Good morning contrarians! Stocks are pointing to gains at the open a day after treading water…

Earnings today and Atlanta Fed President Raphael Bostic at 1050.

There is starting to be some noise about buying bonds, especially at the short end of the curve. This was one common theme of an institutional investor panel attended by yours truly this week. The idea is that the coupon of short-duration paper (which is effectively risk-free) is enough to make up for any volatility or loss of principal that might occur due to higher interest rates or inflation.

This may be true for very short-duration paper, but the thesis does not come without risks. Chiefly inflation, which will force the Fed to move ‘higher for longer’ on interest rates. If one is of the belief that inflation has effectively run its course and that the Fed will not have to raise rates after May, then this would make sense. If one thinks the Fed will likely be forced to raise beyond that, and that cutting rates will not occur for some time (like 2024 at the very earliest) then it makes less sense to pile into this trade.

For today’s stock market activity, it’s likely that earnings will drive things. Bostic may be good for a market-moving comment or two, but we will otherwise likely be rangebound until tomorrow’s PCE Deflator.

Today’s briefing/podcast is free for all, so check it out!