Breakfast News: Bond Yields Jump
January 9, 2025
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The New York Stock Exchange and Nasdaq are closed today as the U.S. commemorates the life and legacy of former President Jimmy Carter. Bond markets will close early, at 2 p.m. ET, for the National Day of Mourning. The tradition of closing major exchanges in remembrance of a president dates back to the assassination of President Abraham Lincoln in 1865.
Source: Image created by JesterAI.
1. 10-Year Treasury Yield Approaches 5%
U.S. Treasury yields continued to move higher, with the 20-year benchmark hitting 5% and the 30-year at the highest level since November 2023 as fears around inflation start to mount again. Strong economic data out this week is usually positive for the stock market, but not necessarily when it limits the U.S. Federal Reserve’s chances of cutting interest rates.
- "Equity/bond yield correlations have turned negative again": Goldman Sachs (GS -0.02%) analyst Christian Mueller-Glissmann stated if yields continue to move higher, stocks could come under pressure, while Bank of America (BAC 0.28%) strategist Ohsung Kwon believes the stock market is “shifting into a ‘good news is bad news’ environment again.”
- “Hope for cheaper stock prices, welcome a bear market”: But bad news can also be good news – in a recent episode of Motley Fool Money, analyst Bill Barker gave host Mary Long his advice for new investors who are just starting out: “You should really want to be able to buy more for your money and let it grow. It’s those periods of stocks being on sale when you can make far more than when they’re at new highs.”
2. Apple Still Locked Out of Indonesia
Indonesia’s industry minister confirmed yesterday the Apple (AAPL 0.20%) iPhone 16 would continue to be banned, with the $1 billion investment proposal not going far enough.
- Using trade regulations as protection: Several countries are putting pressure on big tech companies to work with local partners or source product content domestically. Indonesia has also banned Alphabet’s (GOOG -0.67%) Google Pixel, which was deemed in breach of the same rule of not having 40% of content sourced locally.
- More active mobile phones than people: Apple is keen to tap into Indonesia’s 278 million consumers, with over 50% of them being under the age of 44 and tech savvy. Indonesia itself is the fourth most populous country in the world.
3. Dockyard Strikes Swerved
A fresh strike that was pencilled in for next week involving thousands of dockworkers has been avoided with the signing of a new deal.
- "This agreement protects current ILA jobs…while modernizing East and Gulf coast ports”: The International Longshoremen's Association (ILA) and the US Maritime Alliance agreed on a six-year contract, which both sides said was a win-win agreement.
- Handling nearly 70% of U.S. exports: The deal will help to ensure shipping lines and crucial supply chain logistics can continue to operate without disruption for the foreseeable future. The previous strike last October had an estimated economic cost of $5 billion a day!
4. Costco Benefits From Holiday Spending
Costco (COST 0.65%) saw strong holiday season sales, both online and in-store, in a show of strength for consumers’ finances.
- Sales gains almost double expectations: For the five weeks ending January 5th 2025, net sales rose by 9.9% versus the same period last year. E-commerce sales soared 35.7%, although the inclusion of Cyber Monday within the reporting period does skew the data somewhat.
- Easily beating the market over both the short and long term: A great example of investing in quality companies and holding them for the long term, Costco has beaten the S&P 500 by 2,453% since being recommended in Stock Advisor back in 2002.
5. Foolish Fun
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