The Fed is caught in a dilemma, and US bonds experience a relief rebound🗣️

While the NFP number was contentious enough to keep the 'data-dependent' Fed in limbo (YE hiking odds remain <20% on Friday's close), and treasuries finally saw a relief rally with 10y yields lower by -11bp on the session, it wasn't enough to rescue a challenging week for markets, with treasuries seeingly the highly weekly move since Feb, the SPX having the worst week since March, and commodities seeing the worst since June despite a 10%+ rally in oil.

#Fed #bond #NFP #Oil #SPX

The negative correlation between asset prices and economic surprises is becoming increasingly apparent😯

Moreover, as further signs that the market is turning increasingly confident that the Fed is truly nearing the end of its hiking cycle, interest rate vol has finally cratered in the last 3 months after stubbornly diverging from equity and FX vol for much of the year. Despite a strong bear-steepening move higher in bond yields over the past month, implied vols have come down and bond markets appear to be much more sanguine that there will no ‘taper tantrum’ this time, despite sticky pricing pressures, rebounding oil prices, and a QT plan that is still operating as scheduled. Asset prices are likely to remain well supported with this sentiment, but a lot can change in the winter, especially if oil prices continue to spike higher from here.

#Stock #crypto2023 #cryptocurrency #bitcoin #Oil

Hamas attack on Israel disrupts market calm☕
However, the market calm would not last, as this weekend saw an unprecedented attack by the Hamas Group on Israel, leading to concerns of a more entrenched conflict in the region and risks of another war. The last Israeli intelligence of this magnitude led to the Yom Kippur War in 1973, which saw dramatic rallies in oil (less supply) and gold (flight to quality), a jump in bond yields (inflation), and a corresponding sell off in equities. This time around, markets are relatively more reserved, as we are opening Monday morning with a small pop in oil/gold/bond prices and a mild -0.6% sell off in stocks. Outside of the human tragedy associated with all kinetic conflicts, the market's major focus will be on oil supply, and whether the current attack significantly unwinds the Middle East detente that the world has strived to broker in recent years. We pray that conflicts can de-escalate quickly to minimize the toll on human losses.
#Oil #Gold #BondYields #stock #finance