If you thought this past week was volatile, wait until next week’s CPI, PPI, retail sales, initial claims, housing permits and sales, and consumer sentiment.

Futures are off moderately after being up most of the night.

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Futures are up sharply in a continuation of last week’s volatility.

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Futures got a nice bounce off the 200-day moving average and are slated for another sizable bump today.

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It was only 3 weeks ago, July 16.  In that day’s post [see: On the Brink] we noted that the equity meltup was at risk from the bond market.

A rather worrisome development in the bond market is threatening equities’ meltup. We’ve discussed this many, many times in the past. A breakdown in the 2s10s leads to corrections, while a breakout leads to crashes.

It’s always a bit unnerving to publicly utter the “c” word in the midst of a market meltup. At the open that day, S&P 500 was up over 19% ytd.  In fact, it closed at an all-time high that day.

In hindsight, with SPX 10% now lower (Nikkei futures off 28%) and futures nailing our next downside target, it seems pretty obvious.Don’t look now, but the bond market is on the brink yet again – an even more important brink. And, the yen carry trade is fast unwinding.

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We’re seeing spectacular moves in the bond market this morning with the 10Y, which reached our 3.99 target yesterday, plunging as low as 3.79% and the 2s10s reaching -10 bps.

Equities are taking it on the chin, with ES nearing our next downside target.

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That was quite a bounce yesterday, especially considering that nothing new was learned from the FOMC and we still have the very real threat of a broader war in the Middle East which threatens the entire lower inflation/rate cut narrative.

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While the FOMC is not expected to rock the market’s boat today, a spectacular 11% rise in NVDA and another wrinkle in the Middle East conflict are certain to induce volatility.

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Futures are moderately higher after rising as much as 35 points overnight.

Wednesday’s FOMC rate decision will dominate the financial news this week.

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