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This Week Should See Focus Return to Inflation, Fed (Should)
Good morning contrarians! All is pretty quiet rn, though we are seeing renewed selling in bonds. The main action this week comes on Thursday and Friday with consumer and wholesale prices, respectively. Some Fed speakers this week as well. It’s possible that focus returns to the Fed from earnings, since there are few particularly interesting ones this week.

This may explain why bonds are selling off this morning. The short bond trade appears to have become popular, perhaps thanks to Bill Ackman who is predicting the 30-year yield will rise to 5.5%. Hotter-than-anticipated inflation prints this week will certainly help that conviction, though it’s worth keeping in mind that Ackman is known to talk his book more to seek an exit point than to build a position.

For what it’s worth futures traders still don’t expect the Fed to do anything at the next meeting: 85% are betting on no change to interest rates, which is actually a small increase over a week ago when it was 81%. Will want to watch those numbers this week, especially Thursday and Friday.

Free audio included with today’s briefing/podcast, now live:
Focus Returns to Inflation, Fed
Listen now (9 mins) | Stock index futures are rising with bond yields as investors get set to return their focus to inflation and the Fed this week…

Rico's avatar
Hopefully, they hike but I'm with the 85% here if I were a betting man
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