In late trading, a $207 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) whipsawed after Amazon.com Inc.’s bullish revenue forecast and Apple Inc.’s disappointing iPhone sales. Longer-dated Treasuries are now set for their worst week of 2023 amid signs of unexpected economic strength and concern over a widening budget deficit.

A report Thursday underscored resilient demand for workers, while separate numbers showed labor productivity climbed, helping to offset rising labor costs. Those figures preceded the government’s employment data — forecast to show the US added 200,000 jobs in July. While that would be the weakest print since the end of 2020, it’s still a strong advance historically.

Eoin Treacy's view

The 10-year yield continues to extend its breakout. This is less about inflation fears and more about profligate spending and no plan to rein it in. The higher the return demanded by investors to buy Treasuries the worse the relative return from other asset classes looks.


The iShares iBoxx High Yield Corporate Bond ETF (HYG) has failed to sustain a move above the trend mean on several occasions over the last six months but has sustained an upward bias within its range. The tightening amplitude of the range suggests a breakout, when it comes, will be powerful. At present that looks likely to be on the downside.

Credit tends to lead equity, so the above chart is important to monitor since it is potentially a lead or coincident indicator for the wider market. The Nasdaq-100 paused today in the region of the lower side of the most recent short-term range. The sequence of mild consolidations, one above the last, is still intact. A break lower will be required to signal a quicker pace of mean reversion.

Apple’s sales predictably disappointed and the share has now broken its sequence of higher reaction lows. The odds of mean reversion are improving.