Now we’re worried about rates? Most of 2023 has been characterized by the market’s willingness (cognitive dissonance?) to move past the how high and how long narrative from the Fed. Even as prognostications were proven wrong time and again, equities have largely kept calm and carried. But we are in a brave new world as yields continue to climb and the light summer schedule is taking advantage. One curious development is the Street’s seemingly sudden appreciation for the Fed’s sticktoitiveness. A week that’s already seen strong economic data fired another salvo with a jobless claims figure that saw a slight uptick but hardly suggested a labor market that’s softening. Throw in some positive earnings report and an increasingly bearish sentiment (see below) and the die was cast. Indices toyed with going better to start but per usual this week any strength was sold and that only picked up steam as the day progressed.
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