Erroneous Jubilation
S&P 500 and risk assets welcomed the Fed tone – the expected 50bp hike was attenuated by the soft landing talk. That‘s what markets focused on – not on all the rate raising and balance sheet shrinking ahead. Relief rally was born, and I suspect it would be reversed sooner rather than later as the realization of significantly more pain ahead creeps in. The unsustainably jubilant HYG close would come under pressure, and the same goes for crypto prices. Note that TLT barely moved, and isn‘t sending wildly bullish signals in the least. The path of rising yields remains on, and the risk-on turn getting questioned today and tomorrow, is a virtual certainty. Yes, I‘m not looking at 4,300 to be overcome.
Meanwhile, crude oil and natgas continue stealing the spotlight, which was the safest bet to make. Any talk of soft landing (implies being ready to react to worsening economic data) works to support precious metals, and real assets at large. That‘s the first swallow of the Fed U-turn I anticipate to happen „just in time“ to have a bearing on midterms. Before that, obviously, it‘s silver and copper that would react worst to any truly tough (hawkish) Fed talk – the central bank though appears willing already to walk the fine line. Verbally for now, and markets liked that whiff – reality of more actual tightening ahead would though have to settle in first.
There won’t be a regular analysis featuring charts or Twitter activities today, but I’m keeping a close eye on the markets and will issue a sound commentary whenever required by the markets on my watch.
Thank you for your patience.
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Thank you,
Monica Kingsley
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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