Coach Mark here.

Fed officials have been pushing back against the seven rate cuts that the market has been pricing into the market recently but the market has generally ignored their commentary. Both my brother and I this weekend outlined why the market has it wrong on this one (you can listen to the most recent podcast here). In fact, the market has been so stubborn that after last weeks hotter than expected inflation print rate cut expectations went even higher!

Markets can be very stubborn but as Canadian and UK inflationary data came in this week there seems to be a “maybe inflation won’t go so quietly into the night” moment the market is experiencing. The dollar and 10-year charts certainly look like they are setting up for liftoff and as the last year has shown, risk assets have a very hard time climbing if these charts are climbing as well.

The markets certainly feel like it is at an inflection point. Inflection points in markets are not resolved in day. They are not often resolved in a week or a month either. Bears certainly have taken the opening bell on this Wednesday but this story has many chapters left to be read and temporary rises in inflation are not the final chapter, just the opening page. Earnings, The Fed, economic data, geo-politics, and inflationary data will all play a role (including the unexpected) on how this inflection point resolves.

We will continue to help analyze all of the moving parts on the Halftime Report today so come join us!

10-Year Yields (TNX)

Like the dollar, yields look like they are in a bottoming type formation wanting to test the upside. If this resolves to the upside, then one can expect pressure on multiple asset classes to occur.

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