June 14, 2021
Good morning,
Markets in almost all asset categories are fairly quiet this morning (except for Gold (-1.5%) which is probably just reacting late to Friday’s spike in real yields and the dollar). It makes sense that most assets are starting the week somewhat circumspect. When have we seen a massive addition to risk positions ahead of such a big event as this Wednesday’s?
More than a few macro strategists have said that this week’s Fed meeting (announcement Wed. afternoon) is the biggest so far in Fed-Chair Powell’s career. They expect hawkish surprises (translation: taper talk). And yet, the bond market, arguably the best arbiter of future inflation, remains seemingly comfortable with the current Fed policy, economic growth and inflation expectations. The U.S. 10yr Treasury is yielding 1.46% this morning, off roughly 30 basis points from its high yield print in March 1.77%.
Markets may stay quiet right into about 2pm ET Wednesday but I’ll be back that morning.
Be well,
Mike