Halister News

(Bloomberg) -- “The tiring oil/stocks/yields relationship leaves a lot to be desired from a fundamental flow perspective but the linkage does provide a correlated trading opportunity for those willing to continue to place their trust in it,” independent strategist Marty Mitchell says in note.

• “Markets don’t seem all that attentive to the latest reading on the US labor sector” because they “just cannot shake the high correlation”
• “A stronger than expected number will take the 10yr back toward the 10dma at 1.925% but that may be all that we should expect because thoughts will quickly turn back to the global financial market concerns”
• “A weak number will take yields lower in knee-jerk reaction but look for better selling to develop between 1.79% and 1.75% on the 10yr”
• Other observations from strategist morning notes:
• CRT (David Ader): “Whether for the hawks or the doves, the next few meetings are clearly off the table which means we, in the market, have to digest the data to determine what the Fed might do and, more importantly, wait out the turmoil in risk assets to determine what we should do”
  • “The point here is that ongoing volatility/weakness in those arenas will take their financial conditions and psychological toll and keep a lid on US rates rising”
  • “For now at least, we like the front end relative to the back end and hide behind the skirts of the refunding to justify a concessionary steepening bias,” and “NFP matters, but we think that’s more a trade than a reversal risk”
• FTN (Jim Vogel): “Coming into payrolls, the UST curve and other market indicators still allow for two Fed rate increases this year,” and “a rough read from stocks, for example, might find 1900 on the S&P 500 as a dividing line between 2 and 3 hikes in 2016”
  • “Trading above 1950 corresponds approximately with one hike late in the year,” and “these relationships will shift repeatedly in the weeks leading up to the March meeting”