3 months ago
Stock Market

Day Ahead: Top 3 Things to Watch

Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow. 1. Yield Curve Inversion Sending Bearish

Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Yield Curve Inversion Sending Bearish Signals?

The economic data calendar is pretty empty tomorrow, but there will be plenty of chatter about interest rates after part of the yield curve inverted today.

A yield curve inversion is when the shorter-dated bond yields rise above the longer-term yields.

When this happens with Treasuries, many see it as a sign of an approaching recession, with traders betting that rates will be lower due to economic weakness down the line.

The yield on the 5-year Treasury fell below the yield of the 3-year Treasury today, something that hasn’t happened since 2007.

The 3-Year yield stood at 2.841% at the time of writing, with the 5-Year at 2.831%. The spread between the 2-year and the 10-year was also at an 11-year low.

2. AutoZone, Dollar General Set to Report Earnings

Retail earnings are still trickling in, with AutoZone (NYSE:AZO) reporting before the bell tomorrow.

Shares are higher over the last three months, with the auto parts retailer recovering from a hit it took in mid-October when rival Advance Auto Parts (NYSE:AAP) said it was teaming up with Walmart (NYSE:WMT).

On average, analysts a predicting a profit of $12.21 per share on sales of $2.6 billion.

Dollar General (NYSE:DG) will also weigh in, looking to repeat the solid performance of competitor Dollar Tree (NASDAQ:DLTR) recently.

The Wall Street forecast is for $1.27 a share on sales of about $6.4 billion.

3. Can Oil Continue Its Rally?

The oil market promises to be active again as traders continue to analyze how U.S. and China trade negotiations will impact demand and the possibility of supply cuts from OPEC and Russia.

Oil prices jumped today, helped by Canada surprising the market with a commitment to reduce output with crude prices struggling.

OPEC will meet in Vienna on Thursday, with Russia also expected to be in the discussion. Also that day, the latest U.S. oil inventories numbers will released, a day later than usual with the federal government closed on Wednesday in honor of the late President George H.W. Bush.

"Admittedly, the outcome of the OPEC meeting in Vienna is not a given," Goldman Sachs (NYSE:GS) said in a note. "Non-core OPEC members (Iraq/Iran) are likely to ask that the burden of the cut be footed by the countries that have most aggressively ramped-up (Saudi/UAE/Kuwait). Further, we don’t expect Russia to offer more than a token reduction from current production levels."