Futures are slightly higher in a week certain to be buffeted by a bevy of important economic data.

continued for members…

Oil and gas are both higher this morning, lending upside to to the 10Y…

… as the 2s10s remains at a relatively safe -10bps. I say relatively since our premise is that breakdowns produce corrections and breakouts produce crashes.

The 2s10s has already broken out above the TL from 2021. It also broke above former horizontal resistance. These two events are strongly correlated with the recent meltdowns in stocks.

At it’s current position, it must either break down or break out. Whichever it does will determine which of those outcomes we get.  The only way markets go up is if the 2s10s goes sideways for the next several months – registering neither a breakdown or breakout.

It appears to me that the CPI/PPI will come out significantly lower, bolstering the case for a September rate cut of 25-50 bps. Ideally (for the bulls) it would be important for other data to be relatively benign, i.e. decent growth without suggesting recession.

Stay tuned