Good morning,
News currently focuses on two major headwinds: the renewed US-Iran “hot” conflict and the rising bets on Fed hikes in September/October. While we have the Nonfarm Payrolls this Friday, any number it prints - even if negative - is unlikely to concern the Fed, with the unemployment rate still being so low.
For the doves, the recent resurgence of oil prices may still be assessed as a “temporary shock” rather than a multi-year re-rating. The Fed may want to wait at least one more meeting before committing to the first hike.
One thing I am a little concerned about in recent weeks is the rising TGA level (see below). It is sitting at a multi-year high, which is draining cash from bank reserves that could otherwise flow into the financial markets. Overall, I am cautious in this environment and would shy away from high-beta names.
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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.