Hi YXI friends,
Trump seems to be reaching a deal with China, propelling a global equities rally this morning. What I find interesting is that if the market is moving due to trade optimism, that means the prior ATH had actually priced in trade breakdowns, tariffs, and global export restrictions by the power players.
Take a moment to think about what that meant - there was so much liquidity and money coming into the markets even when everyone seemed pessimistic.
Now, the key risk event this week is the FOMC on Wednesday. A cut is fully priced in at this point, but based on the bond price technicals, I foresee a near-term bounce in yields. This could play out if Powell doesn't sound dovish enough, causing the market to unwind bets on next year's rate cuts, even though he is dovish — everything is relative to expectations.
Minor Housekeeping:
From now on, I will keep Monday as a big picture day to kick off the week. This means I will focus more on the weekly or even monthly charts and the medium-term expectations.
I may not write up a complete earnings note the very next day, but schedule them after we observe the day-1 price reaction. This allows me to quickly comment on the price before the open, without rushing through the notes themselves, especially when we have multiple reports on the same day.
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