It‘s just liquidity
|S&P 500 enjoyed a wild ride yesterday that subscribers did capitalize on intraday, and the key move was in the bond markets as these started requesting the Fed eases practically right away. Unsurprisingly, this helped propel precious metals (seismic change, fundamental catalyst with all the new liquidity) higher, and stocks joined with a fine intraday reversal. The 2y yield sharply plunged to 4% only in what amounts the fastest decline since Oct 1987, and we know what happened then . Even if such as outcome isn‘t on the table now any time soon, I would add that it‘s needless to say, the unjustifiably easy financial conditions have sharply tightened over the last couple of days…
Let‘s talk CPI, the key event of today – my expectations turned out on the hotter side, and both the headline and core CPI came in (YoY) in line with expectations, which takes the spotlight off the Fed‘s inflation fighting focus. Nonetheless, I‘m looking for a relatively lean day ahead (futures are now roughly at 3,935) as the formidable 3,945 – 3,958 resistance zone looms and can‘t be beaten unless HYG keeps and extends intraday gains, and crude oil (back towards $76) with copper ($4.08 at least) peek higher as well today. I‘m not worried about precious metals here at all.
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