So U.S. investors will be dragging their sorry asses back to the desks on Tuesday after a long weekend and the mood will be cautious.
Those of you who were around on Sunday evening for our week ahead preview know there’s plenty to watch this week even it’s light on the data front.
There’s Mueller (who has been indicting some folks) and a flood of supply from Treasury, with some $151 in bills coming on Tuesday and another ~$100 billion in various other debt later this week as the U.S. starts down the road to financing this goddamn fiscal stimulus we don’t need on the way to our final, glorious destiny in what Goldman called “uncharted fiscal territory“:
And then there’s the Fed minutes which should betray a committee that’s getting even more confident about the outlook for inflation. That will be fresh/stale (and that’s the fun thing about meeting minutes, it’s incremental information that’s both fresh and stale at the same time), inflation banter on the heels of the CPI beat and Fed surveys we got last week and ahead of a fully-priced hike.
Yields were higher overnight ahead of the supply deluge, setting the stage for a cautious session in the U.S.:
As you can see, 10Y yields touched 2.93 at one point. The dollar was higher as well.
For his part, Bloomberg’s Mark Cudmore doesn’t like what he’s seeing out there.
“Long-end yields everywhere continue to rise, HSBC results were poor [and] I can’t help but see it as yet another signal of more pain across global equity markets,” he writes on Tuesday morning, adding that “there’s no way we can have that much pnl-destruction and volatility increase and get a V-shaped recovery in equity markets.”
Well hell, you never know these days Mark. U.S. investors are a funny bunch and they’re prone to defying common sense when it comes to piling in for absolutely no reason whatsoever. But futures are lower.
Asian markets were lower pretty much across the board and Europe is looking shaky. Still, as noted above, folks are predisposed to being bullish which is why, the latest CFTC data (which showed trimming of equities positions) notwithstanding, Goldman’s risk appetite indicator is still elevated: