pebblewriter

Tag: FOMC

  • Powell Back in the Spotlight

    It’s been lonely maintaining that rates would continue to rise over the past 10 months. As we noted in Decision Time:

    “TNX…looks likely to test 47.55 after it digests recent gains.”

    After the 10Y topped its Oct 21 highs, folks started coming around. Now it’s looking fairly obvious.The only question is whether Powell will fess up to the coming rise in CPI and, therefore interest rates, in his speech at Jackson Hole (1005 ET.)

    As we discussed a few days ago [see: Interesting Goings On in Currencies] the cross currents in rates and currencies are problematic for the market. We saw ample evidence yesterday when futures gave up a strong opening  – breaking out of a well-formed channel only to close deep in the red.

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  • Charts I’m Watching: Aug 22, 2023

    Futures are up 0.40% largely on bullish algo positioning……with VIX now down 13.4% since Friday’s 200-day moving average tag.

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  • Charts I’m Watching: Aug 8, 2023

    Futures are down sharply as yesterday’s currency moves and VIX smackdown are being unwound by Moody’s banking downgrades.  At least banks aren’t waking up to a 40% windfall profit tax such as Italy just imposed.

    This timely bit of truthiness certainly has the potential to get ES to our SMA50 target in the lead up to Thursday’s CPI print. As for XLF, the timing couldn’t be worse.

    Fear not, the Fed is already tapping the brakes.

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  • Powell Doesn’t Disappoint

    He could have gone full hawk, but he didn’t. Even in the face of economic data (that the rest of us can now see) which was uniformly positive and a coming bump in inflation, Powell chose the route that best supported stocks. ES bounced at its SMA10 and is surging toward its .886 Fib retracement.

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  • FOMC Day: Jul 26, 2023

    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.

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  • Forcing Their Hand

    The recent breakout in oil/gas prices has now inspired a breakout in the 10Y.

    It’s an important headwind for the Fed, which had relied on falling energy prices to keep inflation and interest rates at an acceptable level.

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  • Inflation Not Done

    We might be done with inflation, but judging by the oil/gas markets, it’s not done with us. Both CL and RB have now broken out of channels dating back to early 2022 – with CL pushing above its 200-day moving average this morning.

    The Fed has its work cut out for it this week – and for the next several months.

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  • Charts I’m Watching: Jul 21, 2023

    Just saw that the great Tony Bennett passed early this morning. It was always a thrill to see him perform. He was one of the last great ones, and will be missed.

     * * * * *

    Futures are leaking higher on this OPEX Friday following SPX’s bounce off its .786 Fib.

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  • Charts I’m Watching: Jul 17, 2023

    Futures are off slightly on low volume on a slow news day.

    Some significant Fibonacci levels have been reached, however, setting up potential large moves in equities.

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  • Stagflation Data

    With CPI due out tomorrow, we should see confirmation of how behind the curve the FOMC continues to be. Whether or not the data comes in above estimates, it will still be well above the Fed’s professed target of 2% – meaning the pause was yet another mistake served up in the interest of propping up equity markets.

    Just a reminder: with CPI around 4% and GDP below 2%, we’ve got stagflation. And, the Fed has no answer for that.

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