Daily Alert – Tuesday 14th June 2022: Don’t worry, it’s only a tantrum

Mark NugentDaily Alert, June 2022

Daily Alert – Tuesday 14th June 2022: Don’t worry, it’s only a tantrum

Good morning.

Last week’s market tantrum continued yesterday. Equities continued to fall. Bear market status was reached in many global equity indices. The USD continued to rise, and US bonds sold off, with yields rising. The markets are now expecting a 75 basis-point hike from Wednesday’s Fed meeting. All because core inflation exceeded expectation by the smallest margin possible.

Tantrums never last so I did not trade anything last night. I see that yesterday’s moves have halted and there are signs of reversals taking place.

The best thing that can happen is that the Fed hike by 50 basis-points only on Wednesday, putting some upwards momentum under equities. Now the Fed will have their own, updated inflation projections and maybe things are worse than thought. But if traders expect 75 basis-points just because of last Friday’s CPI print, and that’s all they know for sure, that’s hard for me to accept and would put the Fed in a bad light.

I’ll be back tomorrow.

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