Drumroll please! Headlines overnight of potentially more support for deposits via the Treasury spurred a re-risking in the US markets. Traders had swarmed to the safety of Treasuries the last week and a half to hide from the regional bank fallout. This pushed yields to ytd lows, while also propping the quality companies higher (think mega-tech). Those quality names maintained their gains today however, pushing the S&P Growth factor to yet another daily outperformance versus Value (13 days in a…

The financial mess that has been encircling the US went international today with fresh concerns over Credit Suisse. With the Stoxx Banks index closing down 6.9% (and Credit Suisse -24%/ CS ADR +18.5% vs local close though), the early part of the US session was impacted negatively, culminating just after the EU close. The rush to safety continues evidenced by the sovereigns, as 10-yr Bunds moved from 2.45% to 2.12% intraday. And the US 10-yr had a similar trajectory, closing at 3.47% vs yesterda…

And it’s only his first day of his testimony. Yesterday’s price action in the markets was a good foretelling of what was to come. Stocks could not hold onto early gains ahead of Powell’s testimony to Congress, and when he did speak today, he did not mince words. “Economy’s strength suggests peak rate will be higher than previously anticipated” and, “Fed is prepared to speed up rate rises if warranted”. CME data had a 72% expectation for a 25bps rise on March 22 pre-Powell, it stood at 64% for 5…

The shortest month of the year is now behind investors and markets have bent, but not broken (yet) the work they did in January. The last couple of trading sessions of any month always gets the added element of positioning, and today was no different. After a sluggish start, equites rallied after economic data showed some deterioration once again. The weaker data did not change the Fed rate trajectory, but manufacturing (Richmond Fed/ MNI Chicago PMI) declined sequentially, and Consumer Confide…

February has been a month of repricing expectations on a few levels. As macro data has shown to be resilient, so has the Fed’s resolve, and investors have had to amend positions for a higher for longer trajectory. Treasuries have seen the most aggressive repositioning this month, as the 10-yr yield have moved to 3.88% from 3.42% when the FOMC last met (February 1st). Stocks continue to hold up however, even though they have tested some support levels this week. The genesis of the Streets rethin…

This week has provided investors with some things to think about. The trajectory was never going to be diagonally higher after the 2022 performance, but rather a bumpy one that hopefully will end higher. That turbulence will also happen in economic data, as markets learned via the CPI, PPI, and Retail Sales. But even though all three surprised, equities still moved higher for the week (Nasdaq and Russell 2k), or only lost small (S&P 500). The strength here, is shrugging off the weakness in Trea…

After last week’s hyper economic data releases, investors have had to suffice with a quiet week so far. While Fed heads have been released from their pre-FOMC quiet period, there has not been a rush by them to speak their minds. That quiet changed today for a brief period as the markets heard from both Kashkari and Powell, the latter having the most impact. Traders are battling the Fed about peak rates and when potential cuts may come, and after the Nonfarm payrolls Friday, the Fed seems to be…

It has been a tumultuous twenty-four hours for the markets, and that will continue to be this week’s theme as investors wade through the AAA earnings, and Nonfarm Payrolls. Markets have been watching the deteriorating eco data recently and have decided that the Fed will not only terminate its hiking cycle at 5%, but also start cutting at year end. First it was only a 25bps, but after yesterday’s FOMC meeting, that has grown to 50bps. In Powell’s defense, he did reiterate the Fed’s intent to be “appropriately restrictive” until inflation is under control, but acknowledged that investors needed to do their thing.

It’s thirsty Thursday, and that seems appropriate as markets have been lapping up assets in January. Whether because they have been underweight after a rough 2022, or in anticipation of a soft landing, the support has been appreciated. Obviously there remains a lot of moving parts to this year’s outcome, but it seems easier to look forward since the Fed is closer to the end than the beginning. Equities built upon yesterday’s rally and finished at their highs once again. But today, the Russell 2k finally closed above the 1900 level, a resistance level our technical team is watching.

Higher for longer will have to remain a term for the Fed as equities decided to fall back today. After closing above its 200-day moving average for two sessions, the S&P 500 fell back below, ultimately finishing with its worst one-day performance this (short) year. No doubt the Fed is a central theme for the investment outlook, but traders were reminded today that the aggressive rate hikes in 2022 are still in their infancy for economic impact. Data therefore remains the important part of the recession (will it or not happen) forecast and today’s calendar had plenty to offer.