The negative correlation between asset prices and economic surprises is becoming increasingly apparent🫣
In addition, the market is increasingly confident that the Federal Reserve is indeed nearing the end of its interest rate hike cycle. Interest rate volatility has been running counter to stock market and foreign exchange volatility for most of this year, but has finally declined significantly in the past three months. Despite the strong bearish trend in bond yields over the past month, implied volatility has declined, and while price pressures persist, oil prices have rebounded, and quantitative tightening remains on track, the bond market appears more optimistic that this There won’t be a “taper tantrum” this time around; asset prices are likely to remain supported amid this sentiment, but a lot can change over the winter, especially if oil prices continue to surge from current levels.
