Morning Notes — Near-Term SPX

The S&P 500 is currently trading below technical support at 3890, which should open the door for a full retest of the June lows at ~3660. However, wide expectations for massive monetary tightening this week (11 central bank meetings) could complicate the near-term outlook. Monetary tightening that matches or undershoots expectations would likely result in lower rates volatility, pull yields lower, tighten credit spreads and drive a rally in equity markets.  

Recession? Any deep US recession would need to be consumer-led and consumer credit metrics continue to look strong. The 30-59 day delinquency rate on bank-issued credit cards currently sits at 0.25% vs. 0.44% in December 2019 and 1.73% in April 2009. The 90+ day delinquency rate is 0.39%, which compares to 0.78% in December ‘19 and 3.30% in April ‘09.