So both FOMC and the Fed Press Conference, and it seems an interview on “60 Minutes” has passed, wherein the Federal Reserve and it’s Chairman Jerome Powell made their case for pausing to collect data to confirm inflation is coming down to the ~2% range.
And many market participants seem … I would use the word ‘obsessed’, and insistent on interest rate cuts sooner, rather than later. We discuss this and more in the following video entry …
(By the way … forgive me stumbling over my words a bit in this entry. For some god unknown reason (there’s an actual named speech issue around this phenomenon) .. I said “Hit the offer”. yes, I know, it’s “LIFT into the offer ….” )
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:
It’s a light week on the calendar.
Monday: 10:00 AM EST – ISM Services PMI
Wednesday: 7:00 AM EST – MBA Mortgage Information
SOFR Yield Curve: Per my previous comments regarding positive structural inflation moving into the United States, I stated last week I would not be surprised to see the March 2025 SR3 contract head lower, toward higher yields. And that is exactly what we have had. Not from ‘the movement of a SOFR contract’. But the positive jobs number, as I believe vertical integration to domestic manufacturing migrates to the United States? The Interest Rate markets can normalize higher yields; if we see inflation also stabilize.
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; while the remainder of the curve sticks in the middle of it’s range. The 4 Week Bill Yield is 5.4242%. The 52 Week Bill yield is now at 4.8602%.
Overall Risk: (Stock Indices, Gold, Long Bond, Bills): Overall Risk, we are switching over to neutral, in a general, broad, overall bias.
Equity Volatility: (VIX) We are at 13.84 and -0.03 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 we have switched to neutral on price, neutral on yield. On IEI out TLT (So IEI, IEF and TLT), we have switched all to be 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 have moved back to contango, but only in the front of the forward curve, in response to Interest Rate expectations affecting the front of the curve. Price is consolidating in the near term.
Crude Oil Specifically: (USO, USL and /CL) We have switched over to neutral on Oil Prices.
Gasoline Specifically: (UGA and /RB) We have switched over to neutral 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 remain neutral on the US Dollar as an Index. A hairs breadth away from turning bullish.
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