Inside Markets

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.

The focus remains on the recent backup in bond yields with markets in waiting mode ahead of tomorrow’s Jobs Report.

The S&P 500 (SPX) extended its recent pullback yesterday toward its 200-day moving average and bullish inflection at ~4200.

The $1.9T of additional pandemic-related fiscal spending in the spring of ’21 was unnecessary and reckless given that US manufacturing PMI was at an all-time record high of 59.23 at the time of its proposal in January.