Throughout the week, markets responded negatively to a barrage of economic data. Last week, the U.S. economy created 303,000 jobs, surpassing the most optimistic forecast. Today’s March inflation report will set the market sentiment for the rest of the quarter.
Markets already reacted to this morning’s inflation report. Bond yields are rising again while oil prices are increasing steadily. Investors who held AI and technology stocks missed Exxon’s (XOM) new 52-week high. While crude prices at $100/bbl would send XOM stock higher, energy markets typically hesitate to rise further. Oil prices historically struggled to hold above the $100/bbl level.
Oil prices last reached $122 in March 2022 before slumping. In January 2014, prices topped around $140 before suddenly crashing.
Readers should continue to watch the severe downtrend unfolding in the 20+ year U.S. Treasury ETF (TLT). Risks are rising that TLT stock will fall to $82 again. Bond yields are not breaking out because Fed Chair Powell insinuated plans to cut interest rates sometime in 2024.
REITs are a good barometer of interest rate expectations. They are range-bound for now. REIT investors are not yet convinced that interest rates will change. Watch Realty Income (O) and W.P. Carey (WPC), which are steady. Bearish momentum for Crown Castle (CCI) and American Tower (AMT), however, is worsening.
