Art Cashin: Yield Curve Makes 'Any Idiot' Smart (For Now)
Oil on Monday dropped from its 7-month high to hover around $68. The U.S. dollar extended gains after its largest 1-day rise in five months on Friday. And the 10-year U.S. Treasury yield hit a 7-month high on Monday ahead of auctions this week, amid speculation the Federal Reserve may hike interest rates sooner than expected.
Art Cashin, UBS Financial Services director of floor operations, offered CNBC his market insights for Monday.
"You want to watch those [Treasurys] auctions," Cashin advised. "There are rumors that the Fed is either halfway through with its buying or may, in fact, pull back on its buying, after good news like Friday's payroll numbers."
He said stock-market prognosticators should watch the 10-year and 30-year bond auctions to see "just how large interest is offshore."
Cashin touched on the reflation trade, vis-a-vis all the cheap money being poured into financial lenders:
"It's just like my friend [commodities analyst] Dennis Gartman says: 'When you get a yield curve like this, it makes any idiot look like a genius banker.'"
But, Cashin warns, "I don't know how long that will...play out."
- Oil Rally Over, Likely to Settle Around $60: Gartman
- Gold at $1,200 — And a Pullback for Oil: Analysts
"If we get the yield on the 10-year up around 4 percent, that's going to change the mortgage picture — we may see things slow down."
Summing up, Cashin said: "We had a good day Friday and we have a good day today. This morning, the story is really about the strength of the dollar."
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Disclosures:
Disclosure information was not available for Cashin or his company.