Good Thursday Morning to you,
Markets and traders do love volatility. Yesterday’s Fed minutes gave traders a reason to trade. They spun the minutes to make it seem that the inflation card was in play and that Fed was considering tapering bond purchases. That would be bad for rates, but it is also untrue. Chairman Powell already answered on this at the press conference that inflation is transitory and that the Fed will not taper for the foreseeable future. Bonds had a minor sell off yesterday on the news. Today is opposite day and really what should be happening. We have regained what we lost and the 10-yr is back to 1.62%. We do still have a few hills to climb before we can see a rally. We have to get above the 5, 10 and 21-day moving averages and those may be tough to overcome without some sort of catalyst to propel price. We never know for sure what the catalyst will be, or what direction it will take us. We do know that boring and range bound periods, such as we are in now, often are followed by volatility and wild price swings. The charts offer no clear clues as to which direction the move will be, so you must be careful and not let your guard down just because it is quiet.
And here is a really good piece and tool courtesy of the WSJ and don’t worry if you don’t have a subscription. They say all content is free today.
Consumer prices measured in a monthly inflation report may not show the kind of changes you are seeing at the pump, the supermarket or brunch.
Please remain safe and healthy, make today great.