At the time of this writing, we have yet to receive the host of inflation data on deck for the coming week of February 12, 2024.
We cannot view ‘one binary’ inflation report as ‘the report’. We believe that en totum, the February, March and April inflation reports, we believe, will prove critical …
You can find the video as below on YouTube, and is available in many other video venues (Vimeo, Odysee, etc)
Here is the the note itself, for this week on a 0 to 15 day Periodicity …
This Week on the Calendar:
Tuesday: 8:30 AM EST – Core Inflation Data
Wednesday: 7:00 AM EST – MBA Mortgage Information
Thursday: 8:30 AM EST – Retail Sales
Friday: 8:30 AM EST – PPI Data
SOFR Yield Curve: We believe we are witnessing a longer-term reverse of Globalization back to the United States. We are thus watching the March 2025 SR3 contract move lower, toward higher yields. We will see what this two, binary inflation data releases bring this week. We are thus watching that March 2025 SR3 contract as a ‘tell’ more than a trade at the current time, regarding the ‘winds of inflation’.
Treasury Yield Curve: The yield curve is inverted.
… and as with STIRs, or should I say … with STIRs reflecting as a proxy, movement in Treasuries? We see the 2 year move to higher yields all of last week. And now the 5 year to the Ultra-10’s seem to be joining the party; moving lower in price to higher yields as well. Bonds are currently flirting with their supporting structure at the 119’19 region; and we’ll see if we can pop lower there. The 4 Week Bill Yield is 5.4491%. The 52 Week Bill yield is now at 4.8918%.
Overall Risk: (Stock Indices, Gold, Long Bond, Bills): Overall Risk, we remain neutral, in a general, broad, overall bias.
Equity Volatility: (VIX) We are at 13.93 and +1.00 at the moment on the day. We have volatility that I would rank as cool.
Equity Volatility VIX TERM STRUCTURE: Normal risk and premium conditions as the market is in contango throughout the terms.
Equities: (SPY, SPX or possibly the /ES) We remain bullish on Equities.
S&P 500 High Yield: (SPHD) We remain neutral on S&P 500 High Yield price, neutral on yield.
Treasuries: (FRONT: SHY, MIDCURVE: IEI, IEF, BACKEND: TLT or the /ZT, /ZF, /ZN, /TN, /ZB and /UB). On SHY out to TLT we remain neutral on price, neutral on yield.
Emerging Markets: (PCY, VWO) On Emerging Market Debt prices (PCY), we remain neutral on price, neutral on yield. For Emerging Market Equity Prices (VWO), we remain neutral.
High-Yield: (HYG, JNK) We remain neutral on price, neutral on yield.
Commodities: (GSCI, DBC or GSG) We are switching over to neutral on Commodity Prices as a whole index.
Crude Oil Term Structure: We are firmly within backwardation throughout the forward terms as Fed guidance has rates pushing the forward curve back out. Price is consolidating in the near term.
Crude Oil Specifically: (USO, USL and /CL) We remain neutral on Oil Prices.
Gasoline Specifically: (UGA and /RB) We have switched over to bullish on Gasoline Prices.
Gold and Silver Specifically: (GLD / /GC and SLV /SI) We remain neutral on Gold prices. We remain neutral on Silver.
Currency: ($DXY:IFUS, UUP) We have switched over to bullish on the US Dollar as an Index.
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