Another month, another hotter than expected inflation report. This time it was one which the Fed focus on: “Core PCE”. Expectations were for 4.3% YoY – it came at white-hot 4.7%. Where is the problem? Simple… services. And until we see unemployment tick higher… core services inflation will remain sticky. The Fed has a long fight on its hands… and the market is only recently connecting those dots
"Interest Rates / Bonds"
Managing Risk During ‘FOMO’
There are three important facets to the game of speculating required to make you consistently profitable: (1) understanding your psychology and emotions; (2) a deep understanding of how to manage your risk profile; and (3) access to a wide array of strategies that suit any range of market conditions. Today I think the first of these could be costing a lot of people money… in this case the “fear of missing out”. This is a dangerous mindset which ‘infects’ a lot of speculators… don’t let it be you.
Why a Rising US 10-Yr Yield Presents Opportunity
Bond yields are once again starting to rally. Rates are likely to be higher for longer. The US 10-year is now pressing 3.80% – and likely to exceed 4.0% in the coming weeks. The question is how how far will it go? My view is it will unlikely stay above 4.40% for any sustained period. And if anything – will resume it’s downtrend in 2024 as we approach recession. That represents an opportunity for investors – here is how I am trading it.
Bonds Realign with the Fed… Not Equities
From the first week of 2023 – bond markets were at odds with the Fed. For example, yields on the 2-year treasury plunged from 4.50% to barely above 4.0% over the past 6 weeks. And yet – the Fed were resolute in their resolve to keep raising rates. Something was amiss. Turns out that bond markets have pivoted and now see ‘eye-to-eye’ with the Fed that rates are staying higher for longer. Go figure. However, equities are yet to get the memo…. that’s risky.
For a full list of posts from 2017…