October 11, 2021
Good morning,
The cash bond market is closed today for the holiday – banks are closed, equity exchanges are open. That said, you would think it unlikely that equities would be derailed today by rising Treasury yields. However, bond futures are trading and are pointing to higher yields up and down the curve. It’s not helping that oil (WTI) is trading at its highest level in seven years this morning and nothing informs the public of higher inflation quite like higher energy prices. Equity Futures are off a bit (10-15pts / 25-35bps) ahead of their cash market open.
While there is no data today, there will be plenty to look forward to this week. Corporate earnings reporting season begins, CPI and retail sales are released, Treasury auctions restart and an array of Fed communications are expected, including the minutes of last month’s meeting (a true biggie lately). Goldman and JPMorgan are out this morning saying buy the dip as inflation is transitory (Bloomberg). Even though the VIX has settled down a bit and is below 20 again, there is a lot for equities to plow through this week and with more than half an October left, it doesn’t really feel like volatility is over at this juncture. Of course, I’m happy to be wrong on that.
Be well,
Mike