Hi YXI friends,

Ceasefire expires tomorrow (Wednesday, April 22), but there seems to be no progress towards renewed negotiations. While JD Vance is ready to revisit Pakistan, there has been radio silence on the Iranian side.

Meanwhile, Reuters reports that the Bank of Japan is unlikely to raise rates this month. This keeps the yen weak and supports the carry trade. It also removes a near-term volatility trigger for global bonds.

Overall, I continue to expect near-term volatility, with a potential market pullback that could give back half of the April rally.

To explain my rationale in one sentence:

The latest rally is based on low volume and rising volatility, which typically precedes further consolidation before a sustained move higher.

It’s less about whether I am “right” or “wrong, which is a binary outcome. It is more about sticking with the process we have built over the years to interpret the market regime. The market can still invalidate my thesis by moving higher on high volume and sustainably on low volatility. We only had to look back to last May-June for this textbook bull regime.

DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

Please check out our glossary for explaining the acronyms, financial terminology, and economic data.