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2-year Treasury yield reaches highs not seen in more than a decade (2 min read)
The US Treasury continued to climb higher on Thursday as investors considered the likelihood of further rate hikes from the Fed. The yield on the 10-year Treasury remained above 4% while the 2-year Treasury was close to 5% and at one point reached its highest since 2007. A revised higher Q4 labor cost, pullback in jobless claims, and several Fed officials having expressed their hawkish stance this week all pointed towards another 0.25% rate increase this month and possibly a lift in the peak rate.
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Eurozone inflation exceeds expectations at 8.5% (3 min read)
Eurozone inflation was 8.5% in February, slightly down from the previous month, but still higher than the 8.2% forecast. Despite the dip, analysts expect the ECB to continue raising rates due to persistently high prices and anticipate a 0.5% rise in March. The ECB has already raised rates by 3% since last summer and markets are currently pricing in the bank’s deposit rate jumping to 4% later in the year. The latest data supports the belief that inflation will stay high for longer, which raises the risk of wage prices spiraling in the eurozone.
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Elon Musk's 'Master Plan' for Tesla fails to charge up investors (2 min read)
Tesla shares fell 7% after the company's investor day failed to impress investors that had hoped for an announcement on an affordable electric car. Musk and executives presented plans to cut assembly costs by half and invest in a new plant in Mexico, but provided very little details on timelines or new products. The company's “Master Plan 3” was more of a message of hope for widespread electrification, according to analysts. However, even with the drop on Thursday, Tesla stock is up more than 80% so far this year.
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Macy’s shares jump after holiday-quarter profit tops expectations (3 min read)
Macy's reported strong holiday sales that led to an 11% increase in its stock on Thursday. The company’s earnings in Q4 were better than what analysts had expected. However, it’s anticipating a decline in sales this year due to shifts in consumer spending towards essential goods and services. CEO Jeff Gennette says Macy's plans to improve sales by opening more off-mall stores, refreshing private brands, and expanding its luxury business and online marketplace.
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Buyback ETFs Could Benefit as Share Repurchases Top $1T (3 min read)
Data shows that companies in the S&P 500 have purchased their own shares at record highs in 2022, and this year it could be even higher. In theory, buyback should benefit stock prices because it raises the demand by reducing the number of shares outstanding. Historical performance of buyback ETFs also suggests this theory, as the PowerShares Buyback Achievers ETF (PKW) gained more than the broader index since it launched in 2006. If that is the case, this year will shed positive light on buyback companies and ETFs.
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Active Funds Poised to Add to Market Share in 2023, Study Says (2 min read)
In a recent survey of 200 institutional asset owners, over 25% said they would increase their allocation to active equity strategies over the next two years. The potential switch came as index funds have been underperforming and institutional investors are in search of better returns in active ETFs. The gap between active and passive ETFs has been narrowing in the past year. So far in 2023, almost 48% of active ETFs had positive inflows compared to roughly 45% of passive ETFs.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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