Stocks Move Higher Despite Rising Bond Yields

by Warrior2

Treasury yields continue to increase but stock traders remain focused on the upcoming stimulus package.

The Market Is Set To Finish The Week On A Strong Note

S&P 500 futures are gaining ground in premarket trading as the market looks ready to continue its upside move after the recent pullback.

Interestingly, the stock market ignores the current sell-off in the U.S. government bond market which has already pushed the yield of 30-year Treasuries above 2.10%.

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Stock traders remain focused on the upcoming stimulus package but ignore inflation risks. Weaker dollar may be providing additional support to stocks today as the U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, managed to gain downside momentum and is close to February lows at 90.12.

It should be noted that dollar’s move failed to provide any support to gold which is under pressure due to rising yields, so shares of gold miners may be set for another challenging trading session.Advertisement

Oil Pulls Back As Texas Oil Companies Prepare To Restart Production

WTI oil has recently made an attempt to settle below the $59 level as traders continued to take profits after the recent rally. At this point, Texas oil companies look ready to restart production which will increase available supply and put pressure on oil prices.

While the recent move above the $60 level was triggered by severe cold in Texas, the main catalyst that pushed oil from the $50 level to the $60 level was Saudi Arabia’s decision to cut production by 1 million barrels per day (bpd) in February and March. This catalyst will remain in play, and it remains to be seen whether oil will be able to gain additional downside momentum.

All Eyes On PMI Reports

Today, the U.S. will provide flash PMI reports for February. Manufacturing PMI is projected to decline from 59.2 in January to 58.5 in February while Services PMI is expected to decrease from 58.3 to 57.6.

In the Euro Area, Manufacturing PMI increased from 54.8 to 57.7 compared to analyst consensus of 54.3. In the UK, Manufacturing PMI grew from 54.1 to 54.9. The manufacturing segment has adapted to the current environment so there is a potential for a strong U.S. Manufacturing PMI report.

It remains to be seen whether the U.S. services segment will be as robust as the manufacturing segment, but the recent decline in the number of new coronavirus cases may serve as a significant supportive catalyst for the services segment.

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