Treasuries up, equities down on mounting recession odds | MarketTalk: What’s up today? | Swissquote

Show notes

Yesterday was a typical risk-off day in the financial markets. The US treasuries rallied, the yields fell, and the stocks fell as well, as the latest set of economic data from the US showed further weakness.
The latest US ISM data revealed that the slowdown in US services was slower than expected – although services still grew in March, growth in employment and new orders slowed sharper than expected. The trade deficit grew and the ADP report showed that the US economy added around 145K new private jobs last month, versus around 200K penciled in by analysts.
The soft data spurred the expectation that the Federal Reserve (Fed) could soon be done with the interest rate hikes.
The US jobs data on Friday, and US CPI data next week will be the next important data points to watch for investors.
This said, what’s happening right now - increased appetite for sovereign bonds and decreased appetite for equities due to the rising recession positioning - is exactly what we thought would happen this year.
In this context, one of the most interesting plays could be long positioning in long-dated and inflation protected US papers; they will likely perform better than your regular long-dated papers, given that we don’t know when and by how much inflation will ease, but we guess that at the current state of things, most of the treasury selloff is likely done.
Listen to find out more!