Mid-Week Update
The FOMC is in 24 hours, and there are already a lot of gyrations in the market that are worth considering. Today’s market reaction is all about position unwinding. I think people approached the retail sales number with the view to taking down risk on a weak print. This didn’t materialise, so they have been reducing at worse levels. Yield curves flattened aggressively ahead of the 20-year auction (which went badly), equities initially ripped then undid all gains, while gold got also hit and oil ripped. USD/JPY also jumped on higher front-end yields. That's a bit of everything; good luck running a well-diversified portfolio with this.
I anticipated a bit of a reversal in Gold (thank you reversal model) and certain bond markets. So, the models did ok. More on this further below and updates. Before that, let’s hear about my friend Macro D and his current views on central banks.
Let’s go! Remember, stay nimble. The next 24-48 hours will be tricky.