Killing Time

ADP payrolls beat this morning, while mortgage applications were off. The biggest economic data of the day/week as far as stocks are concerned, though, is EIA oil inventories.

Algos have been riding the reflation trade as indicated by WTI ever since April 2020. Downturns have been very few and far between, meaning significant equity corrections have been non-existent. As we’ve expected, however, markets are finally focusing on the impact rising oil/gas prices have had on inflation, and that’s irritating the few remaining non-Fed bond investors to the point that a (very tiny) bit of price discovery has snuck back into the market.

If the Fed should ever actually taper, the risk of a reunion between economic reality and bond yields will increase. And, that’s a scenario the Fed would very much like to avoid.

Meanwhile, the holding pattern continues.

OPEX issues again?

continued for members


Sorry, this content is for members only.

Click here to get access.


Already a member? Login below

Remember me (for 2 weeks)

Forgot Password