Inside Markets — De Facto End
A de facto end of the tightening cycle has driven bond yields and kicked off equity rotation into growth sectors and Tech in particular.
Inside Markets — Sector Rotation
Rotation into growth from value sectors began late last week after 10-year real yields reversed from strong technical resistance at +170bp.
Inside Markets — Market Volatility
Bond market volatility has spilled into equity markets and other cross markets amid low liquidity conditions. Implied equity volatility as measured by the VIX Index is pressing toward levels from last September.
Inside Markets — Pressure of Rising Funding Costs
Silicon Valley Bank’s failure highlights the pressure of rising funding costs. The Fed backstop on deposits at SIVB and SBNY reduces the likelihood of more regional bank failures, but the pressure on a banks underlying business model remains acute.
Inside Markets — Implications
The Fed’s decision to provide liquidity has markets speculating the central bank may elect to leave rates unchanged when it meets next week..
Inside Markets — Bank Examiner
Yesterday, we discussed the negative impact on bank deposits and assets from the Fed’s QT operations. The Fed’s QE program resulted in rapidly rising bank deposits and support for asset values as the central bank became the largest source of demand for bonds.
Inside Markets — Signal from Banks
In a clear signal from banks, US large cap and regional bank indices are down ~10% for the week after cautious management presentations at a sell-side conference on Monday.
Inside Markets — Challenging Outlook
Multiple factors combine to create a challenging outlook for equities. Yesterday’s testimony from Fed Chair Powell triggered a ~1.5% sell off in the S&P 500 (SPX) and further yield curve inversion
Inside Markets — Bond Yields
Longer-dated bond yields have limited room to lift from current levels given hawkish rate expectations and the potential for a more benign February Jobs Report this Friday.
Inside Markets — Macro Catalysts
US equities are mostly higher into a busy week of macro catalysts.