I hope everyone was able to get some rest after that vicious day Friday. The economy is roaring hot, and it became clear that the foolish rate cut cycle has ended and the next move is hikes. That had become apparent for quite some time to readers here, but only gradually to market participants. That being said, the reaction was quite extreme to what was essentially good news - the job market is doing well. The question becomes, is this the start of a repricing, a VAR shock or a dip that gets bought right out of the gates? We will review the data and explore that below.
We do have data this week, as well as the ECB meeting where they are priced to hike and the BOC where they will stand pat. On Tuesday, we get imports/exports, Redbook and existing home sales. Wednesday we have MBS apps, CPI. Thursday we will get PPI. Friday is UMICH.
Stay tuned this week for my Pipelines note, which looks at PPI in detail to understand the pipeline pressure coming from supply chains.
Below is the latest positioning summary. Let’s dig in.
