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Yields on the 2-year Treasuries briefly exceeded those on the 10-year Yesterday, a first since 2019, a sign that bond investors are pessimistic about the long-term outlook. Historically, inverting yield curve, an abnormal state, did lead to recessions in the US as Fed officials pursued an aggressive tightening policy to combat inflation. But it is important to note that the inverting yield curve by itself has not been the catalyst for a drop in equity markets. Consequently, while yesterday's move is rare in its kind, it does not necessarily represent a threat to stocks in the near term.  

European stocks look to set open lower despite the positive momentum seen in Asia. The shift in sentiment comes as skepticism over Russia's withdrawal from Ukraine is increasing, leaving investors confused. In contrast, oil prices return to gains after a report from American Petroleum Institute showed the stocks of the commodity in the US saw a weekly decline of 3 million barrels.

Momentum for stocks is positive, with markets up in the last sessions and continuing today up 0.4% in pre-market, but headed for major technical resistance. However, a dark cloud could cast some shade and slow down the momentum, as the yields on the 2 and 10-year US Treasury are getting closer to par, with the potential to invert down the road. Only time will tell if the 2-year yield will become higher than the 10-year, and if this scenario materialises it could be interpreted by the market that the US economy is headed towards a recession, casting a shadow on corporate profits, and hence the stock market. The market so far has been pricing a 'soft' landing, but should there be an indication that the Fed takes too harsh tightening measures that could hurt corporates, it could cause investors to re-assess how much they are willing to pay for future earnings. 

Tesla shares advance 6.5% in pre-market to USD1'078, after the carmaker said it will seek shareholder approval for another stock split. Tesla said increasing its amount of common shares will enable a split in the form of a stock dividend. It has not announced a stock split yet, but the Board is signaling its intent. The market is very enthusiastic about the move since Tesla stock gained 81% in 20 days during its last split announcement in August 2020. Fundamentally, not much has changed, but the announcement is helping support sentiment in the stock.

The European Union and the US agreed on a new data transfer pact, likely avoiding a doomsday scenario for tech giants such Meta Platforms (Facebook), Alphabet (Google), and other Big Tech dominating in the Nasdaq 100 benchmark, that rely on the transfers of data across the Atlantic. The agreement in principle, which alleviates concerns about the power of US firms over privacy, is helping revive the momentum in US Big Tech stocks, that has seen many of the beloved stocks correct since the start of the year. The Nasdaq100 and S&P500 are gaining more than 0.4% in pre-market trading. The Stoxx50 is also supported by positive momentum, up 0.9%.