 30 year. How will the auctions be received? This refunding will raise new cash of approximately $34.8 billion according to the Treasury Department.
As widely disseminated, the Federal Reserve said it will buy $40 billion a month of short-term Treasury bills (matures in one year or less) in an attempt to maintain liquidity in the banking system. It is widely accepted that because of Fed intervention, the odds of any issues arising in the shorter-term maturities are low.
Through regulatory fiat, money center banks can no longer provide the needed liquidity, a dangerous environment given the Treasury market has surged threefold since 2010 and money center banks’ Treasury holdings have declined four-fold.
This lack of liquidity and the issues surrounding such is widely known, however nothing really has changed to rectify this situation.
Nominated Fed Chairman Keven Warsh has stated one of his priorities is to shrink the Fed’s balance sheet. Is this possible without increasing volatility?
Is the above environment another reason for the steepening of the curve?
After the close, GOOG posted results that exceeded expectations but initially declined about 7.5% on higher than expected capital expenditure plans for 2026. Shares have rebounded and at the time of this writing are down about 4%.
Last night the foreign markets were down. London was down 0.06%, Paris up 0.27% and Frankfurt down 0.06%. China was down 0.64%, Japan down 0.88% and Hang Seng up 0.14%.
Dow and NASDAQ futures are flat and down 0.75%, respectively. Bit Coin is under $70,000 falling another 5%. Silver is off about 17% and gold down about 2%. The 10-year is up 1/32 to yield 4.27%.
