Equities have ramped almost 12% since the last Fed meeting – ignoring the prospect of higher interest rates for a longer period of time. Given the oil market’s recent breakout and the obvious base effect on inflation, we see a good chance of Powell presenting a more hawkish stance than the overbought market is prepared for…

…raising the prospect of spike in the 10Y to 4.76% by mid-August. One of the few developments that could prevent it: a collapse in oil/gas prices.

continued for members…

The 10Y has dipped a little bit, but only enough to close the gap from Monday. If inflation appears sticky enough, maybe GC and SI can resume their breakouts. At this point, GC has merely confirmed its falling channel.

Futures are off a bit this morning, with a little H&S Pattern setting up in ES that would mean a backtest of the SMA20 at 4518ish. The neckline is right at the SMA10 (currently at 4571.43) so that should be an important test. If stocks bounce at this point, then the .886 at 4659.23 is in play.

…as the DXY firms up.