Strong Recession Signals As US Treasury Remain Under Pressure

The US 2-year and 10-year treasury yield curves inverted by 83 basis points, the most significant inversion in about four decades, signalling increasing concerns about a potential recession. NAS100 fell 0.5% on Wednesday, slipping for the fifth day amid warning signs of recession. The Dow closed flat, and the S&P 500 fell 0.2% after swinging between gains and losses, souring investor sentiment on stocks. 

Against growing recession fears, big tech continued to struggle, with Alphabet (NASDAQ: GOOGL) and Apple (NASDAQ: AAPL) falling more than 1%. Worries about the impact of the recession on the consumer also hurt travel and leisure stocks. Booking Holdings (NASDAQ: BKNG) and Expedia (NASDAQ: EXPE) were down more than 4% and 6%, respectively, while Airbnb (NASDAQ: ABNB) fell 1%. 

Market participants will look toward updating US jobless claims data in Thursday’s trade. Also on Friday, market participants focus on the US PPI, wholesale inventories, and University of Michigan consumer sentiment. Inflation appears to be rolling over, and markets are considering the possibility that the Federal Reserve’s hawkish monetary policy will soon start to ease. But the critical question of how quickly inflation pressure softens leaves more than a trivial amount of uncertainty to ponder. So, the US jobless claims tonight, the PPI, and the Michigan consumer sentiment Friday results must guide market participants’ expectations. 

Key events ahead:

  1. Initial jobless claims on Thursday
  2. US PPI, wholesale inventories, and University of Michigan consumer sentiment on Friday

nasdaq100 chart-1

NAS100 Day Chart

NAS100 is testing the floor of a bearish rising wedge after prices could not push above falling resistance at the beginning of this year. The wedge has been brewing since November, and a breakout lower could open the door to extending losses. In such an outcome, the index could revisit its lows from November. NAS100 ended a volatile session mostly lower on Wednesday amid recession fears and uncertainty around the path of Federal Reserve rate hikes. The bears persist, and further downside could slip to the next support region. Meanwhile, market participants should pay close attention to the US jobless claim tonight and the US PPI on Friday to guide the NAS100.

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