With markets so far ahead of themselves, particularly among the numerous unprofitable tech stocks which are reaching all-time highs, it’s notable that Jerome Powell finally weighed in.

“We do look at overall financial conditions, and we ask ourselves whether our policies are affecting financial conditions in a way that is what we’re trying to achieve, But you’re right, by many measures, for example, equity prices are fairly highly valued.”

When your goal is reducing inflation by another 100 bps in the midst of an inflation stoking tariff regime, excessive liquidity is not your friend. ES fell about 60 points before bouncing near the 1.272 Fib.

We imagine Powell & Co. has been thinking about financial conditions a lot. There’s very little in the economic data, aside from slumping employment, which suggests the Fed should be increasing liquidity.

A hot new home sales print ordered up by the White House would hurt more than help.

continued for members…

Keep an eye on VX, which has managed to make higher lows 4 sessions in a row.

We continue to expect a sizeable bounce in DXY. Aside from the channel bottoms (2 of them) providing support, note that DXY has failed to keep up with TNX.

But, as we know, interest rates often plunge in the event of an equity correction – especially if there’s a loss of confidence in the US economy.

We still expect EURUSD to make at least another leg higher.

But, we can’t help but notice USDJPY is again threatening to breaking out. Maybe just waiting for the Nikkei to run into trouble?
Note that oil and gas are higher again, supporting the notion that inflation isn’t going away.The 2s10s is still hanging around a dangerous breakout.