Earnings season likely to be very disappointing and The downturn in US manufacturing has now caught up with that in world economy and is beginning to look like that of 2015-6.

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Bond market on verge of tripping a signal that could lead to sharp sell-off

All the U.S. stock market seemingly does is set records, so let’s take a look at the world of bonds, where the bulls have been blasting yields lower.

MarketWatch’s call of the day comes from the Leuthold Group, a Minneapolis investment research firm, which tracks the correlation between weekly percentage changes in the S&P 500 SPX, -0.65% and the 10-year Treasury yield TMUBMUSD10Y, -1.27% The correlation between the two flipped positive in the late 1990s, perhaps because of the global economy’s bias towards a decrease in the rate of inflation that stems from rapid technological change and globalization in trade.

Right now, the correlation between the two is at what Leuthold calls an “extreme” level, prone for reversal and, according to the analysis, near a top. Those peaks have identified eight of the last nine best times over the last 18 years to sell bonds. Yields have spiked by an average of 45 basis points in the 13 weeks following a correlation sell signal.

U.S. manufacturing ‘is in recession,’ Fed’s data show

The U.S. factory sector declined in the three months ended in June, the second straight quarterly decline, the Federal Reserve said Tuesday.

For the second quarter, production was down 1.2% after a 1.9% decline in the first three months of the year. Manufacturing fell at a 2.2% rate in the second quarter after a 1.9% drop in the first three months of the year.

For June, industrial production was flat, slightly below the 0.1% gain expected by Wall Street economists.

Compared to 12 months earlier, industrial production rose 1.3%.

Capacity in use slipped to 77.9% in June from 78.1 in the prior month.


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