May 29, 2018
The calling of a new election in Italy, which may prove to be an up-or-down vote on staying in the euro, is dramatically raising demand for safety. Buying in bonds pulled the 10-year Treasury yield down a very steep 15 points to 2.78 percent to make last week's worries over the 3 percent level seem distant. The 2-year yield fell an even more dramatic 16 basis points to 2.32 percent in what may also signal easing expectations for Federal Reserve rate hikes. The dollar is also benefiting, rising 0.8 percent on the dollar index to 94.83.
The day's economic news is led by Case-Shiller data on home prices and are the latest indications that the housing sector, outside the West Coast, is having a slow opening to the Spring selling season. Oil fell $1 and is under $67 with the Dow down 1.6 percent to 24,361 in what is the latest sizable daily swing of 2018. Gold did not rise on the day, edging lower to $1,305.