Morning Notes — Bond Yields
Low volatility, secular growth stocks outperformed into year-end reaching a record high premium to high beta stocks.
Morning Notes — Narrative
The driver behind this week’s rally is a growing belief the Omicron wave will be widespread but relatively brief with infection rates fading in early January, if not sooner.
Morning Notes — Inflation Data Ahead
Light attendance and thin liquidity into a catalyst vacuum typically leads to trend continuation.
Morning Notes — Catalyst Ahead
The SPX tested near-term support at ~4545 yesterday. A firmer core PCE number could bring a test of stronger, secondary support sits in the 4430-4500 range.
Morning Notes — Yield Curve and SPX Support
Support for 10-year Treasury yields sits in the 1.35%-1.40% zone with sustained levels north of 1.55% confirming a reversal to higher levels. We see some light resistance in the low 1.70s, but look for yields to reach the 1.90-1.95% range sometime in H1’22.
Morning Notes — Early Signs of Rotation
Crowded positioning in Tech reflects a bias to own secular growth stocks following 12+ years of disinflation that resulted in sub-1% ten year Treasury yields.
Morning Notes — Fed Reaction
Today’s FOMC had been the primary focus for markets this week, but attention will quickly turn to tomorrow’s ECB meeting.
Morning Notes — Support Levels and the SVX
The S&P 500 failed to break pattern resistance yesterday with intraday levels suggesting a pullback to immediate support into last Tuesday’s upside gap around 4590.
Morning Notes — Busy Week Ahead
Look for the Fed to double its tapering pace to $30B/month on Wednesday with the updated dot plot showing 3 hikes in 2022.
Morning Notes — Reflation
Today’s in-line CPI report and Wednesday’s JOLTS report that implied tighter labor market conditions won’t change the near-term narrative on inflation. It’s not hard for inflation rates to decline from here given much tougher comps starting in December, but the theme looks like it will