Markets Overview
- ASX SPI 200 futures down 0.2% to 8,201.00
- Dow Average up 0.4% to 43,645.22
- Aussie down 0.1% to 0.6342 per US$
- US 10-year yield fell 10.2bps to 4.2983%
- Australia 3-year bond yield fell 3.9 bps to 3.82%
- Australia 10-year bond yield fell 4 bps to 4.40%
- Gold spot down 1.3% to $2,912.62
- Brent futures down 2.2% to $73.10/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$800 Million 3.75% 2037 Bonds
- 11:30: (AU) Jan. CPI Trimmed Mean YoY, prior 2.7%
- 11:30: (AU) Jan. CPI YoY, est. 2.6%, prior 2.5%
- 11:30: (AU) 4Q Construction Work Done, est. 1.0%, prior 1.6%
Stocks closed at a five-week low and bonds surged as another disappointing reading on the US consumer fueled concern about the health of the world’s largest economy.
Another slide in the Nasdaq 100 pushed its four-day loss to around 5%, the most since early September. A gauge of megacaps extended a plunge from its peak to more than 10% – passing the threshold that meets the definition of a correction. Selling was heaviest in speculative corners of the market, with a 6% slide in Bitcoin spurring a plunge in exchange-traded funds specializing in crypto. A rally in Treasuries drove 10-year yields to their lowest levels in 2025.
US consumer confidence fell the most since August 2021 on concerns about the outlook for the broader economy. The data followed recent disappointments on the retail, services and housing fronts. That’s prompted traders to boost their bets on Federal Reserve rate cuts this year even as inflation pressures seem to be intensifying.
“The market still seems more worried about growth than inflation,” said Chris Verrone at Strategas.
At Brown Brothers Harriman, Elias Haddad says “red flags are emerging,” and another month or two of weak US data would deliver “a blow to the US exceptionalism narrative.” To Keith Lerner at Truist Advisory Services, while the primary stock-market uptrend remains intact and recession risks remain relatively low, the near-term risk/reward appears more mixed.
The S&P 500 fell 0.5%. The Nasdaq 100 slid 1.2%. The Dow Jones Industrial Average rose 0.4%. A gauge of the “Magnificent Seven” megacaps sank 2.25%. On the eve of Nvidia Corp.’s results, the giant chipmaker lost 2.8%.
The yield on 10-year Treasuries sank 11 basis points to 4.29%. Money markets are fully pricing in two quarter-point rate cuts by the Fed this year. A dollar gauge slid 0.2%.
“Markets have suddenly begun declining on fears over a slowdown in growth. Wasn’t everyone just worried about too-strong growth and higher inflation a couple of weeks ago?” said Bespoke Investment Group strategists. “We would also note that three of the five Fed manufacturing reports released in February were all in growth territory. So not all the news is bad. The economic outlook is uncertain, but isn’t it always?”
To Jeff Roach at LPL Financial, consumers are increasingly nervous about the unknown impacts from potential tariffs and could pull forward consumer demand as they anticipate higher prices for imports in the near future.
One note of caution from Roach: Consumer surveys are much more volatile than the hard data of retail sales. That means the Fed will not likely change their stance on monetary policy at the next couple meetings, he says.
The bond rally briefly pushed the 10-year yield below three-month bill yield, inverting that segment of the curve for the first time since mid-December. Historically, inversions have been a precursor of economic recessions, though the most recent period of inversion since late 2022 has not thus far.
“The bond market sees trouble ahead, which is why the yield curve is sliding back toward inversion,” said David Russell at TradeStation.
“Consumer confidence continues to come off its election-fueled sugar high from November,” said Bret Kenwell at eToro. “Economic uncertainty remains elevated, whether that’s around tariffs or more US-centric data like inflation or retail sales.”
That’s why Friday’s reading on prices will be key.
The Fed’s preferred inflation metric is expected to cool to the slowest pace since June. The core personal consumption expenditures price index — which excludes often-volatile food and energy costs — probably rose 2.6% in the year through January. Overall PCE likely eased on an annual basis as well.
“Investors should keep an eye on this week’s PCE report,” said Kenwell. “It will give another clue as to how consumers are feeling about their purchasing power. An in-line or lower reading may act as a relief catalyst for consumers and investors alike.”
Before that, traders will be wading through Nvidia’s earnings. They will arrive at a critical juncture, with US stocks vulnerable from a technical and systematic standpoint.
Not only have equities rejected a move beyond their all-time highs, the market is also in a state of vulnerability from three of it biggest drivers. Retail flows are fading, trend followers are estimated to be sellers in every scenario and option flows are unfavorable.
