No, I’m not talking about Philly Fed Index, which at 0.3 versus 8.0 expected and 10.4 prior, is really stinking up the joint.
instead, I’m talking about the 2s10s breakout which, as we’ve discussed countless times in the past, spells serious trouble for equity markets. This is exactly the scenario we discussed earlier this week and is a direct result of the brewing inflation problem which is also not being discussed in polite company.
continued for members…
This doesn’t mean that TPTB won’t be able to maintain SPX/ES with the usual CL/USDJPY/VIX trickery for another week or so. But, unless the 2s10s comes back down below .25, history tells us we’re in for a bumpy ride.
Higher inflation means higher bond yields which, combined with Fed pressure to keep short rates low, translates into the 2s10s potentially blowing out. In the past, this has preceded very big plunges.
The close up:
The closeup on equities:
Because equities, rates and USDJPY will be under pressure, it’s falling on CL/RB and VIX to try to stabilize things this morning.
I’m running out for an appointment, will be back around 11-12.
UPDATE: 12:45 PM
SPX’s TL held.
Both it and ES came within 4 points of their 1.618s, with a potential drop off to flesh out their rising channels.
