Morning Markets | JPM Mid-Year Commodity Report
Recession Over Inflation Today
Market Rundown:
Good morning.
2 hours ago. The dollar was higher, Bonds were stronger ( with short end strongest) stocks were down almost 2%, Gold was down $6. Why? Because overnight UK inflation came in as expected and the markets focus went from inflation to recession in a heartbeat. It started with stocks cratering. Bank of England rate hike projections went from strongly predicting 3 more hikes coming to barely predicting them.
9:30 a.m.- Stocks bounce, Gold goes positive, and Bonds keep rallying. Why? The US, with its more aggressive rate hikes is in a position to back off more quickly with them. Powell speaks today also. So the market is starting to act like the Fed rate hikes will be less if any more at all. It is quite silly, but that is what is happening.
To cement matters further: Other than Powell there was only 1 fed speaker scheduled for today. Now there are a gaggle of them. This means there is risk of Powell saying something that could roil markets. What could he say? He could say what we’ve been saying with reasons for 2 months. This is a recession. And it is by design.
What will happen? The Fed speakers are there to talk the markets out of any big move either way today. They could rally immensely if the Powell admits recession and that is taken as cue for less QT and rate hikes. Powell does not want that. They could also be there in case the markets are worried that despite in a recession Powell will continue to hike rates. Anyway. we shall see
Research Excerpt:
JPMorgan’s mid year commodities report is out and it is very informative. We do not take their market calls at face in this one. But the data and charts offer good explanations of what is going on now. The oil explanations are pretty good.
**more at bottom**
Data: Talking head day. They have added speakers, Powell may do some damage
09:00: Fed’s Barkin
09:30: Powell's Testimony
12:00: Fed’s Barkin
12:50: Fed’s Evans/Bullard
13:30: Fed’s Harker and Barkin