Good evening … Check me if I’m wrong here, but aren’t markets recent reflex and recent global chaotic slide simply a perfect reflection of the Fed and globally coordinated central planner desires? Perhaps you recall THIS
… If we want to set ourselves up for another period of very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn't.
The table was set, this week was and will forever be a Global Central Bank-A-thon with a very large dollup of FISCAL authoritarianism (made that up) on the side …. Friday morning before the selling got underway,
DB noting … the worst day for 5yr gilts since a +200bps hike in 1985 when sterling was slumping …
And more. You’ll also see Goldilocks version of the Gilt move as well as updated / HIGHER yield forecasts from the likes of MS (as Global Wall Street attempts to get out behind the move, as usual) …
… A few other items from the intertubes which caught my attention …
AllStarCharts w/BBG chart of PUT VOLUMES (Hedgers Coming In Hot)
You notice how no one wanted to hedge their portfolios when the stock market was topping out in Q1 of 2021?
But now after a 19+ month bear market, investors have decided that it's now time to hedge. In fact, they've never wanted to hedge as badly as they did this week.
Here's a look at the record put activity via Bloomberg:
… Even the bond market doesn’t like the rise in rates.
Check out the overlay chart of the 10-year yield and junk versus investment-grade debt:
These charts usually move in lockstep. But junk bonds can’t catch a relative bid versus their safer alternative.
Finally, THIS from BBGs Weekly Fix — a reminder (which nobody needs) that USTs are actually back en vogue for a good reason,
…“In an investment grade portfolio, right now you can lock in a 4%-5% yield without taking a tremendous amount of duration risk,” Charles Schwab & Co. chief fixed income strategist Kathy Jones said on Bloomberg Television’s Surveillance on Tuesday. “We think that that’s a good alternative compared to some of the other asset classes.”
Jones hits on a key concern: duration. As we discussed last week, most things in life and markets (particularly at this moment) boil down to duration risk — a security’s sensitivity to interest-rates changes. While stretching out across the curve may appear tempting at the moment, some caution is probably warranted.
“If you’re at the front of the curve, a given move in interest rates, a change in yield, the move is going to have a way lower dollar P&L than it would out the curve because duration is lower,” Bespoke Investment Group global macro strategist George Pearkes said. “It’s very, very unlikely you’re going to have price risk downside at the front of the curve.”
AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.
First, this from the best in the strategy biz is a LINKthru TO this calendar,
Now on to some attempted humor … First, here is a real life lesson that elections have consequences and we’re thankfully seeing some relief in oil prices and so, prices at the pump BUT a description of the administrations playbook be like
AND then there’s this one is now an oldy but a NOT goody,
That’s all for now. Enjoy rest of your weekend ahead!
