Author: jsc

This morning’s reprieve in bond yields is helping the CBOE Volatility Index (VIX) come off highs approaching our ‘elevated’ threshold of 22.

The backup in bond yields became dislocated from their fundamental drivers about three weeks ago.

Takeaways from Powell’s anticipated address to the Economics Club of NY seem a bit more dovish than the consensus message from other Fed officials over the past two weeks.

Geopolitical concerns are getting more attention after an explosion at a Gaza hospital complicates diplomatic efforts to ease the Middle East conflict.

A resumption in the yield backup follows a hotter-than-expected September retail sales number.

The end of a Fed hiking cycle once inflation is vanquished should be positive for risk assets. Equities have reacted favorably to the end of past hiking cycles with the SPX returning an average of +6.6% over 3 months and +8.7% over 6 months.

An end of the hiking cycle doesn’t mean the tightening cycle is over.  Ongoing QT operations by the Fed and increased Treasury issuance are two unchanged factors behind the recent rise in nominal yields.

An end of the hiking cycle doesn’t mean the tightening cycle is over.  Ongoing QT operations by the Fed and increased Treasury issuance are two unchanged factors behind the recent rise in nominal yields.

Two weeks ago, the backup in bond yields disconnected from fundamental drivers of inflation expectations, growth data and Fed expectations.

A blow-out non-farm payroll number of +336,000 is combined with smaller wage gains to breathe temporary life into the soft-landing narrative.