It’s a light week on the economic calendar … and while we do not trade the yield curves while trading equities? You had better believe we watch them in this environment and keep an eye on inflationary inputs.
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:
Thursday: 8:30 AM EST – CPI Data
Friday: 8:30 AM EST – PPI Data
SOFR Yield Curve: All the way out to the 2028’s, we have experienced higher yields in the first week of the year of 2024. There was a slight blip to cheaper yields on Friday with NFP, but we settled back down to the yields seen previously on the day before the report. As with Treasuries …
Treasury Yield Curve: The yield curve is inverted.
…. and as with STIRs, has dropped throughout this first week of 2024 throughout the Treasury Curve. The 4 Week Bill Yield is 5.388%. The 52 Week Bill yield is now at 4.900%
Overall Risk: (Stock Indices, Gold, Long Bond, Bills): Overall Risk, we switched over to bearish last week, in a general, broad, overall bias.
Equity Volatility: (VIX) We are at 13.99 and +0.65 at the moment on the day. We have volatility that I would rank as cool.
Equity Volatility VIX TERM STRUCTURE: We’re in Contango through the VX terms, indicating normal risk conditions.
Equities: (SPY, SPX or possibly the /ES) We had switched over to bearish on Equities last week.
S&P 500 High Yield: (SPHD) We remain bullish 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 out to IEI, we remain bullish on price, bearish on yield. On IEF to TLT we have switched over to neutral on price, neutral on yield.
Emerging Markets: (PCY, VWO) On Emerging Market Debt prices (PCY), we have switched over to neutral on price, neutral on yield. For Emerging Market Equity Prices (VWO), we remain neutral.
High-Yield: (HYG, JNK) We have switched over to neutral on price, neutral on yield.
Commodities: (GSCI, DBC or GSG) We remain bearish on Commodity Prices as a whole index.
Crude Oil Term Structure: Very interesting. Last week, we had seen a bend to backwardation in July of 2024 with Inflation expectations. However with Fed Statements? We see Backwardation returning now, all the way out to the 2026’s.
Crude Oil Specifically: (USO, USL and /CL) We have switched over to neutral on Oil Prices.
Gasoline Specifically: (UGA and /RB) We remain bearish 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 bearish on the US Dollar as an Index.
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