Elliott Wave Options: Inflation Slows But Yields Remain Inverted
There’s a lot of negative sentiment about the economy right now. But the job market remains strong – some say too strong. And inflation is coming down, even if the rate of the drop may slow. Amid all that, the market has moved higher so far this year.
More importantly, stocks have made higher lows on each pullback and has made higher highs. And with tech stocks up over 20 percent from their lows, they’ve entered into a bull market.
Working against that trend is the start of earnings season. So far, things have been quiet, with strong reports from the big banks. However, many expect to see a drop in overall earnings. This earnings recession could impact stocks to the downside in the coming weeks.
If so, the downside may be limited. Markets are more forward looking, and the market has been calming somewhat following the move higher in banking stocks in March.
One improving sign is the U.S. Treasury yield curve, which has come off the worst of its lows in the past few weeks. Traders see a rising chance of interest rates peaking and even declining in the coming months. That could be from the result of more fears in the banking sector, or due to the economy continuing to muddle along.