June 18, 2021
Good morning,
The much ado about nothing comment here Wednesday morning didn’t look very good that afternoon when Fed Chair Powell talked of rate hikes and markets began to swing wildly toward risk-off. And yet, here we are 36hrs later and bond yields are lower (lower, not a misprint), than they were before Chair Powell lifted the mike Wednesday afternoon. The bond market continues to be unshaken by the inflation numbers arriving almost daily and now a clearer schedule for Fed rate hikes.
Stocks have rebounded too from Wednesday afternoon lows but to varying degrees. The NASDAQ index (large tech) is up a percent since then, while the Russell 2000 and Emerging Markets are off a percent. The S&P is ranging in the middle of those two levels.
Today is a quarterly expiration of soft of derivatives – options, future, options on futures – it’s commonly called a Witching Day (no disrespect to witches, I was married to one after all). Anyway, these expiration days are often quite volatile but typically don’t derail the prevailing trend of the market. The only problem with that today is that the market seems trendless lately. It’s anyone’s guess. Just get me to the close seems to be the prevailing sentiment among traders today – I agree.
Have a great weekend.
Be well,
Mike