As it is the last week of January 2024, the focus is on the Fed, NFP and the Interest Rate markets. Folks who are new? Sometimes get a little lost here.
Following our comments last week, as this ol’ guy tries to keep it brief and mentions a tool for new traders, as FOMC approaches and what market we’ll be watching and why …
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: 9:00 AM EST – Case-Shiller Home Data
Wednesday: 2:00 PM EST – Fed Interest Rate Decision
2:30 PM EST – Fed Press Conference
February 1st, 2024
Thursday: 10:00 AM EST – ISM Manufacturing PMI, Employment
Friday: 8:30 AM EST – NFP and Unemployment Rate
SOFR Yield Curve: All eyes in rates are on the Fed this week. Last week, with GDP and key Inflation Data, we were range bound between ~3.6% and ~3.69% on the key March 2025 contract. Per my previous comments, that is the asset I’ll be watching closely as we head into a key Fed week.
Treasury Yield Curve: The yield curve is inverted.
…. and as with STIRs, we were pretty much range bound all week from the 2 year to the 10’s, with the 30 year and ultra’s dipping in price just a bit, to slightly higher yields. We will see what the Fed Press statement on Wednesday and NFP on Friday bring us The 4 Week Bill Yield is 5.4037%. The 52 Week Bill yield is now at 4.8063%
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 13.25 and -0.21 at the moment on the day. We have volatility that I would rank as cool.
Equity Volatility VIX TERM STRUCTURE: (VXG2024 and VXG2024) February (VXG2024) (Closest Month) is LESS expensive than April (VXG2024). February being worth less. Meaning we are in Contango … February, being at a less of a premium to February. Indicating normal risk conditions.
Equities: (SPY, SPX or possibly the /ES) We remain bullish on Equities last week.
S&P 500 High Yield: (SPHD) We remain neutral on S&P 500 High Yield price, bearish on yield.
Treasuries: (FRONT: SHY, MIDCURVE: IEI, IEF, BACKEND: TLT or the /ZT, /ZF, /ZN, /TN, /ZB and /UB). On SHY we remain bullish on price, bearish on yield. On IEI we have switched to join IEF to remain neutral on price, neutral on yield. On TLT, we remain bearish on price, bullish 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 bullish on Commodity Prices as a whole index.
Crude Oil Term Structure: Price led the way, as the entire forward curve is in backwardation out to 2029.
Crude Oil Specifically: (USO, USL and /CL) We have switched over to bullish 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 remain neutral on the US Dollar as an Index.
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