Inside Markets

The small-cap, cyclically-sensitive Russell 2000 (RTY) continues to trade beneath key range resistance near ~2070.

OIS markets are now priced for 70bp of rate cuts in CY’24, which is now lower than the 75bp from the Fed’s dot plot

There were no major surprises in yesterday’s release of FOMC meeting minutes, although some note dovish implications from advanced discussions on slowing the pace of QT.

The momentum factor is unwinding at the moment with hedge fund and retail investor positioning metrics at/near record levels.

US equities are mostly lower as we start the holiday-shortened week with a mild flight to safety.

Technical resistance for the SPX is the range-measured objective of 5099. We see that level holding at least until 10-year yields confirm a peak by closing below ~4.19%.

Charles Dow developed ‘Dow Theory’ back in the late 1800s and it still works today – in one form or another.

Yesterday’s orderly decline in equity markets suggests the broad macro outlook remains relatively benign. 

The hot CPI print means that markets will pay close attention to the week’s remaining inflation numbers, including PPI revisions (tomorrow), January import/export prices (Thursday) and January PPI/Michigan inflation expectations (Friday).

It’s a fairly quiet session as markets await tomorrow’s January US CPI print. US equities are mostly higher with the S&P 500 (SPX) pushing further above 5000.